The appellant who had previously been employed as an immigration officer was appointed assistant passport officer in the External Affairs Service on his acceptance of the terms of a letter which stated, inter alia, that '...the appointment will extend for a period of three years in the first instance.... You will be required to serve a probationary period of one year from the date of your appointment and subject to your work and conduct being satisfactory you will be eligible for confirmation in your appointment at the end of this period'. One of the conditions laid down in the advertisement for applications was that candidates should have passed the school certificate examination. The appellant did not have the requisite school certificate but he stated in his application that he had passed that examination. When that was discovered, the respondent Commission, without giving the appellant the opportunity of being heard, terminated his appointment during the probationary year and reverted him to his former post. The appellant applied, inter alia, for an order of certiorari to quash the Commission's decision on the ground that under the Constitution his employment could not be terminated without giving him an opportunity of being heard. Ong Hock Thye J, as he then was, dismissed the application ([1960] MLJ 221) and the Federal Court upheld his decision ([1964] MLJ 239). On appeal to the Privy Council,

Held: (1) art 135(2) of the Constitution was concerned with the right to be heard in respect of disciplinary offences and applied only when dismissal or reduction in rank was inflicted in circumstances involving the imposition of a punishment or penalty. Penal consequences or punishment existed if an order for the reduction of rank of a member of a public service entailed or provided for forfeiture of pay or allowances, loss of seniority in substantive rank, or the stoppage or postponement of his future chances of promotion. In this case, there has been no reduction of rank enabling the appellant to rely on the provisions of art 135(2) and so obtain a hearing for the reason that the action of the respondent could not be characterized as being by way of punishment; (2) the appellant was in any event appointed to the rank of assistant passport officer only as a probationer so that he could be reverted to his substantive rank of immigration officer without the question of reduction of rank arising for consideration notwithstanding the statement in the letter that subject to his work and conduct being satisfactory he would be eligible for confirmation in his appointment at the end of the period. 'Eligible for' is not equivalent to 'entitled to' and means no more than 'fit to be chosen for'.

Munusamy v Public Service Commission [1967] 1 MLJ 199 Privy Council Appeal from Malaysia (Lord Morris of Borth-Y-Gest, Lord Hodson and Lord Wilberforce).

This was an appeal from the decision of the Federal Court reported at [1975] 2 MLJ 61. The respondent, a police constable, had been convicted of the offence of permitting his car to be used as a public service vehicle without a licence and after his conviction he was informed that his dismissal was contemplated and he was told that if he wished to make representations he should do so in writing to the Chief Police Officer. The respondent sent in a letter submitting his representations but the Chief Police Officer, purporting to act under the powers conferred on him as per the 1st Schedule to the Police Ordinance 1952, decided to dismiss him. The Police Force Commission had purported to delegate its powers under art 140(1) of the Federal Constitution to the Chief Police Officer. The respondent applied for a declaration that his dismissal was void and inoperative and that he was still a member of the police force. The High Court held that the dismissal by the Chief Police Officer was null and void and inoperative and this was confirmed by the Federal Court. The appellant appealed to the Yang di-Pertuan Agong and on the hearing of the appeal before the Privy Council it was sought to present a new argument based upon the amendment to art 140 by the Constitution (Amendment) Act 1976 (Act A354).

Held, dismissing the appeal: (1) the provisions of the Commissioner's Standing Order and of Schedule 1 to the Police Ordinance 1952, which authorized the dismissal of a constable by a commanding officer was not in accord with the Federal Constitution prohibiting dismissal of a member of the police force by an authority subordinate to that which had power to appoint him and as the respondent was dismissed by the commanding officer, his dismissal was void; (2) the commanding officer had no power under the Police Ordinance to appoint a police constable, and therefore the purported delegation by the Police Force Commission of its functions under art 140(1) of the Federal Constitution was ineffective to delegate the power of appointment of a constable to the Chief Police Officer and therefore, the Chief Police Officer having no power to appoint could not dismiss the respondent; (3) it would not be proper in this case to entertain the new argument based on the amendment to the Federal Constitution as the respondent had not been given adequate opportunity to meet it.

Government of Malaysia v Iznan bin Osman [1977] 2 MLJ 1 Privy Council Appeal from Malaysia (Viscount Dilhorne, Lord Hailsham of Marylebone, Lord Edmund-Davies, Lord Fraser of Tulleybelton and Lord Keith of Kinkel).

This was an appeal from the decision of Sharma J (sub nom Isman bin Osman v Government of Malaysia [1973] 2 MLJ 143). The respondent, a police constable, had been convicted of the offence of permitting his car to be used as a public service vehicle without a licence and after his conviction he was informed that his dismissal was contemplated and he was told that if he wished to make representations he should do so in writing to the Chief Police Officer. The respondent sent in a letter asking that he be re-employed but the Chief Police Officer decided to dismiss him. The Chief Police Officer purported to act under the powers given by the Police Ordinance 1952. The Police Force Commission had purported to delegate its functions under art 140(1) of the Constitution to the Chief Police Officer. The respondent applied for a declaration that his dismissal was void and inoperative and that he was still a member of the police force. Sharma J held that the dismissal by the Chief Police Officer was null and void and inoperative. The appellant appealed to the Federal Court.

Held, dismissing the appeal: as it was not shown that the Police Force Commission had delegated the power to appoint constables to the Chief Police Officer, the purported dismissal of the respondent by the Chief Police Officer was contrary to the prohibition in art 135(1) of the Federal Constitution and therefore void.

Government of Malaysia v Iznan bin Osman [1975] 2 MLJ 61 Federal Court, Ipoh (Suffian LP, Lee Hun Hoe CJ (Borneo).

[Annotation: The appeal by the appellant was dismissed by the Privy Council (see [1977] 2 MLJ 1).]

In this case, the plaintiff, a police constable, was dismissed by the Chief Police Officer, Perak. He had been convicted of the offence of permitting his car to be used as a public service vehicle without licence and after his conviction he was informed that his dismissal was contemplated and he was told that if he wished to make any representations he should do so in writing to the Chief Police Officer. The plaintiff sent in a letter asking that he be re-employed but the Chief Police Officer decided to dismiss him. The Chief Police Officer purported to act under the powers given by the Police Ordinance 1952. The Police Force Commission had purported to delegate its functions under art 140(1) of the Constitution, to the Chief Police Officer.

Held: (1) the Police Force Commission has no power to delegate its functions in so far as they relate to the dismissal or reduction in rank of a public servant; (2) the Chief Police Officer was in fact not acting under any delegation of authority by the Police Force Commission when he dismissed the plaintiff; (3) the dismissal from service of the plaintiff in this case was therefore null and void and inoperative.

Isman bin Osman v Government of Malaysia [1973] 2 MLJ 143 High Court, Ipoh (Sharma J).

[Annotation: The defendant's appeal was dismissed by the Federal Court (see [1975] 2 MLJ 61) and by the Privy Council (see [1977] 2 MLJ 1).]

In this case, the plaintiff who was a police constable had been convicted on his plea of guilty on a charge under s 353 of the Penal Code (FMS Cap 45). Disciplinary proceedings were taken against him and eventually he was dismissed by the Chief Police Officer, Selangor. The power to dismiss constables had been delegated by the Police Force Commission to the Chief Police Officer. Power to appoint a police constable had not been so delegated to the Chief Police Officer. The plaintiff applied for a declaration, inter alia, that his dismissal was void and inoperative.

Held: the Chief Police Officer was not delegated with the power to appoint but merely with the power to dismiss. In the absence of the power to appoint, the dismissal by the Chief Police Officer was therefore in violation of art 135(1) of the Federal Constitution and therefore void.

Zainal bin Hashim v Mohamed Haniff bin Omar & Anor [1975] 2 MLJ 262 High Court, Kuala Lumpur (Abdul Hamid J).

[Annotation: The decision of the High Court was reversed by the Federal Court (see [1977] 2 MLJ 254) and the decision of the Federal Court was affirmed by the Privy Council (see [1979] 2 MLJ 276).]

In this case, the respondent had been appointed in 1953 as a temporary clerk/interpreter in the police clerical service. His appointment was on the terms that his engagement would be 'terminable at one month's notice or on payment of one month's salary in lieu of notice on either side' and that in so far as they were relevant to the duties of his appointment and to his employment as a public servant, he would 'throughout such employment comply with the provisions of the General Orders applicable to his employment within the Federation'. In 1962, disciplinary action was taken against him by the Chief Police Officer, Johore, under reg 32 of the General Orders, Chapter D, for acts of alleged indiscipline. He was required to exculpate himself but his representations were not accepted and the Chief Police Officer informed him by letter that in effect he had failed to exculpate himself and that it had been decided to terminate his services as a temporary clerk. The respondent appealed to the Public Service Commission for reconsideration of his case but his appeal was dismissed. In 1966, the respondent sought a declaration that his purported dismissal by the Chief Police Officer was void, inoperative and of no effect. The High Court dismissed the action but on appeal to the Federal Court, the appeal was allowed and a declaration as sought made ([1971] 2 MLJ 172). The government appealed to the Yang di-Pertuan Agong and the appeal was referred to the Privy Council.

Held: (1) members of the general public service obtained a degree of security of tenure under the Constitution of their appointments and it is not correct to say that they were guaranteed security of tenure under Part X of the Constitution; (2) under the laws of Malaysia, a distinction is drawn between dismissal and termination of services and there is nothing in the Constitution which affects the right of the government to terminate temporary employment in accordance with the terms of the engagement. The Board could not agree with the Federal Court that reg 36 of the General Orders was invalid and inconsistent with the Constitution; (3) the learned trial judge in this case was right in holding that the respondent had not been dismissed but that his services were validly terminated in accordance with the terms of his appointment.

Government of Malaysia v Lionel [1974] 1 MLJ 3 Privy Council Appeal from Malaysia (Lord Wilberforce, Viscount Dilhorne, Lord Simon of Glaisdale, Lord Solomon and Sir Gordon Wilmer).

In 1953, the appellant was appointed as a temporary clerk/interpreter in the Kelantan Police Contingent. In 1958, he was transferred to contingent police headquarters in Johore Bahru. In 1962, disciplinary action was taken against him by the Chief Police Officer, Johore, under reg 32 of the General Orders, Chapter D, for acts of alleged indiscipline. His explanations were not accepted and by letter dated 29 May 1962, the Chief Police Officer informed him, in effect, that he had failed to exculpate himself and that it had been decided to terminate his services as a temporary clerk. The appellant appealed to the Public Service Commission for reconsideration of his case but his appeal was dismissed. He therefore sought a declaration that his purported dismissal by the Chief Police Officer was void, inoperative and of no effect.

Held, allowing the appeal: the authority which had power to dismiss the appellant was the Public Service Commission who had not delegated the power and the act of the Chief Police Officer in this case was clearly contrary to the Constitution and therefore void.

Lionel v Government of Malaysia [1971] 2 MLJ 172 Federal Court, Johore Bahru (Ong CJ (Malaya).

[Annotation: The decision of the Federal Court was reversed by the Privy Council (see [1974] 1 MLJ 3).]

The officers of the Federal Land Development Authority are not public officers within the meaning of O 43 r 5(2) of the Rules of the Supreme Court 1957. Public services under the Interpretation Act 1967 (Act 23/1967) means the public services mentioned in art 132(1) of the Federal Constitution which sets out a list of public services. However, the Federal Land Development is not one of the services mentioned in the constitution.

Ramalingam s/o Muthusamy v Chong Kim Fong; Lembaga Kemajuan Tanah Persekutuan (Garnishees) [1978] 1 MLJ 83 High Court, Seremban (Ajaib Singh J).

The term 'government' refers to His Majesty's Government which includes His Majesty the Yang di-Pertuan Agong and of which he is the constitutional head. A reference to the 'government' in a letter by the Director of Public Services is sufficiently comprehensive to manifest the Yang di-Pertuan Agong's participation.

Balakrishnan v Ketua Pengarah Perkhidmatan Awam Malaysia and the Government of Malaysia [1981] 2 MLJ 259 Federal Court, Kuala Lumpur (Raja Azlan Shah Ag LP, Abdul Hamid FJ and Abdoolcader J).

Where an officer is granted a pension, he may at his option take that pension or take a pension at the rate of three-fourths of that pension and a gratuity consisting of a lump sum and once having exercised the option it is irrevocable.

Haji Wan Othman & Ors v Government of the Federation of Malaya [1965] 2 MLJ 31 High Court, Alor Star (Suffian J).

[Annotation: The above decision was affirmed by the Federal Court in [1966] 2 MLJ 42.]

The appellant, an assistant immigration officer of about seven years' service, applied on 21 February 1957 for the post of assistant passport officer for service in the then Federation of Malaya Government Overseas Missions in answer to an advertisement in the Malay Mail dated 18 February 1957. One of the qualifications necessary for this appointment was that the applicant should possess a 'school certificate'. The appellant in his application stated 'I passed my school certificate'. On 21 August 1957, the appellant was informed by letter from the chief secretary's office that he had been selected for appointment as assistant passport officer, External Affairs Service, on probation. On 25 August 1957, the appellant left for Karachi where he assumed duties as assistant passport officer in the office of the High Commissioner for the then Federation of Malaya in Pakistan. Sometime on or before 6 November 1957, the Public Service Commission came to know that the appellant did not possess the Cambridge school certificate and on 30 November 1957, the appellant received a letter from the Permanent Secretary, Ministry of External Affairs recalling him for reposting. On his return the appellant found that criminal proceedings were being taken against him for an offence under s 182 of the Penal Code (FMS Cap 45). In the meantime, on 10 February 1958, the Controller of Immigration informed the appellant that because of the criminal proceedings he had been interdicted from duty on half monthly emoluments with effect from 24 January 1958. Then on 23 May 1958, after the prosecution appeal had failed, the secretary of the respondents informed the appellant that as he had not passed the school certificate as required he was underqualified for the appointment and that it had been decided to terminate his appointment as assistant passport officer and that he would revert to his former post on the terms and conditions under which he was serving before his appointment to the External Affairs Service. The appellant commenced proceedings in which he prayed for an order of certiorari to bring up and quash the decision of the Public Service Commission contained in their letter of 23 May 1958 and for a consequential order of mandamus against the Commission. Ong J dismissed the application but made no order as to costs ([1960] MLJ 221). On appeal,

Held: as the appellant was reverted back to his former post as probationary passport officer (because he did not have the necessary qualification) there was never any hiatus in his employment in the public service nor can it be said that he suffered a punishment by his removal on that ground. There was therefore neither a dismissal nor a reduction in rank within the meaning of art 135(2) of the Constitution.

Munusamy v Public Services Commission [1964] MLJ 239 Federal Court, Kuala Lumpur (Thomson LP and Barakbah CJ (Malaya).

[Annotation: Mr Justice Neal, the third member of the Federal Court, left Malaysia on retirement without giving his judgment and in accordance with s 16(2) of the Courts Ordinance 1948, where there is no majority decision, the decision of the trial court shall stand. Section 16 has since been repealed by the Courts of Judicature Act 1964 (Act 91). The decision of the trial court was affirmed by the Privy Council in [1967] 1 MLJ 199. (See case comments at (1962) 4 Mal LR 305; (1963) 5 Mal LR 168; (1964) 6 Mal LR 173; (1964) 6 Mal LR 425.)]

The appellant was a workshop clerk in the service of the government of Kelantan. When he was appointed, his letter of appointment did not state that he had to pass any examination. He was given annual increments until he reached the efficiency bar but subsequently his increments were stopped on the ground that he had not passed the required examination. The appellant applied for a declaration that the stoppage of his increments was unlawful and void. The application was dismissed in the High Court and he appealed to the Federal Court.

Held, dismissing the appeal: (1) in view of the fact that the appellant held his office at the pleasure of the Ruler, his tenure of the office was subject not only to rules and regulations prevailing at the time of his appointment but also to any amendments to such rules and regulations made by the government; (2) in this case, therefore, the appellant could not contend that his letter of appointment made no reference to the passing of any examination; (3) in this case the payment of salary above the bar on conversion must be regarded as an indulgence by the state in recognition of his past services but the requirement that he should pass the examination required under the rules of service remained applicable to him and therefore he had no right to further increments until he passed the prescribed examination.

Rajion bin Haji Sulaiman v Government of Kelantan [1976] 1 MLJ 118 Federal Court, Kota Bahru (Suffian LP, Rajah Azlan Shah and Wan Suleiman FJJ).

In this case, the appellant was employed as a stenographer on probation. After she got married, she was offered a temporary appointment on a month to month basis. She continued to serve the government until her services were terminated by notice. She claimed that the purported termination was null and void, inoperative and of no effect. Her application was dismissed in the High Court and she appealed to the Federal Court.

Held: in this case, the appellant was employed temporarily on a month to month basis and the respondent was entitled to exercise the right to terminate her services in accordance with the terms and conditions of service.

Ratnam Bikai Seevaratnam v Government of State of Pahang [1982] 1 MLJ 16 Federal Court, Kuala Lumpur (Raja Azlan Shah CJ (Malaya).

The plaintiff's application was for a declaration that the revocation of his appointment as chief director of the first defendant was void, and for consequent reliefs. The plaintiff had begun his career with the first defendant as a director (superscale G) in 1972. Subsequently, he was promoted to superscale F, then to superscale E. In 1980, the Minister for the second defendant appointed the plaintiff to the post of chief director (superscale B) by the powers accorded to him under the Lembaga Padi dan Beras Act 1971, s 9(1). The first defendant's committee ('the Jemaah') was informed of the appointment, who then met to determine the salary and benefits that were to be given to the plaintiff. It was not disputed that the appointment was not made according to the normal process of promotion. While the plaintiff was on paid study leave in December 1984, he was given notice by the Minister that his appointment would be revoked with effect from 1 January 1985. In February 1985, he was informed that, with effect from January 1985, it had been decided by the Jemaah to return the plaintiff to his original post in superscale E and that all the fringe benefits given to him as chief director would accordingly be revoked. In September 1986, he was given a further three months' notice of the termination of his appointment as an administration officer of superscale E.

Held, dismissing the appeal: (1) the plaintiff's appointment as chief director by the Minister was not a promotion as only the Jemaah had the power to promote its officers. Revocation of the appointment and returning the plaintiff to superscale E could not be considered a demotion since there was no promotion in the first place; (2) the Minister had the right to revoke the appointment, although there was no express power for him to do so, by virtue of s 47 of the Interpretation Act which gave any person who has the power to appoint the same power to revoke such appointment; (3) the relationship of the plaintiff with the first defendant was contractual and governed by the terms in his appointment letter and General Orders Ch A (Appointments and Promotions), both of which allowed the termination of the plaintiff's services with three months' notice since he was not a pensioned officer; (4) since the plaintiff had not been dismissed or demoted, the right to a hearing under art 135(2) of the Constitution did not arise.

Haji Ismail bin Shamsudin lwn Lembaga Padi dan Beras Negara & Satu Yang Lain Civil Suit No R2-22-7-87 High Court, Kuala Lumpur (Wan Adnan J).

The appellant was an officer of the permanent establishment. As a result of a report made by the officer's head of department, his services were terminated by the Director of Operations under reg 44 of General Orders, Chapter D. The appellant brought an action against the government for a declaration that the termination of his service was void. It was argued that the appellant had been dismissed and as no reasonable opportunity had been given to him to be heard, the dismissal was void. In the High Court, judgment was given for the appellant, but on appeal ([1975] 2 MLJ 155) the Federal Court held in effect that the appellant had not been dismissed and therefore was not entitled to a reasonable opportunity of being heard. The appellant appealed.

Held: (1) for dismissal to arise the decision to terminate the employment must be connected with conduct of the servant in relation to his office which was regarded by the government as unsatisfactory or blameworthy and the consequences of termination must involve an element of punishment; (2) the fact that the government decided to terminate the appellant's service under reg 44 of Chapter D, if taken by itself, was equivocal as to whether the termination satisfied the first of the two criteria of what constituted dismissal for the purposes of art 135 of the Federal Constitution. The decision might have been connected with the conduct of the appellant in relation to his office which was regarded by the government as unsatisfactory or blameworthy or it might have been unconnected with this. The best evidence as to whether it was or was not would be provided by the report of the officer's head of department but as privilege was claimed for this report it was not available and it was necessary to rely upon such inferences as might legitimately be drawn from the available facts; (3) in this case, the appellant's pension was made subject to a deduction of 10% and from this it followed that the government must have been satisfied when they terminated the service of the appellant that he had been guilty of negligence, irregularity or misconduct in his office; (4) it was a necessary inference of fact from this that termination of the appellant's service at a reduced rate of pension involved an element of punishment and was connected, at any rate in part, with conduct on his part in relation to his office which the government regarded as unsatisfactory or blameworthy; (5) the two criteria of dismissal in the relevant sense were therefore satisfied and what the government purported to do was to dismiss the appellant within the meaning of art 135(2) of the Federal Constitution; (6) as the appellant was not given a reasonable opportunity of being heard, the purported dismissal or termination of service was void.

Mahan Singh v Government of Malaysia [1978] 2 MLJ 133 Privy Council Appeal from Malaysia (Lord Diplock, Lord Edmund-Davies, Lord Russell of Killowen, Lord Scarman and Sir Garfield Barwick).

The respondent was an officer on a permanent establishment. As a result of a report made by the officer's head of department, his services were terminated by the Director of Operations under reg 44 of the General Orders, Chapter D. The respondent brought an action against the government for a declaration that the termination of his service was void. In the High Court, the learned judge gave judgment in favour of the respondent. The appellants appealed. The main issue on the appeal was whether the purported termination of the respondent's service by the government was lawful.

Held, allowing the appeal: (1) a pensionable officer has no right, lien, or title to his post and all federal public officers hold office at the pleasure of the Yang di-Pertuan Agong; (2) reg 44 of General Orders, Chapter D is not inconsistent with the Federal Constitution and is therefore valid; (3) the government had power to terminate the respondent's service in the public interest under the regulation and as the government's decision to do so did not involve punishing or penalizing the respondent, he had not been dismissed and therefore was not entitled to a reasonable opportunity of being heard under art 135(2) of the Federal Constitution; (4) normally, the power to legislate rests with the Yang di-Pertuan Agong and the two Houses of Parliament. But, where an emergency is declared and Parliament is not sitting, then the entire power falls on His Majesty. Indeed art 150 makes provisions for such a situation, and His Majesty is dutybound to summon Parliament as soon as may be; (5) if His Majesty may delegate part of his power, he can delegate all of it and this could not amount to an abdication because he still retained certain constitutional powers which he alone could exercise.

Government of Malaysia v Mahan Singh [1975] 2 MLJ 155 Federal Court, Kuala Lumpur (Suffian LP, Lee Hun Hoe CJ (Borneo).

[Annotation: On appeal, the decision of the Federal Court was reversed by the Privy Council (see [1978] 2 MLJ 133). However, the Privy Council did not deal with the Federal Court's comments on the delegation of the Yang di-Pertuan Agong's powers.]

This was an appeal against the decision of Raja Azlan Shah J dismissing the claim of the appellant. The appellant was a Kathi in the service of the State of Pahang and his services had been terminated by giving him three months' notice. The appellant claimed that he had been unlawfully dismissed and that he had not been given an opportunity to defend himself before his services were terminated. On appeal it was argued that only the Ruler could terminate the services of the appellant as he had been appointed by the Ruler and that his dismissal was not in accordance with law or the rules of natural justice, as he had not been given an opportunity to meet any charges brought against him.

Held, dismissing the appeal (Barakbah LP and Suffian FJ, MacIntyre FJ dissenting): (1) the Pahang State government had the right to appoint a Kathi on contract subject to termination of service on notice or payment of salary in lieu and such a contract is not inconsistent with the Constitution; (2) the appellant's services in this case had been lawfully terminated and such termination did not involve a penalty or punishment so as to make it dismissal within the meaning of art 135(2) of the Constitution of Malaysia and to make it necessary first to give him a reasonable opportunity of being heard; (3) on the facts, the appointment of the appellant had been revoked by the Ruler and it was not necessary for the letter of revocation to be signed by the Ruler.

Haji Ariffin v Government of Pahang [1969] 1 MLJ 6 Federal Court, Kuala Lumpur (Barakbah LP, Suffian and MacIntyre FJJ).

The applicant applied for an order of certiorari to quash the decision of the Public Service Commission terminating the appointment of the applicant as a temporary officer. The application was made more than six months after the decision of the Public Service Commission and the applicant applied for enlargement of time to make the application.

Held: (1) the court will only extend the time where a strong case for it is shown and the only delay that the court will excuse is the delay involved in the pursuit of a legal remedy open to the applicant; (2) in this case, the relationship between the government and the applicant was one of contract and the government was therefore entitled to terminate the employment of the applicant by payment of a month's salary in lieu of notice, as provided in the contract; (3) the applicant in this case was not dismissed from the service and therefore the provisions of art 135(2) of the Constitution did not apply so as to give him an opportunity to be heard; (4) in the circumstances, no strong case had been established to warrant the court in enlarging the time in respect of the application and therefore the application must be dismissed.

Gnanasundram v Public Services Commission [1966] 1 MLJ 157 High Court, Kuala Lumpur (Raja Azlan Shah J).

The plaintiff had been appointed as temporary enforcement officer. The letter of appointment provided that his services could be terminated by giving three months' notice or one month's salary in lieu of notice. The services of the plaintiff was terminated by giving him one month's salary in lieu of notice. He then brought an action for damages for the wrongful termination of his appointment and alternatively for a declaration that he was still in the employ of the defendants. It was argued, inter alia, that the services of the plaintiff were terminated without his being given a reasonable opportunity of being heard and contrary to reg 33(a) of Chapter D of the General Orders, regs 49 and 50 of the Public Services (Conduct and Discipline) Regulations and arts 135(2) and 136 of the Federal Constitution. It was also submitted in the course of argument that although the government may lawfully enter into a contract, there was no evidence in this case of a signature by the proper person for the purpose of s 2 of the Government Contracts Ordinance 1949.

Held: as the services of the plaintiff were terminated in accordance with the terms of the offer of appointment, the plaintiff could not claim a right to be heard under art 135(2) of the Federal Constitution and therefore the plaintiff's claim cannot succeed. Semble: appointment of officers in the government service, temporary or otherwise, is not made by written contracts executed in the manner provided under the Government Contracts Ordinance 1949. Such an appointment is made by the Public Services Commission. Any appointment by the Public Services Commission in exercise of its functions pursuant to art 144 of the Federal Constitution is in effect in the nature of a special contract and once an appointment is made the government is bound by the terms and conditions of such appointment.

Gnanasundram v Government of Malaysia [1971] 1 MLJ 208 High Court, Kuala Lumpur (Abdul Hamid J).

In this case, the respondent had been told that he was transferred from a school in Kuala Lumpur to a school in Trengganu. He appealed to the Minister of Education, who confirmed the transfer. The respondent thereupon applied for a declaration that the transfer was inoperative and void. The appellants applied to have the statement of claim struck out on the ground that the issues raised in the statement of claim were non-justiciable and that they were otherwise scandalous, frivolous, vexatious and an abuse of the court's process. Vohrah J dismissed the appellant's application. He held that the power of transferring an officer must be exercised by the transferring authority honestly, bona fide and reasonably and as the statement of claim contained allegations of bad faith the respondent's suit should proceed to trial. The appellants appealed.

Held: (1) as a civil servant holds office during pleasure, not only the length of his service is subject to pleasure but the place and time of his service is similarly subject to pleasure. The only difference is that as regards dismissal and reduction in rank procedural safeguards contained in art 135 of the Federal Constitution must be observed whereas in cases of transfer and other matters no such safeguards need be followed; (2) thus whether a civil servant should be transferred and if so where and when the transfer is to be made are matters for the government to decide. No useful purpose could thus be served in this case by holding a full trial of the respondent's allegations of mala fide and unreasonableness; (3) as employment in the public service is during the pleasure of the Yang di-Pertuan Agong, so long as a public officer is in the service, it is for the government to decide whether his transfer is in the public interest or not having regard to the fact that the government has a large public duty to perform. There was absolutely no legal basis for the court to interfere with the government's discretion; (4) there is nothing in the Constitution which entitles an officer to bring his grievances before the court whenever he is punished unless and until the punishment complained of amounts to a dismissal or reduction in rank. No matter how aggrieved an officer is by the punishment, he has no cause of action; (5) no officer can claim to have a legal right of non-transferability because by joining the government service he has become liable to transfer; (6) there was nothing to show that the respondent had been reduced in rank by the transfer. Taking him away from a supervisory capacity is not a reduction in rank within the meaning of art 135 of the Federal Constitution; (7) there was no evidence to show that the respondent was transferred because of personal animosity. In this case it was clear that the decision was made by the minister, who had genuinely considered the merits of the transfer; (8) even on the assumption that the allegations in the statement of claim were true, the respondent had no cause of action. In this case, the statement of claim not only did not show any reasonable cause of action but it was also scandalous, frivolous, vexatious and an abuse of the process of the court.

Pengarah Pelajaran, Wilayah Persekutuan & Ors v Loot Ting Yee [1982] 1 MLJ 68 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

In this case, the first plaintiff on 13 June 1961 made a document purporting to be a wakaf by which she made a number of dispositions in favour by of her relatives and the balance to various religious and charitable objects. Subsequently, she wrote to the Commissioner of Religious Affairs, Trengganu, to revoke the wakaf. In this suit, she sought a declaration that the said purported wakaf was void.

Held: (1) the validity of the wakaf in this case must be determined in accordance with the Muslim law as professed and practised in the State of Trengganu and subject to any rules as to its administration that may be regulated by the state laws of Trengganu, including the Administration of Islamic Law Enactment 1955 and the Islamic Wakaf Validating Enactment 1972; (2) the wakaf in this case has been validated by s 3 of the Islamic Wakaf Validating Enactment 1972 subject to rights, titles, obligation or liability created before 8 August 1972; (3) by virtue of s 61 of the Administration of Islamic Law Enactment, the wakaf was valid only in respect of a third of her property as on 13 June 1961.

Tengku Nik Maimunah & Anor v Majlis Ugama dan Adat Melayu Negeri Trengganu & Ors [1979] 1 MLJ 257 High Court, Kuala Trengganu (Harun J).

In this appeal, an additional ground of appeal sought to show that the mandatory death sentence for the offence of drug trafficking and for the offence under the Firearms (Increased Penalties) Act 1971 (Act 37) is against the injunctions of Islam and therefore unconstitutional and void.

Held: (1) the term 'Islam' or 'Islamic religion' in art 3 of the Federal Constitution in the context means only such acts as relate to rituals and ceremonies; (2) during the British colonial period, through their system of indirect rule and establishment of secular institutions, Islamic law was rendered isolated in a narrow confinement of the law of marriage, divorce and inheritance only. It is in this sense of dichotomy that the framers of the Constitution understood the meaning of the word 'Islam' in the context of art 3; (3) it should thus appear that not much reliance can be placed on the wording of art 3 to sustain the submission that punishment of death for the offence of drug trafficking or any other offence will be void as being unconstitutional.

Che Omar bin Che Soh v Public Prosecutor; Wan Jalil bin Wan Abdul Rahman & Anor v Public Prosecutor [1988] 2 MLJ 55 Supreme Court, Kuala Lumpur (Salleh Abas LP, Wan Suleiman, Seah, Hashim Yeop A Sani and Syed Agil Barakbah SCJJ).

Pemungut Hasil Tanah, Daerah Barat Daya, Pulau Pinang v Ong Gaik Kee [1983] 2 MLJ 35 Federal Court, Ipoh (Wan Suleiman, Salleh Abas and Abdul Hamid FJJ).

See CONSTITUTIONAL LAW, Vol 3, para 1496.

Abdul Ghapur bin Haji Salleh v Tun Datuk Haji Mohamed Adnan Robert, Yang di-Pertua Negeri, Sabah & Ors [1987] 2 MLJ 724 High Court, Kota Kinabalu (Abu Mansor J).

See CONSTITUTIONAL LAW, Vol 3, para 1412.

The 52 plaintiffs (`the plaintiffs') were heads of families representing a group of aboriginal people living around the Sungai Linggiu catchment area (`the Linggiu valley'). The defendants were the Government of the State of Johor and the Director of Land and Mines, Johor. The plaintiffs sought reliefs against the defendants for the following declarations: (i) that all the lands acquired by the defendants for the purpose of constructing the Sungai Linggiu Dam near Kota Tinggi, Johor was aboriginal area or aboriginal reserve; and (ii) that the defendants jointly or severally pay to the plaintiffs all the compensation received by them from the Government of Singapore or a sum deemed just by the court. The plaintiffs in their affidavits claimed that the lands within the vicinity of Sungai Linggiu (`the lands') were their traditional and ancestral land and upon which they depended to forage for their livelihood in accordance with their tradition. The plaintiffs stated that the defendants had alienated the lands to the State Corporation. The defendants in their affidavits in reply did not rebut most of the allegations of the plaintiffs, except to state that the plaintiffs were not staying in the area anymore and that they were not prevented from entering the lands. The plaintiffs' counsel submitted that the rights accorded to the aboriginal people by common law and statutory law were proprietary rights within the ambit of art 13(1) of the Federal Constitution and that when these rights were taken away by the defendants, the plaintiffs should be compensated pursuant to art 13(2).

Held, allowing the application: (1) generally, the aboriginal peoples' common law rights over the land included the right to move freely about their land, without any form of disturbance or interference and also to live from the produce of the land itself, but not to the land itself in the modern sense that the aborigines could convey, lease out, rent out the land or any produce therein since they have been in continuous and unbroken occupation and/or enjoyment of the rights of the land from time immemorial. In Malaysia specifically, the aborigines' common law rights included, inter alia, the right to live on their land as their forefathers had lived and this would mean that even the future generations of the aboriginal people would be entitled to this right of their forefathers; (2) section 11 of the Aboriginal Peoples Act 1954 (`the Act') guarantees adequate compensation for land, bearing rubber or fruit trees claimed by the aboriginal people, that was alienated. It was clear that the land on which those trees were planted was either a reserve land for the aboriginal people or an area where they had a right to access, which was a jungle reserve. As such, adequate compensation had to be made for these trees but not for the land. In the present case adequate compensation for the loss of livelihood and hunting ground ought to be made when the land where the plaintiffs normally went to look for food and produce was acquired by the government. The compensation was not for the land but for what was above the land over which the plaintiffs had a right; (3) the plaintiffs' rights both under common law and statutory law were proprietary rights protected by art 13 of the Federal Constitution which mandated that all acquisition of proprietary rights should be compensated; (4) the plaintiffs had established that they have proprietary rights over the Linggiu valley and that the defendants had deprived them of these rights. Since the defendants had failed to establish the right to deprive the plaintiffs of their proprietary rights over the Linggiu valley, the deprivation without compensation was unlawful. The plaintiffs were entitled to compensation in accordance with art 13(2); (5) in this case, the plaintiffs had suffered deprivation of the following types of interest in the land: (i) deprivation of heritage land; (ii) deprivation of freedom of inhabitation or movement under art 9(2); (iii) deprivation of produce of the forest; (iv) deprivation of future living for himself and his immediate family; and (v) deprivation of future living for his descendants. As compensation, the plaintiffs were awarded the sum of RM26.5m; (6) (obiter) the National Land Code 1965 did not provide for compensation of land acquired. However, the National Land Code 1965 had to be read as being subservient to art 13 of the Federal Constitution and where there was no provision for compensation under statutory law, art 13(2) should be read into that statute.

Adong bin Kuwau & Ors v Kerajaan Negeri Johor & Anor [1997] 1 MLJ 418 High Court, Johor Bahru (Mokhtar Sidin JCA).

The applicants were the registered owners of several parcels of land in the District of Kuantan. By gazette notification dated 11 May 1972 the government of the State of Pahang intended to acquire the said lands. The s 8 declaration was published in the Gazette dated 13 February 1975. The inquiry was commenced only on 28 November 1980 and was completed on 17 January 1981. The offer of compensation was made by the respondent on 8 April 1981. At the inquiry before the respondent, solicitors for the applicants submitted a valuation report on the said lands by a well-known firm of estate agents, surveyors and valuers who had valued the lands as at 13 February 1975 at $31,837,500 and as at 28 November 1980 at about $70,000,000. The respondent awarded and offered as compensation the amount of $10,801,553.10 based on his opinion of the market value of the said lands as at 13 February 1975. On 5 May 1981, within the prescribed time each applicant filed an objection under ss 37 and 38(1) of the Land Acquisition Act 1960 (Act 34/1960). The issue on hearing of the objections would have to be what the true market value of the land was as at 13 February 1975, and not 28 November 1980. Because of the delay, the applicants applied for an order of certiorari to quash the decision and award of compensation made by the respondent. The basis of the application appeared to be that the whole process of acquisition had become a nullity and when he finally got down to conduct the s 10 inquiry the respondent had ceased to have jurisdiction to do so. The State Legal Adviser on behalf of the respondent contended as a preliminary objection that the court had no jurisdiction to grant an order of certiorari in respect of an award of compensation made by a Collector of Land Revenue in a land acquisition proceeding.

Held: (1) the court has the jurisdiction to entertain the motion for certiorari, and the preliminary objection was dismissed with costs; (2) the dilatory nature of the proceedings had acted so oppressively on the applicants as owners of the lands so as to make the compensation eventually awarded to them based on 1975 value to be no compensation at all; (3) the delay of almost six years between the s 8 notification and the holding of the s 10 inquiry caused the s 8 notice to be exhausted and of no effect, for the valuation of the land made in 1981, based on the date of the s 8 notification (13 February 1975) would not provide adequate compensation to the applicants; (4) the awards of the respondent were called in and quashed, with costs to the applicants.

Re Application of Tan Oon & Ors; Tan Oon & Ors v Pemungut Hasil Tanah, Kuantan [1985] 2 MLJ 67 High Court, Kuantan (George J).

The applicant was the registered proprietor of land which was required for use by the government. In 1956, a declaration of intended acquisition under s 6(i) of the Land Acquisition Enactment (Cap 140) was made in respect of it. The notice server did not find the occupier of the land and notice was not served upon the applicant in accordance with s 9(iv) of the enactment. As the applicant did not appear at the hearing, an award was made in her absence. The notice server was again unable to find the occupier and the applicant was accordingly not served with the notice of the award as required under s 12 of the enactment. The applicant had no knowledge of the proceedings and in fact paid quit rent for the next three years. It was not until the quit rent for 1959 was tendered that the applicant was informed of the compulsory acquisition of her land and her quit rent was rejected. By s 22 of the enactment, any person interested who has not accepted the award may, by written application to the Controller, require the matter to be referred by the Controller for the determination of the court. There is a time limit imposed for making such application and in the present case the period for making application has long expired. However, s 22(iv) of the enactment provides that the period is capable of enlargement by order of a court in special circumstances. The issue before the court was whether the applicant in this case was entitled to ask the court to extend her period of making application to the collector in accordance with s 22(iv).

Held: (1) the notice server failed to make reasonable inquiries to ascertain the address of the applicant as he did not make a diligent effort to do so, and this in itself was a special reason for enlarging the time in accordance with the provisions of s 22(iv); (2) another reason for enlarging the time was the fact that the applicant was not informed of the compulsory acquisition of her land when she called at the land office to pay her quit rent within six months of the acquisition although the Collector knew that she was unaware of the whole proceedings. If she had been informed she would still have been within the period allowed to her to apply for the matter to be referred to the court. Per curiam: 'It is a matter of natural justice that before property is taken compulsorily and compensation fixed, the owner should be made aware of the proceedings, where it is humanly possible to do so, so that he may be heard. The enactment makes it clear that every reasonable effort should be taken to ensure that the owner and occupier are served with notice of the proceedings.'

Lai Tai v The Collector of Land Revenue [1960] MLJ 82 High Court, Kuala Lumpur (Adams J).

The applicants are the registered owners of a piece of land which is the subject matter of a compulsory acquisition scheme. The procedure relating to land acquisition was duly complied with and an award was made in the sum of $70,000 per acre. The total sum for the whole area amounted to $1,606,750. A notice in Form H dated 25 August 1983 making an offer of compensation as awarded was accordingly served on the applicants who accepted it without any objection. As no payment had been made for more than a year, the applicants then wrote two letters dated 21 May 1985 and 30 July 1985 to the authority concerned asking for payment to be made as soon as possible. Still no payment was made. Then on 28 July 1987, the authority concerned held a meeting with the applicants in which a scheme of payment was proposed that the compensation would be paid by instalments within a period of four years. The applicants rejected the instalment proposal and filed their originating motion applying for declaratory orders: (a) that the Collector has contravened art 13 of the Federal Constitution, in failing to complete the acquisition proceedings in that he has failed to make payment as required under s 29 of the Land Acquisition Act 1960 (Act 34/1960), (b) as a result of the contravention by the said Collector of the constitutional rights of the applicants, the applicants have suffered damage, and (c) that the said Collector be required to pay the applicants the award of the sum of $1,606,750 and damages in the form of interest at the rate of 8% pa under s 32 of the Land Acquisition Act from 25 August 1983 to 25 February 1988 amounting to 4 1/2 years of $578,430 and continuing.

Held, dismissing the application: (1) prayer (a) was refused as the court found no necessity to invoke art 13 of the Federal Constitution as failure to pay compensation was not a breach of art 13; (2) prayer (b) was also refused as the court found no contravention of the provisions of the Federal Constitution and therefore no damage was suffered by the applicants; (3) prayer (c) is allowed only to the extent that the applicants are entitled to the full sum of the original award of $1,606,750 with interest leviable under O 42 r 12 of the Rules of the High Court 1980 from date of judgment. As possession has not been taken, damages asked for under s 32 do not arise; (4) costs to the applicants.

Dato Fong Chow & Ors v Pentadbir Tanah Daerah Jerantut & Anor [1988] 3 MLJ 325 High Court, Kuantan (Lamin J).

Sometime in March 1977, the applicant company became the registered owner of two lots of land in Kuala Lumpur. While developing the said land the applicant company was informed that the lands had been compulsorily acquired. The applicant company wrote to the respondent asking for further information on the matter. The respondent forwarded copies of certain forms issued pursuant to the Land Acquisition Act 1960 (Act 34/1960). All these forms did not name the applicant company as the registered owner of the land. The applicant company only came to know of the acquisition proceedings after the compensation award was made by the respondent. The applicant company contended that the acquisition proceedings were illegal, null and void since 'the registered proprietor had no notice whatsoever of the purported acquisition proceedings' and the necessary notices and documents had not been duly served upon the registered owner as required by law. The respondent by way of a preliminary objection contended that the procedure adopted by the applicant company was incorrect and that the applicant company could only ask for an order of certiorari to quash the proceedings as there was merely an error on the face of the record which made the proceedings only voidable and not void.

Held: (1) the acquisition proceedings had taken place contrary to the provisions of the Act and in breach of the fundamental rules of natural justice and the applicant company had made out a case that its constitutional right might have been impinged, contrary to art 13 thus entitling the applicant company to seek a declaration; (2) in the exercise of the court's discretion the applicant company should be allowed to proceed with its application for a declaratory remedy.

Goh Seng Peow & Sons Realty Sdn Bhd v Collector of Land Revenue, Wilayah Persekutuan [1986] 2 MLJ 395 High Court, Kuala Lumpur (LC Vohrah J).

The government of the State of Selangor commenced proceedings to acquire compulsorily certain land in the state needed by the war department for a defence purpose, which is a purpose specified in the first column of the Second Schedule to the Federation of Malaya Agreement 1948. Objection was taken by the registered proprietors of the land that the High Commissioner had made no requirements to acquire the said land under cl 21 of the Agreement, and the absence of such requirement was admitted by the Attorney General. As this necessitated the construction of cl 21 of the Agreement, an Interpretation Tribunal was constituted under cl 153 thereof to decide the following question: 'Whether on the true construction of the Federation of Malaya Agreement 1948 the government of the State of Selangor was empowered to take proceedings for the compulsory acquisition of the said land for a defence purpose in the absence of any requirement by the High Commissioner so to do under cl 21 of the said Agreement.'

Held: no requirement having been made by the High Commissioner under cl 21 of the Federation of Malaya Agreement 1948 to acquire the said land, the government of the State of Selangor was not empowered to take proceedings for the compulsory acquisition of it for the purpose stated.

Re Land Acquisition by the State of Selangor [1950] MLJ 152 Interpretation Tribunal, Federation of Malaya (Willan CJ (Chairman).

In this case, the respondents had brought an action against the appellants for vacant possession of the premises known as Station Hotel, Kuala Lumpur, which had been let to the appellants under a lease which had expired. The respondents applied for summary judgment under O 14. The appellants raised three defences: (a) that the premises were rent-controlled premises; (b) that the appellants had been deprived of property without compensation and (c) that the refusal to renew the lease was in breach of art 153 of the Federal Constitution. The learned trial judge rejected all three defences saying in his judgment that he was disposing of them before trial under O 25 of the Rules of the Supreme Court 1957. On appeal, it was argued that (a) the learned judge was wrong in finding that the appellant was not a tenant protected by the provisions of the Control of Rent Act 1966 (Act 56/1966), (b) the learned judge was wrong in holding that the revocation or refusal to renew the relevant leases and terms in favour of the appellant did not offend the provisions of art 153 cll (7) and (8) of the Federal Constitution.

Held, (Gill CJ and Ali FJ, Ong Hock Sim FJ dissenting): (1) the land on which the hotel stood was the property of the federal government so that it was exempt from the operation of the Control of Rent Act; (2) art 153 of the Federal Constitution has no application to cases of contractual rights.

Station Hotels Bhd v Malayan Railway Administration [1977] 1 MLJ 112 Federal Court, Kuala Lumpur (Gill CJ (Malaya).

[Annotation: The above decision was affirmed by the Privy Council in [1980] 1 MLJ 197.]

This was an appeal against the judgment of Chang Min Tat J ([1974] 1 MLJ 127). Chang Min Tat J held that the court had to grant the application of the government to sign final judgment in the claim for income tax and he held further that the provisions in the Income Tax Act 1967 (Act 53) were not ultra vires the Constitution. The appellant appealed.

Held, dismissing the appeal: (1) the effect of the relevant provisions of the Income Tax Act is that on service of a notice of assessment on the person assessed to tax the tax payable under the assessment becomes due and payable, whether or not the person appeals against the assessment, which tax can then be recovered by the government by civil proceedings as a debt due to the government and that on such civil proceedings being brought by the government the court has no power to entertain any plea that the amount of the tax sought to be recovered is excessive, incorrectly assessed, under appeal or incorrectly increased; (2) the ground of appeal that the learned judge erred in law on the construction of the term 'in accordance with law' in art 13(1) of the Constitution is untenable. Whenever a competent Legislature has enacted a law in the exercise of any of its legislative powers, destroying or otherwise depriving a person of his property, the latter is precluded from questioning its reasonableness by invoking art 13(1) of the Constitution.

Arumugam Pillai v Government of Malaysia [1975] 2 MLJ 29 Federal Court, Penang (Gill CJ (Malaya).

The plaintiff applied for leave to enter summary judgment in a suit for income and additional taxes on notices duly made under the Income Tax Act 1967 (Act 53). The defendant objected to the application on the ground that the action was ultra vires the Constitution.

Held: the Income Tax Act was duly enacted and income tax is deprivation of property in accordance with the law. Taxing cannot therefore be ultra vires the Constitution.

Government of Malaysia v Arumugam Pillai [1974] 1 MLJ 127 High Court, Penang (Chang Min Tat J).

In this case, it was argued (a) that the provisions of s 82 of the Income Tax Ordinance 1947 (which requires tax to be paid notwithstanding an appeal) are void as being inconsistent with art 13(1) of the Federal Constitution (which provides that no person shall be deprived of property save in accordance with law); (b) that s 86(3) of the ordinance (which makes the certificate of the Comptroller as to the amount of tax due by a defendant 'sufficient evidence' of the amount so due) should not be applied where an objection or appeal has been lodged.

Held: the legislation in this case was duly passed by Parliament and is therefore in accordance with law; (2) the proceedings being essentially a matter of giving effect to the statutory provisions of the law, do not, in law call into question the effect of any provision of the Constitution and therefore in accordance with s 86(3) of the Income Tax Ordinance judgment must be given for the Comptroller.

Comptroller-General of Inland Revenue v NP [1973] 1 MLJ 165 High Court, Ipoh (Chang Min Tat J).

Article 13(1) of the Federal Constitution guarantees the right to one's property save in accordance with law. Article 96 provides as follows: 'Article 96: No tax or rate shall be levied by or for the purposes of the Federation except by or under the authority of federal law.' The ordinance and the act are federal laws duly passed by Parliament. In imposing the penalties and the increases, the Comptroller and the Director-General were merely exercising the powers given to them by and performing their duties under these federal laws. There is, therefore, no question of ultra vires.

Arumugam Pillai v Government of Malaysia [1980] 2 MLJ 283 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The properties of the appellants had been seized under s 25(2) of the Dangerous Drugs (Forfeiture of Property) Act 1988. The appellants then lodged their claims to the seized properties within the stipulated time and their claims were referred by the respondent to the sessions court ('the claims'). The sessions court judge decided that the burden to commence the proceedings in respect of the claims lay on the appellants. The appellants appealed to the High Court. The respondent argued that since the claims were referred under s 32(2) of the 1988 Act, the respondent need not comply with the procedure laid down in s 8 of the 1988 Act. Section 8 of the 1988 Act provides for the forfeiture of property by way of an application by the respondent to the High Court supported by affidavit. In this case the respondent did not make any formal application supported by affidavit to the sessions court. The respondent also relied on s 35 of the 1988 Act which states, inter alia, that where proceedings under the 1988 Act are brought against any person or in respect of any property, the court shall presume such a person to be a 'liable person' and such property to be 'illegal property'. The first appellant had been charged with an offence under the Dangerous Drugs Act 1952 ('the drugs case'). The first appellant made an oral application to the High Court under s 7(3) of the 1988 Act for a stay of the proceedings in respect of the claims until the proceedings in the drugs case had been finally concluded in the court of original jurisdiction, or where there was an appeal, in the court of final appellate jurisdiction.

Held, allowing the appeal and the first appellant's application: (1) the rule of construction of penal law is that acts imposing criminal or other penalties should be clear and unambiguous and should be construed narrowly in favour of the person proceeded against; (2) the primary purpose of s 32 of the 1988 Act is to allow the respondent not only to seize property but also to forfeit the property seized. Where no person claims the seized property within the period of three months, s 32 of the 1988 Act provides for forfeiture by mere effluxion of time; (3) if there is a claim to the seized property, in fairness to the claimant and considering the peculiar wording in s 35 of the 1988 Act, s 32(2) of the 1988 Act requires the respondent to adopt a procedure similar to that laid out in s 8(2) of the 1988 Act. This is to ensure that no person is deprived of property claimed by him to be legitimately his merely through seizure under s 25 of the 1988 Act without any proper grounds; (4) the presumption under s 35 of the 1988 Act arises only where the proceedings under the 1988 Act are brought 'on the ground that such person is a liable person or that such property is illegal property'; (5) in view of the lacunae in the 1988 Act, the procedural requirements similar to that set out in s 8 of the 1988 Act, have first to be complied with by the respondent in the proceedings for forfeiture in the sessions court. Consequently, the procedures similar to those set out in ss 9 and 10 of the 1988 Act would also be applicable to proceedings in the sessions court; (6) the respondent ought to adopt the procedures set out in s 8 of the 1988 Act because in a case that strikes at the very heart of art 13 of the Federal Constitution, the court should treat with aversion any attempt at forfeiture of properties through summary procedures without the prior making out of a case by at least affidavit evidence for the claimant to answer; (7) considering the juxtaposition in time, the charge against the first appellant and the seizure, the first appellant fell within the definition of 'liable person' in s 7 of the 1988 Act. As such, by virtue of s 7(3) of the 1988 Act, s 35(1) of the Courts of Judicature Act 1964 and s 323 of the Criminal Procedure Code (FMS Cap 6), the court ordered that the proceedings in respect of the claims pending against the first appellant be stayed until the proceedings in the drugs case had been finally concluded in the court of original jurisdiction or, where there was an appeal, in the court of final appellate jurisdiction.

Tang Kheng Teong & Anor v Public Prosecutor [1992] 2 MLJ 489 High Court, Penang (Vincent Ng JC).

In this case, the plaintiffs asked for a declaration that they were entitled to compensation for the goodwill of their business which the first defendant, the government of Malaysia on behalf of the second defendant, Lembaga Pelabuhan Kelang, by virtue of ss 29A and 35A of the Port Authorities Act 1963 (Act 21/1963) (added by the Port Authorities (Amendment) Act 1972) deprived them by compulsorily acquiring the same. Alternatively, the plaintiffs asked for a declaration that s 35A of the Port Authorities Act is unconstitutional and is of no effect. The plaintiffs claimed that they had been carrying on the business of pilotage services within certain areas of the port and that as a result of the legislation they had been prohibited from carrying on their business within the pilotage district of the port.

Held: (1) in view of art 74 of the Federal Constitution and in consideration of the matters in respect of which Parliament is empowered to legislate there is no validity in the plaintiff's allegation that Parliament was incompetent to enact s 29A of the Port Authorities Act. Moreover, Parliament in enacting s 35A of the Act, had acted within the powers conferred by the Constitution when it imposed a prohibition directed to all persons other than the authority, against engaging in any pilotage act within the pilotage district; (2) s 35A of the Act did not provide for the acquisition of property within the meaning of art 13 of the Federal Constitution and there was therefore no liability on the part of the defendants to meet the claim made by the plaintiffs.

Selangor Pilot Association v Government of Malaysia & Anor [1974] 2 MLJ 123 High Court, Kuala Lumpur (Abdul Hamid J).

This was an appeal from the decision of Abdul Hamid J ([1974] 2 MLJ 123). The appellants had been carrying on the business of providing pilotage services within certain areas of the port and they had in fact a monopoly of that business. The Port Authorities Act 1963 (Act 21/1963) was amended by the Port Authorities (Amendment) Act 1972 which added two new sections, the effect of which was to prohibit the appellants from carrying on their business within the pilotage districts. The second respondents, the Lembaga Pelabohan Kelang, took over the physical assets of the appellants and paid compensation for them. The appellants asked for compensation for loss of goodwill and loss of future profits but this was refused. They applied for a declaration that they were entitled to compensation for the goodwill of their business. Alternatively, they claimed a declaration that s 35A (added by the Port Authorities (Amendment) Act was unconstitutional as it was inconsistent with art 13 of the Federal Constitution). The learned trial judge dismissed the application and the appellants appealed to the Federal Court.

Held, allowing the appeal: (1) a person may be deprived of his property or his property may be acquired by or on behalf of the state by a mere negative or restrictive provision interfering with his enjoyment of the property, even if there has been no transfer of the ownership or right of possession of the property to the state or to a corporation owned or controlled by the state; (2) in this case, as the impugned s 35A has the effect of depriving the appellants of their property and as it did not provide for adequate compensation, it contravened art 13 of the Federal Constitution; (3) there should therefore be a declaration that the plaintiffs are entitled to compensation for the goodwill of their business of which they have been deprived.

Selangor Pilot Association (1946) v Government of Malaysia & Anor [1975] 2 MLJ 66 Federal Court, Kuala Lumpur (Suffian LP, Lee Hun Hoe CJ (Borneo).

[Annotation: The decision of the Federal Court was reversed on an appeal to the Privy Council (see [1979] 1 MLJ 133).]

This was an appeal from the decision of the Federal Court ([1975] 2 MLJ 66). The respondents had been carrying on the business of providing pilotage services within certain areas of the Port of Klang and they had in fact a monopoly of that business. The Port Authorities Act 1963 (Act 21/1963) was amended by the Port Authorities (Amendment) Act 1972 which added two new sections, the effect of which was to prohibit the respondents from carrying on their business within the pilotage districts. The second appellant, Lembaga Pelabohan Kelang, took over the physical assets of the respondents and paid compensation for them. The respondents asked for compensation for loss of goodwill and loss of future profits but this was refused. They applied for a declaration that they were entitled to compensation for the goodwill of their business. Alternatively they claimed a declaration that s 35A (added by the Port Authorities (Amendment) Act) was unconstitutional as it was inconsistent with art 13 of the Federal Constitution. The High Court (per Abdul Hamid J) dismissed the association's claim and held that there were no grounds for saying that s 35A was unconstitutional and that there had been no acquisition of property within the meaning of art 13: [1974] 2 MLJ 123. The association appealed and the Federal Court allowed the appeal ([1975] 2 MLJ 66) and held, inter alia: (1) a person may be deprived of his property or his property may be acquired by or on behalf of the state by a mere negative or restrictive provision interfering with his enjoyment of the property, even if there had been no transfer of the ownership or right of possession of the property to the state or to a corporation owned or controlled by the state; (2) in this case, as the impugned s 35A had the effect of depriving the appellants of their property and as it did not provide for adequate compensation, it contravened art 13 of the Federal Constitution; (3) there should therefore be a declaration that the plaintiffs are entitled to compensation for the goodwill of their business of which they have been deprived.

Held, allowing the appeal (Lord Salmon dissenting): (1) the restrictions placed on the activities of individual licensed pilots did not deprive them of property nor did it deprive the licensed pilots who were partners in the association of property. All they lost was the right to act as pilots unless employed by the Port Authority and the right to employ others on pilotage, neither right being property; (2) art 13 of the Constitution of Malaysia cannot properly be construed in the way in which art 31 of the Constitution of India has been construed. Although a person may be deprived of property by a mere negative or restrictive provision, it does not follow that every provision which leads to deprivation also amounts to compulsory acquisition or use; (3) if, in consequence of the amending legislation, the association was deprived of property there was no breach of art 13(1) for such deprivation was in accordance with the law which it was within the competence of the Legislature to pass; (4) there was no contravention of art 13(2) as there was no compulsory acquisition or use of property contrary to art 13(2). Even if the association's right to employ licensed pilots which was destroyed by the amending Act was a right of property, this right was not acquired or used by the Port Authority. Its right to employ them was given to it and acquired by it from the Legislature; (5) even if the association, over a period of time, had acquired a goodwill (of which it was deprived by the amending Act) it does not follow that the goodwill was acquired by the Port Authority from the association. Per Lord Salmon, dissenting: 'The legislative measure passed in 1972 obviously had an inevitable effect of putting the respondents out of business...I am, however, entirely convinced that the amending Act of 1972 did provide indirectly but inevitably for the compulsory acquisition without compensation of the respondents' property by the Authority and therefore contravened art 13(2) of the Constitution.'

Government of Malaysia & Anor v Selangor Pilot Association [1977] 1 MLJ 133 Privy Council Appeal from Malaysia (Viscount Dilhorne, Lord Wheatley, Lord Salmon, Lord Fraser of Tullybelton and Lord Russell of Killowen).

[Annotation: See LA Sheridan, 'Mysterious Case of the Disappearing Business', (1977) 4 Jernal Undang Undang 1.]

In this case, the Penang State Authority made a declaration on 25 April 1974 under s 8 of the Land Acquisition Act 1960 (Act 34/1960), for the acquisition of an area of land for a public purpose. By another Gazette Notification dated 20 December 1979, the State Authority made a declaration that an area of the said land together with some other lands was needed for a public purpose. An inquiry was held and compensation awarded for this land. On 5 November 1980, the Collector issued a notice that he would hold an inquiry in respect of the original piece of land. The inquiry was held despite the objection of the respondent and an award made. The respondent applied for an order of certiorari to quash the inquiry and the award. Mustapha Hussain JC allowed the respondent's application. He held that the doctrine of exhaustion of an earlier declaration by a subsequent one applied in this case and that there was injustice caused to the landowner by the delay in holding the inquiry under s 10 of the Act and the making of the award. The appellants appealed.

Held: (1) the doctrine of exhaustion is not applicable as both declarations were declarations under s 8 of the Land Acquisition Act 1960; (2) the constitutionality of the Land Acquisition Act is not in issue in this case and no challenge was made against the Act for not providing adequate compensation or in any way being contrary to cl (2) of art 13 of the Federal Constitution; (3) the Collector's delay in holding the inquiry under s 10 of the Land Acquisition Act 1960 seven years after the declaration of acquisition resulting in an inadequate compensation to the respondent brings the inquiry and the award outside the purview and scope of the Act. In view of the long delay resulting in injustice to the landowner, the acquisition was not done in accordance with the Act and the learned Judicial Commissioner was correct in ordering the issue of an order of certiorari to quash the acquisition proceedings.

Pemungut Hasil Tanah, Daerah Barat Daya, Pulau Pinang v Ong Gaik Kee [1983] 2 MLJ 35 Federal Court, Ipoh (Salleh Abas (Malaya).

In this case, the applicants applied for an order of certiorari to quash the decision of the Collector of Land Revenue, Barat Daya, Pulau Pinang for the acquisition of certain land registered in the name of the applicants. One of the grounds raised was that the award ought to be quashed by reason of failure on the part of the Collector to observe the rules of natural justice when conducting his inquiry. A preliminary objection was raised that, as the respondent's award had been referred to the High Court, the proceedings should be stayed until the reference had been disposed of.

Held: (1) the applicants will not be able to obtain the remedy they seek by these proceedings in the reference under s 38(5) of the Land Acquisition Act 1960 (Act 34/1960). For that reason the application of the respondents to stay the proceedings should be dismissed; (2) s 68 of the Land Acquisition Act 1960 which says that no order or award of the Collector made under the Act should be set aside must be read subject to art 13 of the Federal Constitution which provides that no person shall be deprived of property save in accordance with law and even then subject to the payment of adequate compensation. Section 68 only applies to decisions and awards which have been properly made by the Collector.

Kam Gin Paik & Ors v Pemungut Hasil Tanah, Daerah Barat Daya, Pulau Pinang [1983] 2 MLJ 59 High Court, Penang (Raja Abdul Aziz Addruse JC).

In this case, the government of the State of Pahang declared its intention to acquire the lands by publishing the declarations under s 8 in 1974 and 1975. The inquiry under s 10 of the Act was only commenced on 16 December 1980 and completed on 7 January 1981. The offer of compensation was made on 8 April 1981. The Collector made his award based on his opinion of the market value of the lands as at the date of the s 8 notification. The applicants applied for an order of certiorari to quash the decision and award of compensation of the Collector of Land Revenue on the ground that the whole process of acquisition had become a nullity and when he finally conducted the s 10 inquiry the Collector had ceased to have jurisdiction. The learned Legal Advisor raised a preliminary objection that the court had no jurisdiction to grant an order of certiorari in respect of an award of compensation made by a Collector in a land acquisition proceeding. He also argued that there were no merits in the application.

Held: (1) the modern trend has been to extend the scope of certiorari and impose it as a general remedy for the control of decisions by the administration affecting the rights of the subject. The ratio for this apparent extension of application of the power of judicial review is that whenever there is a power to determine questions affecting the rights of the subject there is a duty to act judicially; (2) the courts not only have the power but will readily use such power to quash administrative decisions which were arrived at without due observance of the requirements of the statute under which the decision was purported to have been arrived at or which was arrived at without due observance of the principles of natural justice if it can be shown that the effect of the decision is in some real sense against good conscience; (3) in this case, the delay of almost six years between the s 8 notification and the holding of the s 10 inquiry caused the s 8 notice to be exhausted and of no effect, for the valuation of the land made in 1981 based on the date of the s 8 notification would not provide adequate compensation to the applicants. Accordingly, the award of the Collector should be quashed.

Oriental Rubber & Oil Palms Sdn Bhd v Pemungut Hasil Tanah, Kuantan [1983] 1 MLJ 315 High Court, Kuantan (George J).

The plaintiffs in this case sued the state government and the Collector of Land Revenue in respect of acquisition proceedings over their land of about 22,000 sq ft with two single storey detached houses along Lorong Anderson. The plaintiffs sought for declaration that the acquisition proceedings were null and void and of no effect on two grounds: (1) the acquisition of the land was not bona fide for a public purpose and (2) the unreasonable delay on the part of the Collector in making the payment for the compensation awarded by him contravened s 29(1) of the Land Acquisition Act 1960 (Act 34/1960) and art 13 of the Federal Constitution. The facts revealed that the Collector made an award of $85,841 as compensation for the plaintiffs' land. The formal notice of the award and offer of compensation was duly served on the plaintiffs on 22 March 1974. They signed a written acceptance of the compensation on 29 March 1974 with a request that the award be sent to them by cheque. By a letter dated 23 May 1981, the Collector requested the plaintiffs to call at his office to collect the sum of $85,841 and by notice dated 27 May 1981 he took formal possession of the land under s 22 of the Land Acquisition Act 1960. This notice was served on the plaintiffs on 16 July 1981 and from that date the ownership of the land was as good as passed to the State Authority. The formality of making a memorial on the register document of title that the land has been acquired and has vested in the State Authority was all that remained to be done. The plaintiffs refused to accept the money.

Held, dismissing the plaintiffs' claim: (1) there was no evidence whatsoever that the defendants had not acted in good faith in the matter, the project was for a public purpose as well as for a commercial purpose within the meaning of s 3(a) and (c) of the Land Acquisition Act 1960; (2) in all the circumstances of the case the delay did not render the acquisition proceedings null and void; (3) until the Collector takes possession of the land under s 22 of the Land Acquisition Act, the land does not vest in the State Authority but remains the property of the land owner. In the present case, the plaintiffs did in fact receive rents from the two houses and were still receiving them although their right thereto had been extinguished; (4) art 13 of the Federal Constitution has not been contravened in any way. The land was acquired in accordance with the law under the Land Acquisition Act 1960 and the value of the land acquired was assessed by the Collector on the market value as at the date of the gazette notification, ie 5 July 1973 and on that basis the award of $85,841 was made; (5) under ss 37 and 38 of the said Act the plaintiffs could have made objection to the amount of the compensation awarded but the plaintiffs did not do so. By bringing the present suit, the plaintiffs were in effect seeking compensation based on the market value of their land as at 23 May 1981 when the Collector wrote to them to collect the award. The plaintiffs had valued the land at half a million dollars but they were entitled to no more than the sum awarded to them by the Collector.

Tan Boon Bak & Sons Ltd v Government of the State of Perak & Anor [1983] 1 MLJ 117 High Court, Ipoh (Ajaib Singh J).

In this case, a piece of land vested in the first appellant as trustee for and on behalf of the second appellant, the Tamilian's Physical Culture Association, was acquired for a public purpose, ie for the purpose of building a hockey stadium. The land was held subject to the special condition that it was to be used for the erection of buildings and for a recreation ground for the purposes of the association, but various public sporting events had in fact been held there. The appellants applied to the High Court for declarations to impugn the validity of the acquisition but the application was dismissed. The appellants appealed to the Federal Court and the appeal was argued on four grounds namely: (1) there is a right of a pre-acquisition hearing under the Act in consonance with the rules of natural justice; (2) in the alternative, art 13(1) of the Federal Constitution would render any law providing for deprivation of property without a hearing invalid; (3) the question of public purpose is justiciable and the present user of the land already constitutes use for a public purpose and so negates any requirement for compulsory acquisition and that the purported acquisition of the land under s 3 would amount to deprivation of property which is confiscatory in nature; (4) the failure to comply with the provisions of s 9(1)(b) which are mandatory and not directory vitiated the acquisition purported to have been effected.

Held: (1) there is nothing in the legislation imposing any obligation for a pre-acquisition hearing in marked contrast to the specific provisions for an inquiry and hearing in respect of the quantum of compensation payable; (2) the acquisition could not be impugned on any ground of natural justice since the legislation imposed no obligation for any injury and hearing in respect of the acquisition. The Legislature can by clear words exclude the principles of natural justice in the absence of specific constitutional guarantees and art 13(1) of the Federal Constitution in no way vitiates the provisions of the Land Acquisition Act 1960 (Act 34/1960), in this regard; (3) the purpose of the acquisition can be questioned but only to the extent that it be shown that the acquiring authority has misconstrued its statutory powers or that the purpose stated does not come within s 3 of the Land Acquisition Act 1960 or if bad faith is established. In this case, even if public sporting events had been held on the land this did not constitute user for a public purpose as the use was at the discretion of the association and subject to the payment of fees. Therefore the land could be acquired for the public purpose stated; (4) the provisions of s 9(1)(b) of the Land Acquisition Act are directory and not mandatory as its purpose is in substance also covered by the publication of the declaration in the Gazette. The omission had been rectified and the necessary notation of the intended acquisition made on the register document of title.

S Kulasingam & Anor v Commissioner of Lands, Federal Territory & Ors [1982] 1 MLJ 204 Federal Court, Kuala Lumpur (Syed Othman FJ, Mohamed Azmi and Abdoolcader JJ).

[Annotation: For a critique of this case, see Mohd Ariff Yusof's 'Save in Accordance with Law: a Critique of Kulasingam v Commissioner of Lands' (1982) 9 JMCL 155.]

In this case, the applicant company was the registered proprietor of a piece of land held in perpetuity. The land was in the Federal Territory and the applicant applied to the federal government for sub-division of the land and for conversion to have the express condition relating to the user of the land amended to allow the applicant to put up a hotel for which planning permission had been granted. It also applied to surrender part of the land to the government for use as service roads, side and back lanes. The matter was referred to the Land Executive Committee and subsequently the Director of Lands and Mines, Federal Territory, informed the applicant that the application would be approved if certain conditions were compiled with. The applicant agreed to all of them except one which was that on surrendering the land, the applicant was to receive back in respect of the part to be retained by him not title in perpetuity but a lease of 99 years. The applicant applied to the court for an order that the approving authority approve its application for sub-division upon the usual terms and conditions. In the High Court, Harun J gave judgment for the applicant. The Land Executive Committee thereupon appealed to the Federal Court.

Held: (1) the government had no power to make the applicant give up its freehold title and receive in exchange a 99-year lease. The condition which the applicant objected to did not relate to the permitted development, it was unreasonable and was used for an ulterior object, the object being to bring developed land into line with newly alienated land as to which only leases not titles in perpetuity are granted; (2) the applications should be remitted for reconsideration by the Land Executive Committee on behalf of the federal government in the light of the law set out in the judgment of the court; (3) in reconsidering the applications the Land Executive Committee should act fairly and not arbitrarily and should bear in mind that it had already approved the application subject to the other conditions set out therein.

Pengarah Tanah dan Galian, Wilayah Persekutuan v Sri Lempah Enterprise Sdn Bhd [1979] 1 MLJ 135 Federal Court, Kuala Lumpur (Suffian LP, Raja Azlan Shah Ag CJ (Malaya).

[Annotation: In this case, the appellant in the appeal was the Land Executive Committee, and not, as stated in the appeal record, the Pengarah Tanah dan Galian. However, the parties made nothing of this, presumably because the government agreed that whoever was cited as appellant the government would be bound if the appellant lost.]

The applicant asked for an order that the decision of the respondent pursuant to the application for sub-division of the applicant in respect of certain lands be varied. The applicant sought to vary the decision in so far as it related to the question of the surrender of the said lands and the issue of leasehold titles in lieu of the freehold titles. The applicant also asked the court to direct the respondent to approve the application for sub-division without imposing the conditions objected to. On behalf of the respondent it was argued that the letter of the respondent contained an offer not a decision.

Held: (1) the respondent's letter to the applicant sought to impose conditions for the approval of the application for sub-division. This was ultra vires the National Land Code 1965 (Act 56/1965); (2) the application for sub-division should be referred back to the relevant authority for reconsideration according to law.

Ipoh Garden Bhd v Pengarah Tanah dan Galian, Perak, Ipoh [1979] 1 MLJ 271 High Court, Ipoh (Hashim Yeop A Sani J).

This was an appeal from the decision of the Federal Court (reported in [1974] 2 MLJ 100). The appellant had sought a declaration in the High Court that the National Land Code (Penang and Malacca Titles) Order 1965 and the state orders imposing or revising rent on certain lands were null, void and of no effect and contrary to the Constitution. Ong Hock Sim J (as he then was) stated a case for the opinion of the Federal Court and the Federal Court answered the questions put in the case and ordered that the motion for the declaration be dismissed. In effect, the Federal Court held that it was competent for the State Authority in Penang to issue the orders under the National Land Code 1965 (Act 56/1965), in order to impose or increase rents. The appellants appealed and at the hearing before the Privy Council it was sought to argue that the orders of the State Authority operated a compulsory acquisition of property without compensation in breach of art 13(2) of the Constitution.

Held, dismissing the appeal: (1) to challenge federal legislation, upon which the regulation of extensive real property rights is based, is a serious step, and is one which the Privy Council is not prepared to entertain in the absence of any pronouncement in the matter by the Federal Court, who are the primary guardians of fundamental liberties guaranteed by the Constitution. Thus, the ground of invalidity sought to be maintained against the federal legislation, ie that it is unconstitutional under art 13(2) of the Federal Constitution, found no place in the declaration forming the subject-matter of the proceedings and the question was raised in no other declaration. In the circumstances, that question could not as a matter of law competently be argued for the first time before the Privy Council; (2) the appellant's holding must by virtue of para 2(a) of the National Land Code (Penang and Malacca Titles) Order 1965, be deemed to be land alienated before the commencement of the code and so the Federal Court was right in holding that the State Authority was competent to enact laws to impose or increase rent on such holding.

Philip Hoalim Jr & Anor v State Commissioner, Penang [1976] 2 MLJ 231 Privy Council Appeal from Malaysia (Lord Wilberforce, Lord Morris of Borth-Y-Gest, Lord Kilbrandon, Lord Salmon and Lord Russell of Killowen).

In this case, the applicant had by notice of motion filed in the High Court asked that certain orders made under the National Land Code 1965 (Act 56/1965) be declared null and void. One of these orders had the effect of making the applicant's land, which was originally granted by the East India Company or the British High Commissioner on behalf of the British Crown, subject to rent. The learned judge of the High Court stated a case for the opinion of the Federal Court as he was of the view that a question as to the effect of the Federal Constitution had arisen. The questions framed by the learned judge were as follows: (1) whether as successor of Her Majesty's government in respect of the Settlement of Penang, the Governor of the State of Penang is bound by reason of art 167(2)(a) of the Constitution, towards its subject in regard to the rights, liabilities and obligations which formally bound Her Majesty's government towards them; (2) whether the legislations, namely LN 478165, PU (A) 526/69, Pg PU 39/69 and Pg PU 4/70 are not only contrary to the said art 167(2)(a) but are also tantamount to deprivation of property under art 13(1); (3) whether the said land is 'alienated land' for the purpose of the National Land Code; (4) whether it is within the competency of the State Authority for the State of Penang to enact laws, namely Pg PU 39/69 and Pg PU 4/70 affecting the rights previously enjoyed by its subjects and for the purpose of this motion, whether those rights are to be deemed 'vested rights'.

Held: (1) land granted by the British Crown before the commencement of the National Land Code 1965 and now held under a replacement title is not 'alienated land' within the meaning of s 5 and for the purposes of s 101(1) of the National Land Code 1965; (2) such land is 'land alienated before the commencement of the code' for the purpose of s 102(1) of the National Land Code 1965; (3) as s 102(3) of the National Land Code expressly provides that a direction under sub-s (1) shall apply to any land notwithstanding that it is held rent free or subject to any express provision in the document of title that rent thereby reserved shall not be capable of revision and as the applicant's land is 'land alienated before the commencement of the code', it is affected by Pg PU 39/69; (4) LN 478/65 which creates a presumption that land held under interim title or final replacement title is land alienated before the commencement of the code, is not ultra vires s 439 of the National Land Code; (5) Pg PU 4/70 applies only to alienated land and does not apply to the applicant's land; (6) the indenture in this case was not a contract for the purpose of 167(2)(a) of the Constitution. Furthermore, art 13(1) of the Constitution does not restrict the legislative powers of Parliament, but merely declares unconstitutional or prohibits any illegal executive acts of depriving property. The four orders named in the second question do not have the effect of depriving any person of his property. As such, no question as to the effect of art 167(2)(a) or art 13(1) of the Federal Constitution has arisen for the consideration of the court; (7) the first three questions in the case stated must be answered in the negative and the fourth in the affirmative and therefore the case should be sent back to the High Court with a direction that the motion be dismissed with costs.

Philip Hoalim Jr & Anor v State Commissioner, Penang [1974] 2 MLJ 100 Federal Court, Penang (Azmi LP, Ali and Raja Azlan Shah FJJ).

[Annotation: The applicant's appeal was dismissed by the Privy Council (see [1976] 2 MLJ 231).]

This was an appeal from the decision of the Federal Court ([1977] 1 MLJ 112), which dismissed the appeal of the appellant from a decision of Chang Min Tat J, as he then was, in the High Court. The learned judge had granted the respondent's application for summary judgment and had ordered the appellants to give up possession of the Station Hotel to the respondents. The issues raised on appeal before the Board were: (a) whether, as the judge and the Federal Court had decided, the premises were exempted from the provisions of the Control of Rent Act 1966 (Act 56/1965), s 4(2)(b), and if so (b) whether the judge was correct in dealing with the respondent's application as a proceeding 'in lieu of demurrer' under O 25 of the Rules of the Supreme Court 1957.

Held: (1) if the premises were the property of the Railway Administration, then by virtue of s 4(1A) of the Railway Ordinance 1948, they were exempted from the protection of the Control of Rent Act 1966, as if they had been the property of the government of the Federation; (2) although the premises were under the control and management of the Railway Administration, they remained the property of the federal government and as such were outside the Control of Rent Act 1966; (3) assuming the learned judge should have invited an application from the respondents before acting as he did under O 25, the effect of his decision was precisely the same as if he had acceded to the application under O 14 and had entered judgment for the plaintiffs. The fact that he may possibly have adopted an erroneous method did not alter the fact that the result was correct in law, just and expeditious.

Station Hotels Bhd v Malayan Railway Administration [1980] 1 MLJ 197 Privy Council Appeal from Malaysia (Lord Diplock, Viscount Dilhorne, Lord Edmund-Davies, Lord Scarman and Lord Lane).

The plaintiff claimed against the estate of the late Sultan of Perak for a sum of money, being the price of diesel oil supplied to a mining company of which the late Sultan was the sole proprietor. The defendant, who was the administrator of the estate, entered an unconditional appearance to the suit and filed a defence in para 5 of which he claimed 'the deceased's estate is not liable for the (alleged debt) as the deceased was at all material times the sovereign of the State of Perak and therefore not liable to any proceedings whatever in any court'. On an application by the plaintiff, the court ordered that a preliminary issue as to whether the said para 5 of the defence disclosed a good defence in law be tried first before the trial of other issues in the action.

Held: (1) both from the Federal Constitution and the laws of the Constitution of Perak, no legal proceedings of whatever nature, criminal or civil, could have been maintained against the late sovereign, and the same position still obtains today in Perak; (2) the nature of the prerogative of immunity from all legal process was personal to the late sovereign and could not be transmitted to the administrator of his estate. The administrator therefore could not waive the prerogative of immunity for he had nothing to waive. His entry of an unconditional appearance would become completely immaterial and ineffective; (3) the unconditional appearance coupled with a defence of royal prerogative of immunity did not amount to a submission to the jurisdiction of the court; (4) in the circumstances, the preliminary issue in this case must be decided in favour of the defendant and therefore the defendant was not liable for the sum claimed as the late Sultan of Perak was not liable to any legal proceedings whatsoever in his personal capacity.

Mobil Oil Malaysia Sdn Bhd v Official Administrator, Malaysia [1988] 1 MLJ 518 High Court, Ipoh (Peh Swee Chin J).

A foreign sovereign prince cannot be sued in the courts of this colony simply because he happens to be a natural-born British subject according to our own law if he has not acted or done anything by which it might be inferred that he acted as a subject. In a suit against such an individual it is not necessary to aver in the bill or declaration that he is subject to the jurisdiction of the court. This is a matter that should come from him and if in his plea he does not say he is exempt from the jurisdiction it must be presumed that he is not so exempted. Quaere: whether a person after he has been once recognized by the British Crown as an independent sovereign can thereafter be considered a subject of that Crown?

Nairne v Ahmed Tajudin (Rajah of Quedah) & Anor [1861] 1 Ky 145 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Maxwell R).

Sultan Omar Akamoden v Nakodah Mahomed Cassim [1841] 1 Ky 37 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Norris R).

See CONFLICT OF LAWS, Vol 3, para 1023.

Mobil Oil Malaysia Sdn Bhd v Official Administrator, Malaysia [1988] 1 MLJ 518 High Court, Ipoh (Peh Swee Chin J).

See CONSTITUTIONAL LAW, Vol 3, para 1506.

Abdul Wahab bin Mohomat v Sultan Alli Iskander Shah (Sultan of Johore) [1843] 1 Ky 298 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Norris R).

See CONFLICT OF LAWS, Vol 3, para 1024.

A foreign sovereign prince is not exempt from the jurisdiction of the courts of this colony unless he is recognized as such by the British Crown.

Lim Guan Teet v Tunku Akobe [1882] 1 Ky 539 High Court, Straits Settlements (Wood J).

Mighell v Sultan of Johore [1894] 1 QB 149 Court of Appeal, England (Lord Esher MR, Lopes and Kay LJJ).

See CONFLICT OF LAWS, Vol 3, para 1026.

In this case, the plaintiff, who was a Singapore citizen, sued the Sultan of Pahang ('the Sultan') in his personal capacity for alleged libel and for damages in the Special Court established under art 182 of the Federal Constitution. The Attorney General had given his consent to the plaintiff to sue the Sultan under art 183. Both parties agreed that the court should first determine a preliminary issue raised by the defendant, that was whether the plaintiff, not being a Malaysian citizen, had the right to sue the Sultan in his personal capacity in the Special Court.

Held, by a majority of 4:1, allowing the defendant's preliminary objection (Anuar CJ (Malaya) dissenting): (1) (per Eusoff Chin Chief Justice) the powers of Parliament to make laws were restricted by art 74(3) of the Federal Constitution, which provided that the power to make laws conferred by this article was subject to any conditions or restrictions imposed with respect to any particular matter by the Constitution; (2) (per Eusoff Chin Chief Justice) in this case, Parliament's legislative power was subject to the special provision of art 155 of the Constitution, which provided that where the law in force in any part of the Commonwealth conferred upon the citizens of the Federation any right or privilege it should be lawful, notwithstanding anything in the Constitution, for Parliament to confer a similar right or privilege upon citizens of that part of the Commonwealth who were not citizens of the Federation. As under the Singapore Constitution, a Malaysian citizen could not sue the President or the Republic in any Singapore court, the plaintiff, being a Singapore citizen, could not be conferred the right to sue the Sultan in this case. Even if Parliament were to confer the right on a Singapore citizen to sue the Yang di-Pertuan Agong or a Ruler, such conferment was illegal and ultra vires art 155 of the Federal Constitution; (3) (per Chong Siew Fai (CJ) Sabah & Sarawak) having regard to the principle of sovereign immunity in international law, the immunity of the Rulers existing at least for decades before the formation of Malaysia with its subsequent incorporation in the Federal Constitution, and the concept of reciprocity, it was concluded that the ambiguous or imprecise wording in art 182(2) of the Federal Constitution did not entitle the plaintiff, as a citizen of the Republic of Singapore, to sue the Ruler in the latter's personal capacity; (4) (per Mohd Azmi FCJ) in the absence of express provision, and as there was doubt in the meaning of the words used in art 181(2) and the intention of Parliament and the Conference of Rulers, the presumption of continuity of the Rulers' privilege, sovereignty, prerogative and legal immunity must prevail, as far as foreign citizens were concerned; (5) (per Mohd Suffian) art 155 rendered art 182(3) void to the extent that it purported to allow a non-citizen to sue a Ruler in the Special Court. If Singapore were to amend its Constitution to allow a Malaysian citizen to sue the President in Singapore, the Malaysian Parliament might confer on a Singapore citizen a similar right or privilege to sue a Ruler in our country; (6) (per Anuar CJ (Malaya), dissenting) art 155(1) did not prohibit Parliament from enacting a law giving a non-citizen a right to sue a Ruler in Malaysia. There was no provision that art 182 was to be 'subject to the provisions of the Constitution' and therefore, it was not subject to art 155.

Faridah Begum bte Abdullah v Sultan Haji Ahmad Shah Al Mustain Billah Ibni Almarhum Sultan Abu Bakar Ri'Ayatuddin Al Mu'Adzam Shah [1996] 1 MLJ 617 Special Court, (Eusoff Chin Chief Justice, Anuar CJ (Malaya).

The plaintiff had prayed for a declaration that he was the Sultan and ruler of the State of Terengganu from 26 September 1942 to 5ÊNovember 1945, that the defendant pay him an allowance for life at a monthly rate of RM1,500 from November 1945 and all arrears up to the date of payment, interest at 8% pa for all arrears and consequential benefits. The defendant opposed the claim, contending that the purported ascension of the plaintiff to the Sultanate of Terengganu was made by the Japanese military administration and did not conform with the Constitution of the Way of Illustrious Sovereignty No 1 of 1911 ('the 1911 Constitution'). The defendant further contended that the plaintiff's claim was barred by s 2 of the Public Authorities Protection Act 1948 and s 6 of the Limitation Act 1953.

Held, dismissing the plaintiff's claim: (1) the purported ascension of the plaintiff to the Sultanate of Terengganu was not in accordance with the 1911 Constitution as on the date the plaintiff was appointed the Sultan and ruler of the State of Terengganu, the State Executive Council and the Jemaah Pangkuan Negeri were not in existence. As the plaintiff's appointment was not valid, the remaining issues in this case would not arise for consideration; (2) the concept of limitation is that there must be an end to litigation. The relevant provisions relating to limitation in this case would be s 2 of the Public Authorities Protection Enactment 1937 and the Limitation Enactment 1937 and the delay of 47 years clearly disentitled the plaintiff from obtaining any remedy. Also, the plaintiff had accepted all the allowances given to him and had never objected to anything, indicating that he had chosen to waive his rights. This meant that all claims for ancillary relief must fail. Therefore, the plaintiff's claim was barred by limitation and bad for laches, and consequently not maintainable by virtue of acquiescence, waiver and estoppel.

Tengku Ali ibni Almarhum Sultan Sulaiman v Kerajaan Negeri Terengganu Darul Iman [1996] 4 MLJ 374 High Court, Kuala Terengganu (Abdul Malek J).

During the Japanese occupation, the Sultan of Johore applied to a Japanese-constituted court to set aside a settlement of land in Singapore; the court found in his favour. After the reoccupation, the respondents, claiming to be aggrieved by this order, applied to the High Court of Singapore under s 3 of the Japanese Judgments and Civil Proceedings Ordinance 1946 to set aside the decree, alternatively to appeal against it. The Sultan applied for a stay of the proceedings on the ground that he was a sovereign ruler. The summons-in-chamber which was adjourned into open court for argument in which it was sought to set aside an originating summons on the ground that the court had no jurisdiction over the appellant who is a sovereign ruler was heard by Gordon-Smith J, whose judgment is reported in [1949] MLJ 187. The Sultan appealed to the Court of Appeal and the appeal was dismissed. The decision of the Court of Appeal is reported in [1950] MLJ 3. On appeal to the Privy Council,

Held: (1) the Secretary of State having certified the Sultan is a foreign sovereign the matter must be considered conclusive; (2) nevertheless, as he had himself instituted proceedings in the Japanese court and the present one was in the nature of an appeal, he having waived his immunity could not object to being made respondent, his original submission bound him to accept the jurisdiction on appeal. The present proceedings were to determine whether the Japanese court was right or wrong; (3) it was not necessary to determine whether the immunity of a sovereign who had waived it extended to a case involving title to immovables within the jurisdiction of the court but their Lordships 'do not consider that there has been finally established in England' (and hence in Singapore) 'any absolute rule that a foreign independent sovereign cannot be impleaded in our courts in any circumstances'.

Sultan of Johore v Tungku Abubakar & Ors [1952] MLJ 115 Privy Council Appeal from Singapore (Viscount Simon, Lord Porter, Lord Oakley, Lord Radcliff and Sir Alfred Bucknill).

On 8 December 1898, the British Resident in Pahang, on behalf of the Sultan of Pahang by a lease executed on that date granted to the Pahang Corp, of which company the appellants were the assigns, full mining rights in certain lands in Pahang described in the second schedule thereto. As assigns of the Pahang Corp, the appellants were entitled to the benefit of the said lease. In February 1931 the principal tin producing countries of the world, including the Federated Malay States, entered into an agreement to secure a fair and reasonable equilibrium between production and consumption with the object of preventing rapid fluctuations in the price of tin. In pursuance of this International Agreement the Tin and Tin-Ore (Restriction) Enactment No 23 of 1931 was passed on 26 April 1931 by the Federal Council and assented to by Rulers of the Federated Malay States. By s 2(i) of the enactment the Chief Secretary to the government was empowered to make rules for restricting the production and export of tin. By virtue of these rules quotas were allowed to all tin producers including the appellants restricting the right to produce and export tin to the amount set forth in the quotas. Before the passing of Enactment No 23 of 1931, the appellants applied to the government for exemption from the provisions of the proposed legislation. Upon refusal by the government of the application, the appellants brought an action against the respondent by which they claimed to be exempted from any legislation restricting the amount and/or export of tin from their mines and, if they were not so exempted, to recover damages from the state of Pahang, in that the state had committed a breach of the lessor's covenants in the lease. The trial judge, Elphinstone CJ, dismissed the appellants' claim. On appeal, the Court of Appeal (Pritchard, Burton and Mudie JJ) affirmed the decision of Elphinstone CJ, Mudie J partially dissenting. The appellants then appealed to the Privy Council.

Held: (1) Enactment No 23 of 1931 overrides any special rights claimed by the appellants to have been conferred upon them by the lease of 1898, and there is sufficient indication on the face of the enactment of an intention that the rules to be made thereunder should be wide enough to apply to every case; (2) the suit against one of the Federated Malay States in respect of a matter or thing arising under or resulting from the operation of the enactment or the rules made thereunder is barred by s 5 of that enactment. The findings of the trial judge and of the Court of Appeal, except as to that part of the decision of Mudie J on question of exemption from mining regulations, upheld.

Pahang Consolidated Co Ltd v State of Pahang [1933] MLJ 247 Privy Council Appeal from the Federated Malay States (Lord Tomlin, Lord Thankerton and Sir Lancelot Sanderson).

Government of the State of Kelantan v Government of the Federation of Malaya & Anor [1963] MLJ 355 High Court, Kuala Lumpur (Thomson CJ).

See CONSTITUTIONAL LAW, Vol 3, para 1219.

In this case, the applicant applied for an interim injunction: (a) to restrain the second defendant by himself or any person acting on his behalf from recommending, advising or requesting the first defendant to dissolve the Legislative Assembly of Sabah; (b) to restrain the first defendant from dissolving the Legislative Assembly of Sabah; (c) to restrain the first defendant from removing from office, the Speaker.

Held: (1) there was no evidence that the Legislative Assembly was to be dissolved but only speculation and rumours; (2) no court may grant an injunction or order against an officer of the government if the effect of granting such an injunction or such an order would be to give any relief against the government which would not have been obtained against the government; (3) the power to dissolve the Assembly can only be exercised in accordance with the provisions of the Constitution and the applicant could not by application to court question the acts or would-be acts of the head of state or the head of the government in this aspect; (4) there was no evidence that the Speaker of the Legislative Assembly would be dismissed but only speculation. The dismissal of the Speaker is by executive act and needs to be confirmed or tacitly agreed to by the Legislative Assembly. The court cannot grant an injunction against the executive act of the government; (5) the applicant has not followed the proper procedure in this case as he had made an application for interim injunction without the accompanying statement of claim; (6) leave to appeal would be granted on terms and Erinford injunctions granted pending appeal.

Tun Datu Haji Mustapha bin Datu Harun v Tun Datu Haji Mohamed Adnan Robert, Yang di-Pertua Negeri Sabah & Datuk Joseph Pairin Kitingan [1986] 2 MLJ 391 High Court, Kota Kinabalu (Abu Mansor J).

On 15 July 1912, the respondents, the government of Kelantan (acting by the Crown Agents for the colonies), entered into an agreement under seal with the appellants whereby the respondents granted the appellants certain rights of mining, timber cutting and road making and other rights to be exercised in that state. The deed contained an arbitration clause, which incorporated the Arbitration Act 1889. Disputes having arisen as to the meaning and effect of the deed, the disputes were referred in accordance with the provisions of the arbitration clause to an arbitrator who made an award in favour of the appellants and directed the respondents to pay costs of the arbitration. In December 1921, the respondents applied to the Chancery Division, under s 11 of the Arbitration Act, to set aside the award, but the application was refused. In June 1922, the appellants obtained, from the King's Bench Division, under s 12 of the Act, an order giving leave to enforce the award. This order was, however, set aside on the application of the respondents, on the ground that Kelantan was a sovereign independent state. Before setting aside the order, the Master asked the Secretary of State for the Colonies for information as to the status of Kelantan and received an official letter stating that Kelantan was an independant state and that its Sultan was the ruler. Furthermore, the letter stated that the King of England did not exercise or claim any rights of sovereignty over Kelantan. An agreement regulating the relations between the Sultan and the King was enclosed. By this agreement, the Sultan agreed to have no political relations with any foreign power except through the medium of the King, and in all matters of administration (other than those touching Islam and Malay custom) to follow the advice of an advisor appointed by the King.

Held: (1) It has for some time been the practice of English courts to take judicial notice of the sovereignty of a state and for that purpose (in any case of uncertainty) to seek information from a secretary of state. When the information is so obtained, it is conclusive; (2) a sovereign state is one which governs itself by its own authority and laws without dependence on any foreign power, but a state may, without ceasing to be a sovereign state, be bound to another more powerful state by an unequal alliance. Thus, although the Sultan has by the agreement with the King restricted the exercise of his sovereign rights, the State of Kelantan is still a sovereign state; (3) (Viscount Carson dissenting) submission to jurisdiction must take place when the jurisdiction is invoked and not earlier. In that respect, the government of Kelantan had not submitted the jurisdiction of the court either by assenting to the arbitration clause. Furthermore, the government had not submitted to the court's jurisdiction either by applying to have the award set aside since the application to set aside was an attempt to get rid of the award and the respondent left it to the court to decide on his rights in this respect.

Duff Development Co Ltd v Government of Kelantan & Anor [1924] AC 797 House of Lords, England (Viscount Cave, Viscount Finlay, Lord Dunedin, Lord Sumner and Lord Carson).

In this case, the respondent had applied for a declaration that the purported appointment by the first appellant of the second appellant as the new Undang of Jelebu was contrary to the adat, custom and constitution of the luak of Jelebu. The appellants after filing their defence applied for an order that the statement of claim be struck out on the ground that the court had no jurisdiction because the dispute involved a question of adat and custom of the Malays in the luak and on the further ground in the case of the second defendant that under the Constitution of Negri Sembilan he as ruling chief enjoyed legal immunity in his personal capacity. The learned trial judge dismissed the application of the appellants, holding that the court had jurisdiction to entertain the action and that the second defendant did not enjoy legal immunity. The appellant appealed.

Held, by a majority (Suffian LP dissenting): (1) the Dewan Keadilan dan Undang is given power under the Constitution to advise on matters relating to Malay custom and as the Dewan in this case had blessed the appointment of the second defendant as the Undang of Jelebu, the court should not attempt to usurp the function of the Dewan, which is a more suitable forum for discharging that function; (2) the court should decline jurisdiction on the ground that it is forum non conveniens and that there is another body which is more appropriate and which has been given power under the Constitution of the state to decide the matter; (3) the respondent in this case had sent petitions to His Highness the Yang di-Pertuan Besar and to other ruling chiefs and also to the Secretary of the Dewan and the Dewan having sat and deliberated upon the petitions and finally given its ruling the matter should have ended there. The respondent is therefore estopped from raising the matter again, especially before a court of law; (4) art 181(2) of the Federal Constitution is irrelevant in this case as the very appointment of the second appellant is under attack. The article does not define a ruler but deals rather with the consequence of one being a ruler.

Dato Menteri Othman bin Baginda & Anor v Dato Ombi Syed Alwi bin Syed Idrus [1981] 1 MLJ 29 Federal Court, Kuala Lumpur (Suffian LP, Raja Azlan Shah CJ (Malaya).

See bankruptcy, para VIII [11].

YAM Tengku Iskandar ibni Almarhum Tengku Ahmad lwn Majlis Perajaan Negeri Kelantan & Satu lagi [1997] 2 MLJ 555 High Court, Kuala Lumpur (Azmel J).

The plaintiff, a company limited by guarantee, submitted a petition to the Yang di-Pertuan Agong for an incorporation order for Merdeka University under s 6 of the Universities and University Colleges Act 1971 (Act 30). The petition was rejected and the Minister of Education announced that the rejection of the plaintiff's petition was for the following reasons: (a) Merdeka University would use Chinese as the medium of instruction; (b) it is meant to cater for students from Chinese independent secondary schools; (c) it is to be set up by the private sector; and as a composite for the basis of rejection that in effect its establishment would be contrary to the national education policy. The plaintiff requested a dialogue with the minister but there was no response. The plaintiff issued a writ asking for a declaration that the rejection of the petition for the establishment of Merdeka University is null and void as it contravenes the Federal Constitution and for a declaration that the refusal of the petition to establish the university is an unreasonable and improper exercise of the discretion conferred by s 6 of the Universities and University Colleges Act 1971.

Held: (1) it is a condition precedent to the exercise of the power of the Yang di-Pertuan Agong under s 6 of the Universities and University Colleges Act 1971 to make an incorporation order that he has to be satisfied that it is expedient in the national interest that a university should be established. If he is not so satisfied he has no power to make an incorporation order and must accordingly reject the application. Even if the condition precedent is met, the Yang di-Pertuan Agong is left with a discretion as to whether or not to make an order and has the power but not the duty to do so, but as a general rule of law once the condition precedent is fulfilled then the power ought to be exercised unless it is impracticable to do so; (2) the Yang di-Pertuan Agong is a constitutional monarch and is required under art 40(1) of the Federal Constitution in the exercise of his function (except on certain matters that do not concern these proceedings) to act in accordance with collective or individual ministerial advice and not on his own initiative; (3) the substantial questions arising for consideration in this case are whether or not in the exercise of his power under s 6 of the Universities and University Colleges Act 1971, the Yang di-Pertuan Agong and in effect the defendant, the government of Malaysia, took into account legally relevant considerations and acted fairly, there was any misdirection in fact or in law (including the provisions of the Federal Constitution), the decision was made on sufficient material and evidence or on extraneous considerations or was so unreasonable that no reasonable person could have come to it; (4) the discretion conferred by s 6 of the Universities and University Colleges Act in the subjective form 'if he is satisfied' does not exclude judicial review if objective facts have to be ascertained before arriving at such satisfaction. The discretion would be reviewable and the deciding authority has in fact to have reasonable grounds and it is insufficient if he merely thinks he has reasonable grounds. The test of unreasonableness is not whether a particular person considers a particular course unreasonable, but whether it could be said that no reasonable person could consider that course reasonable; (5) the Constitution is not to be construed in any narrow or pedantic sense but this does not mean that the court is at liberty to stretch or pervert the language of the Constitution in the interests of any legal or constitutional theory or even for the purpose of supplying omissions or of correcting supposed errors; (6) if the Merdeka University were established, it would be a public authority within the definition in art 160 of the Federal Constitution and its purpose would accordingly be an official purpose within art 152(6) of the Constitution and it would therefore be excluded by the parenthesis in proviso (a) to art 152(1) from its protection. Consequently as the Merdeka University proposes to give instruction in its courses in Chinese, whether as the only or the main medium of instruction, the proviso would afford no protection for that purpose; (7) the proposal to use Chinese as the medium of instruction would be contrary to the national education policy; (8) the plaintiff cannot rely on the provisions of art 8(2) of the Federal Constitution to argue that the rejection of the petition would result in discrimination in violation thereof. It is clear that the second reason for the rejection of the petition is intricately interwoven with the first reason on the question of language in relation to the medium of instruction and the negation of the national education policy and attracts the same consequences in its practical effect; (9) on the evidence there was sufficient justification and basis for the defendant to rely on the financial aspect on the third reason, that the university is to be set up by the private sector, for the rejection of the petition; (10) the point taken by the plaintiff that the reasons for the rejection of the petition are incompatible with art 26 of the Universal Declaration of Human Rights does not arise in this case and in any event the pertinent provisions for consideration are those contained in municipal legislation. The court's power to make declarations is confined to matters justiciable in the courts and limited to legal and equitable rights and does not extend to moral, social or political matters; (11) it is clear from the evidence, both oral and documentary that all relevant matters were before the minister to enable him to come to a fair and reasonable decision and that he had sufficient material before him for consideration for this purpose. The petition was clear and unambiguous and the minister said he considered with care all the relevant factors before coming to the conclusion that the petition could not be acceded to as he was satisfied that it was not expedient in the national interest to do so. The minister did not decide arbitrarily without any basis and on the material before him he said that he required no further details as everything was clearly stated in the petition and there was nothing that needed clarification. In the circumstances of this case, the failure to accord a dialogue, with or without a request therefor, did not in any way affect the situation and the defendant therefore did not act unfairly in not entertaining the request for a dialogue; (12) in the circumstances and on the evidence the Yang di-Pertuan Agong has acted properly, reasonably, fairly and in accordance with the law in the exercise of his broad discretion in the matter under s 6 of the Universities and University Colleges Act 1971 on sufficient evidence and material and has taken all relevant matters into account without being influenced by any irrelevant considerations. The reasons given for the rejection of the plaintiff's petition clearly bear a vital nexus with the question of expediency in the national interest; (13) on all the three reasons given for the rejection of the petition there was sufficient basis and justification for the Yang di-Pertuan Agong to be satisfied on any one or more of them that it was not expedient in the national interest for Merdeka University to be established.

Merdeka University v Government of Malaysia [1981] 2 MLJ 356 High Court, Kuala Lumpur (Abdoolcader J).

[Annotation: The plaintiff's appeal to the Federal Court was dismissed (see [1982] 2 MLJ 243).]

Stephen Kalong Ningkan v Tun Abang Haji Openg & Tawi Sli (No 2) [1967] 1 MLJ 46 High Court, Kuching (Pike CJ (Borneo).

See CONSTITUTIONAL LAW, Vol 3, para 1383.

N Madhavan Nair v Government of Malaysia [1975] 2 MLJ 286 High Court, Kuala Lumpur (Chang Min Tat J).

See CONSTITUTIONAL LAW, Vol 3, para 1403.

See civil procedure, para VIII [35].

Oversea-Chinese Banking Corporation Ltd v The Timekeeper Singapore Pte Ltd & Ors [1997] 2 SLR 526 High Court, Singapore (Rubin J).

See companies and corporations, para VII [25].

Bee See & Tay v Ong Hun Seang & Ors (trustees of Zion Gospel Mission Ltd) & another appeal [1997] 2 SLR 193 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as the means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.

Lee Seng Heng & Ors v Guardian Assurance Co Ltd [1932] MLJ 17 High Court, Straits Settlements (Murison CJ).

On 4 August 1925, Cheng Kee telephoned to the defendant from Mr Green's office, Mr Green being present, and got an offer for the purchase of 15 tons of rubber, at $1.03. Mr Green went out and met Lim Lip Chong, the plaintiffs' manager, who said he would sell at $1.04. On Mr Green's return to the office, Cheng Kee telephoned again to the defendant, who said he would but at $1.03[1/4]. Mr Green telephoned to Lim Lip Chong who agreed to that price. Cheng Kee then telephoned a third time to the defendant and closed the contract with him at $1.03[1/4] The usual confirmation slips were made out by Mr Collier. Cheng Kee took the buyer's slip and handed it to the defendant the same day. On the following day the contract was posted to the defendant. There was an entry of five cents for postage in Messrs Green & Collier's petty cash book. On 9 August, Cheng Kee went to the defendant's office to get back the confirmation slip, but could not see the defendant. On 10 August, Messrs Green & Collier wrote a letter to the defendant asking for the return of the slip. In the morning of 11 August, Mr Green, Cheng Kee and Lim Lip Chong went to the defendant's office. The defendant was not in but they saw a man whom they knew as Ah Choon, the defendant's manager, but who gave his name in court as Tay Tha Chew, and described himself as a weighing clerk. This man admitted to them that he had seen Cheng Kee hand the confirmation slip to the defendant. In the afternoon Mr Green and Cheng Kee went again to the defendant's office, and on this occasion saw the defendant. The defendant was requested to sign a duplicate contract, but refused to do so. On the same afternoon Messrs Green & Collier received a letter from the defendant stating that he had not authorized the purchase of any rubber on 4 August, and that he had not received the contract. The telephone communication of 4 August between Cheng Kee and the defendant was conducted in Chinese and Mr Green, who heard one end of the conversation, deposed that Cheng Kee used some Chinese words which he knew meant the closing of a contract. The defendant denied the making of the contract, the receipt of the confirmation slip, and the receipt of the contract. Tay Tha Chew denied having seen Cheng Kee on 4 August and having stated on 11 August that he had seen the confirmation slip on 4 August.

Held: the plaintiffs have failed to discharge the onus cast on them of proving that the contract was made.

Lam Choon & Co v Lim Yam Hong [1931] SSLR 96 Privy Council Appeal from the Straits Settlements (Viscount Haldane, Lord Atkinson, Lord Blanesburgh, Lord Darling, Lord Warrington of Clyffe).

In this case, one Hiswara of PT Bina Alam, an Indonesian firm, had agreed to buy fertilizer from a Rumanian company but he had arranged with Phillips Petroleum International Inc (Phillips) to be the buyers in their name. Hiswara instructed, unknown to each other, Phillips and the second appellants to find vessels for carrying the fertilizer. Phillips instructed Stolt-Nielsen, and the second appellants instructed the respondents. The respondents negotiated with the ship brokers, Polfracht Sydney, to charter vessels from the first appellants in the belief that the charterers were Phillips. They conducted the negotiations by telex. A contract of affreightment was eventually drawn up and this was sent to Phillips for signature. The manager of Phillips refused to sign the contract. The first appellants then sued Phillips and the respondents claiming damages from Phillips for breach of the contract of affreightment and in the alternative, damages from the respondents for breach of warranty of authority. The respondents in turn joined the second appellants, Hai Nguan, as third parties claiming an indemnity from them on the ground that in purporting to contract on behalf of Phillips, they had acted on the instructions of the second appellants. Choor Singh J in the High Court dismissed the action of the first appellants against Phillips holding that the respondents had no authority to act on their behalf. He concluded that a complete agreement had been reached between the respondents and Polfracht Sydney and accordingly held that the respondents were liable in damages to the first appellants for breach of warranty of authority; but he dismissed the third party proceedings of the respondents against the second appellants, holding that the respondents had not been authorized by the second appellants to enter into the contract on behalf of Phillips. The damages payable by the respondents to the first appellants were assessed at US$253,658. The respondents appealed to the Court of Appeal, which allowed the appeal. They held first that no concluded agreement had resulted from the telex exchange between the respondents and Polfracht Sydney, with the result that the respondents were under no liability to the first appellants for breach of warranty of authority. They further held that the second appellants had authorized the respondents to contract with the first appellants on behalf of Phillips. The effect of this was that if the respondents had been liable to the first appellants, the respondents would have been entitled to be indemnified by the second appellants. They ordered the second appellants to pay the costs of the third party proceedings both in the Court of Appeal and in the High Court (see [1982] 1 MLJ 53). The first appellants appealed with leave from the decision of the Court of Appeal that the respondents were under no liability to them for damages for breach of warranty of authority and the second appellants appealed against their decision that they had authorized the respondents to contract on behalf of Phillips and so must pay the costs of the third party proceedings.

Held: (1) the decision of the Court of Appeal that there was no complete agreement between the respondents and Polfracht Sydney could not be sustained and therefore the respondents were liable in damages to the first appellants for breach of warranty of authority; (2) having considered the evidence and the judgment of the trial judge, their Lordships have come to the conclusion that the Court of Appeal were fully justified in coming to a different conclusion from the trial judge on the question whether the respondents had been authorized by the second appellants to act on behalf of Phillips; (3) with all respect to the trial judge, their Lordships having considered the contemporary documents, concluded in agreement with the Court of Appeal, that the probabilities pointed overwhelmingly to the conclusion that the respondents were authorized by the second appellants to contract on behalf of Phillips; (4) the respondents must pay to the first appellants the sum of US$253,658 with interest and the second appellants must indemnify the respondents in respect of these sums.

Grace Shipping Inc & Anor v CF Sharp & Co (Malaya) Pte Ltd [1986] SLR 32 Privy Council Appeal from Singapore (Lord Bridge of Harwich, Lord Brandon of Oakbrook, Lord Oliver of Aylmerton, Lord Goff of Chieveley and Sir Ivor Richardson).

The plaintiffs were the building sub-contractors of the defendants and claimed that the termination of their employment by the defendants on 17 October 1979 was wrongful. The plaintiffs therefore claimed the price of work done and materials supplied, the refund of the retention moneys, damages and other consequential reliefs. The parties agreed that quantum and damages would be referred to arbitration. The defendants relied on lack of progress on the part of the plaintiffs on aluminium works to justify termination. The defendants counterclaimed a certain sum as damages and repayment of a loan of $210,000 with interest. In 1976, the Ministry of Environment ('MOE') invited tenders for the execution of the Kim Chuan Sewage Treatment Works stages II and III ('the said works'). The plaintiffs offered to act as sub-contractors of the defendants and to prepare quotations. The defendants were awarded the contract by MOE at a stated price on 6 May 1977. The parties proceeded as if the said works would be sub-contracted to the plaintiffs, save and except for the prime cost item, and on the basis that the plaintiffs would carry out the sub-contract works at 6.5% less than the main contract sum. The parties agreed that they would later enter into a written sub-contract. On 4 July 1977 the plaintiffs commenced work without signing any written sub-contract. On 1 October 1977 the defendants sent to the plaintiffs the draft sub-contract for which the plaintiffs suggested five amendments, three of which were accepted by the defendants. On 14 March 1979 the defendants sent the amended sub-contract (backdated 15 December 1977) to the plaintiffs, duly signed by the defendants. The plaintiffs did not sign and return it. The learned judge found that the plaintiffs had agreed to be bound by the terms of the sub-contract and proceeded to determine the question of whether the plaintiffs were released from all responsibilities to complete the remaining aluminium works for stage III. If they were so released, they were not responsible for any lack of progress.

Held: (1) the plaintiffs were, on the true and natural construction of clause 7 of the written agreement concluded with the defendants on 29 August 1979, released from seeing to the progress of the remaining aluminium works for stage III. Accordingly, the defendants were wrong to have purported to terminate the sub-contract. The purported termination of the sub-contract for roadworks in stage III must be declared unlawful; (2) there will be judgment with costs for the plaintiffs for work done and materials supplied up to the date of the wrongful termination of the roadworks sub-contract. The plaintiffs were entitled to the refund of the retention moneys; (3) the defendants were entitled to set off the claims of the plaintiffs against the loan of $210,000 with interest thereon at 9% pa from the date of its disbursements.

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

A person who contracts for the purchase of 'transfer and scrip', cannot be compelled to take a bearer warrant. There is no rule of law similar to the saying, 'silence gives consent', applicable to mercantile contracts; and an omission to reply (in connection with such a contract) does not constitute a waiver. Under a contract for scrips for mining shares 'expected to be mailed about the end of March' and which if mailed would have arrived on 23 April, it is not a delivery within a reasonable time, to have the scrips mailed early in April, and to offer them on 15 May.

Fraser v Everett [1889] 4 Ky 512 High Court, Straits Settlements (Wood Ag CJ).

The plaintiffs were ship-brokers and agents for the charterers, Sea Transport Services Co. Under the terms of a time charterparty entered in mid-March 1978 between the charterers and the owners of the vessel, MV 'Smirnachos Frangistar' the charterers were required to deposit a sum of US$100,000 with the plaintiffs, as stakeholders, to ensure due performance and observance of the charterers' obligations. The deposit was to be made before the owners/master would release bills of lading at Pusan, South Korea. The vessel arrived at Pusan on 24 March 1978 and started loading on arrival when she was in the service of the charterers. Loading was completed by 31 March 1978 and the shippers were awaiting the release of bills of lading to be signed by the owners' agents. The plaintiffs had not by this date received the deposit from the charterers. At the charterers' request, the plaintiffs agreed to extend credit of US$100,000 to the charterers on two conditions: (1) that the defendant company, the Singapore agents of the charterers responsible for the encashment of freight from shippers would telex to the plaintiffs confirmation of their receipt of irrevocable instructions from the charterers to teleremit US$100,000 to the plaintiffs upon receipt of the freight; (2) the charterers themselves would telex the plaintiffs that they have irrevocably instructed the defendants to remit the said sum to the plaintiffs out of freight received by them and earned by the charterers as a result of the operations of the vessel. The telex sent on Easter Friday 1978 by the charterers to the defendants read as follows, ' ... now Mr Richter of Intershiff with whom I had long talk confirmed to me that he is agreeable to tell owners Frangistas OK we have received today the 100.000 dol so no prob provided you can send a telex to them telling that: you are acting as our general agents in Far East that you are responsible for cashment of freight and that you have received irrevocable instructions from us that upon receipt freight you will TT immi 100.000 dollars to Interschiff and remit the balance to us ...'. The defendants' telex to the plaintiffs was as follows, ' ... we have received irrevocable instructions from sea transport antwerp that upon receipt frets of s frangistas will imdtly tt repeat tt usdllrs 100,000 to intershiff of hamburg and the balance frts will be remit under further instruction frm sea transport'. The defendants failed to honour the commitment to the plaintiffs, and instead, remitted to the charterers direct the sum of US$228,000 on 13 April 1978 and a further sum of US$85,049.25 on 24 April 1978. The charterers became insolvent and failed to pay the plaintiffs. The plaintiffs honoured their commitment to the owners and paid them US$100,000 on 14 August 1978. The plaintiffs commenced the action against the defendants to recover the said sum.

Held: (1) there was a contract between the plaintiffs and the defendants as evidenced by the defendants' telex to the plaintiffs dated 31 March 1978. The consideration therefor was the defendants' request to the plaintiffs to cause the release of the bills of lading; (2) in the alternative, even if there was no contract between the plaintiffs and the defendants, the two telexes both dated 31 March 1978, one from the charterers to the defendants and the other from the defendants to the plaintiffs, constituted a good equitable assignment of the debt due from the defendants to the charterers; (3) a high degree of proof is required to make good any allegation of fraud and misrepresentation. The plaintiffs' confirmation to the owners that they were holding US$100,000 at the owners' disposal was not a fraudulent misrepresentation.

Interschiff Schiffahrtsagentur GmbH v Southern Star Shipping & Trading Pte Ltd 1982 High Court, Singapore (Lai Kew Chai J).

The plaintiff had originally on 22 May 1968 brought an action to recover the sum of $73,901.28 with interest and costs. Subsequently after the defendant had filed his defence the plaintiff filed an amended statement of claim for $64,560.24. When the matter came before the court on 18 August 1970 judgment by admission was entered against the defendant for $27,688.70, leaving the balance of $36,871.54. On 12 March 1971, the parties signed an agreement whereby the plaintiff agreed to accept certain goods and articles from the defendant and 'agreed to withdraw the whole matter from the court case'. Subsequently on 30 January 1972 the plaintiff applied for judgment against the defendant for the balance of $36,871.54.

Held: (1) as in this case the plaintiff had agreed to accept the goods and articles in satisfaction of his claim for money, there had been accord and satisfaction; (2) the evidence in this case showed that the defendant allowed the plaintiff to transport all the goods and articles mentioned in the agreement from his store and handed the plaintiff the keys of the two vehicles on the faith of the representation and assurance given by the plaintiff that he had agreed to withdraw the whole case from the court and this was in fact acted on; (3) as the agreement was drafted by the plaintiff, the contra proferentem rule must be applied so that the agreement must be construed to refer to the 'whole matter' and not to the judgment debtor summons only as alleged by the plaintiff.

Tiun Eng Jin v Wong Sie Kong [1975] 2 MLJ 34 High Court, Kuching (BTH Lee J).

Yamaha (Malaysia) Sdn Bhd was wound up by order of the court on 22 February 1982. The applicant, Indian Overseas Bank, lodged a proof of debt for the sum of $2,947,032.06 with the liquidator of the company. Relying on a statement by a director of the company, the liquidator had rejected the proof on the ground that the debt had already been paid. By a motion dated 18 April 1987, the applicant appealed to the court against the rejection of the proof. The applicant had granted credit facilities to an associate company in Singapore, part of which was used for the benefit of the company in the form of three bills of exchange. Following the dishonour of the bills, the applicant sued the company and obtained judgment on 19 May 1978 for the sum of $2,947,032.06. The applicant had also sued the associate company and six of its directors in Singapore for the recovery of all sums due under the facilities, which facilities included seven trust receipts and the three bills. The applicant obtained judgment in Singapore for the sum of $4,629,770.84, which sum included the sum due under the three bills. Following negotiations, in consideration of the applicant forebearing from executing the judgment obtained in Singapore, the associate company agreed to make monthly repayments towards the judgment debt and as security for this arrangement, certain properties were mortgaged to the applicant. Following a default by the associate company in making the payments, the applicant sold some of the properties and from the proceeds of sale and other payments, the total sum of M$3,656,655.80 was paid to account and which the director contended should have been utilized first towards settlement of the three bills, as liability on those bills had arisen earlier in point of time to the trust receipts. The applicant's motion was also opposed by a contributory of the company, namely, Sucaba Holdings Bhd on the ground that there had been accord and satisfaction of the debt by the terms of the settlement reached in Singapore. Sucaba Holdings Bhd also contended that no arrears of interest could be claimed for the period prior to 18 April 1981 (being the date six years prior to the date of the filing of the motion) as the claim was barred by limitation, and relied on s 6(3) of the Limitation Act 1953. It was contended for the applicant that the motion was intended to enforce a judgment as opposed to the commencement of an action to enforce the judgment. It was also contended that the relevant limitation period was prescribed by r 93 of the Companies (Winding-Up) Rules 1972 upon which the motion was founded. The applicant further contended that any action to recover money secured by any mortgage or charge on land or personal property was outside the limitation period prescribed by s 6(1) of the Act and hence s 6(3) of the Act was not applicable.

Held, allowing the applicant's appeal: (1) for there to be accord and satisfaction, there must be a tender which is accepted as satisfaction of the debt due from the party in whose favour the tender is made; (2) for Sucaba Holdings Bhd to succeed in their contention, they must establish that the applicant had agreed that the mortgages executed in its favour as part of the settlement reached with the associate company were in satisfaction of the amount due from the company; (3) the mortgages were created as security for the arrangement enabling the associate company to settle its indebtedness to the applicant and it was a term of each of the mortgages that the applicant shall, in addition to exercising its right as a mortgagee, also exercise its rights as a judgment creditor. There was also no evidence of any arrangement that any instalment payment received from the associate company should be utilized first towards the settlement of the three bills; (4) in calculating when time began to run for the purpose of limitation, what was more important was the date when judgment was entered as it was from that date that time started to run. Since the judgment was obtained on 19 May 1978, the six-year limitation period as far as enforcement of arrears of interest was concerned commenced from that date; (5) the effect of bringing the present proceedings was nothing more than to seek enforcement of the judgment obtained in 1978 and to that extent, s 6(3) of the Limitation Act 1953 was applicable. The period of limitation in r 93 of the Companies (Winding-Up) Rules 1972 regulates when a notice of motion should be brought, and it has got nothing to do with the limitation period of enforcing a judgment. The mortgages were created in Singapore in respect of the Singapore judgment. What was sought to be enforced was not the Singapore judgment but the Malaysian judgment.

Re Yamaha (Malaysia) Sdn Bhd [1990] 3 MLJ 317 High Court, Kuala Lumpur (Siti Norma Yaakob J).

P, a company, was formed by D1, D2 and Y, all children of the deceased, after the death of the deceased. Grant of probate of the estate of the deceased was issued to D2 and the lands in question, which formed part of the extensive assets of the deceased, were registered in the name of D2 as personal representative of the estate of the deceased. D1 had entered a caveat against these lands. A family agreement was entered into by the three brothers to provide for a comprehensive settlement of the differences concerning the assets of the deceased. Under this agreement, D1 agreed to withdraw an earlier caveat entered in respect of the lands in question on the promise of the issue of shares representing one-seventh of the equity of P to him and also on the further promise of payment of a sum of M$250,000 by P to him. On the same date of the family agreement, P, D1 and Y entered into another agreement (tripartite agreement) whereby under cl 4 of the agreement, D1 and Y confirmed that they had no further claims to the lands in consideration of P's undertaking to pay the sum of M$250,000 to each of them. The tripartite agreement did not detract in any way from the obligations of P to pay M$250,000 and to issue shares representing one-seventh of the equity of P. P had not at any time denied these obligations. It was found as a fact that the earlier caveat entered by D1 had been withdrawn and a fresh one entered on the same ground that D1 was a beneficiary to the deceased's estate. Clause 1(2) of the family agreement allowed D1 to enter a fresh caveat where the obligations to pay M$250,000 and to issue the shares in question in P to D1 were not carried out. In the present application by P for the removal of D1's caveat, counsel for P contended that once the tripartite agreement was signed, any right which D1 might have over the lands was extinguished and that D1 only had a money claim as D1 had agreed to claim money and not an interest in the lands. Accordingly, D1 was not entitled to enter the caveat. Counsel for P also stated that share certificates representing the stipulated number of shares in P were despatched to D1's solicitors who, however, returned the same to P presumably for fear of prejudicing their claim to the continuance of the caveat in question. In regard to the non-payment of the sum of M$250,000 up to the date of judgment, counsel for P stated that P could not sell the buildings on the lands to realize the said sum of money partly on account of the caveat in question.

Held, allowing P's application: (1) a contracting party in respect of his obligation towards another is released from such obligation if there is accord and satisfaction between the two parties. It is a question for the court to find on any document or evidence whether it is the performance of the substituted obligation that is intended by the parties as such satisfaction or, on the other hand, just a mere promise to perform it as so intended by the parties; (2) in the instant case, the original obligation was the obligation of D2 to distribute the agreed portion of the proceeds from the land to D1 while the substituted obligation was the issue of shares and the payment of M$250,000. Having regard to the family and tripartite agreement, there was no doubt that D1 had accepted a promise to have the sum of M$250,000 paid to him instead of the actual payment. Such a view was supported by the facts of actual withdrawal of the previous caveat by D1 before he had received even one cent and the filing of a civil suit by D1 for the recovery of the M$250,000 before the present application by P for removal of the caveat was filed. It made no difference that the substituted obligation was to be performed by P and not by D2 for satisfaction could come from a third party; (3) as there was accord and satisfaction in the instant case, any claim by D1 to the lands as a beneficiary would be barred. D1's remedy now was merely to claim the sum of M$250,000 which claim could not amount to a caveatable interest as defined in s 323 of the National Land Code 1965. The learned judge, accordingly, ordered removal of the caveat to allow the transfer of the lands asked for in P's application.

Amusu Properties Sdn Bhd v Muruchadayah & Anor [1989] 1 MLJ 451 High Court, Ipoh (Peh Swee Chin J).

An account stated may take the form only of a mere acknowledgment of a debt; in that case though it amounts to a promise from which the existence of a debt may be inferred that inference may be rebutted; and then there is no consideration and no binding promise. But there is another form in which the account stated includes items on both sides, and the parties have agreed that there shall be a set-off and that only the balance shall be paid; in that case, there is a promise for good consideration to pay the balance even though some of the debts were barred by limitation, Siqueira v Noronha [1934] AC 332. The parties to this appeal were car dealers. The plaintiff had sued the defendants for $1,900 as the sum due from them out of a transaction entered into between the parties based on a document, P1, which was purported to be an account stated. The defendants denied the claim and counterclaimed for the sum of $955 on the ground of misrepresentation by the plaintiff to them.

Held: (1) the contents of P1 did not take the form of a mere acknowledgment of a debt amounting to a promise from which an inference of debt might be inferred and therefore it did not fall under the first form. Even if it did the defendants were still not barred from denying it; (2) on a perusal of P1 it was clear that it also could not fall under the second form because there were no two proper columns showing the credit and debit columns and moreover the balance to be paid as shown at the bottom of P1 was the sum of $575 and not $1,900 as claimed by the plaintiff.

Chee Bay Hoon v Tan Chong & Sons Motor Co Ltd [1968] 1 MLJ 167 High Court, Malacca (Pawan Ahmad J).

In this case, the respondents brought an action to claim from the appellants repayment of loans of US$25,000 and US$100,000. It was alleged that the sums were paid to the appellants by bank drafts. The appellants denied requesting the respondents for the sums by way of loan or that they had agreed or promised to repay them. They further said that if the said sums were remitted by the respondents to the appellants they were not for the benefit of the appellants but for the use or benefit of Mosbert Finance (Hongkong) Ltd or other persons or companies. The learned judge gave judgment in favour of the respondents under the heading of loans and s 71 of the Contracts Act 1950 (Act 136). The appellants appealed.

Held, dismissing the appeal: the learned trial judge had rightly given judgment under the headings of loan and s 71 of the Contracts Act 1950. He had considered that all the four conditions in s 71 of the Contracts Act 1950 had been satisfied and the respondents had therefore established their claim under the said section.

New Kok Ann Realty Sdn Bhd v Development & Commercial Bank Ltd, New Hebrides [1987] 2 MLJ 57 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

As fraud had been pleaded and the defence had not been heard, no specific performance should be ordered.

Siah v Tengku Nong [1964] MLJ 43 Federal Court, Kuala Trengganu (Barakbah CJ, Azmi and Suffian JJ).

By a contract in writing, the defendants agreed to carry the plaintiff's goods from Tatau to Kuala Belait on the MV Lubok Nibong. The vessel ran aground on the Miri bar and on the Juragan's order the plaintiff's goods were jettisoned. The plaintiff sued for the loss of his goods claiming that the vessel had been run on the Miri bar through negligence; that in attempting to enter Miri harbour it was making an unauthorized deviation; and that, in any event, the circumstances were never such as to justify the jettisoning of his cargo.

Held: (1) the contract which the plaintiff concluded with the defendants was a contract of affreightment and not a charterparty or a bill of lading and there was nothing in that contract to prevent the vessel from calling at Miri en route; (2) by r 2 of art IV of the Schedule of Rules to the Carriage of Goods by Sea Ordinance (Cap 90), the defendants were excused from liability for the negligence of their servants in running the ship onto the Miri bar; (3) in all the circumstances, the jettisoning of the plaintiff's cargo was justifiable general average sacrifice made in the interests of the vessel and the cargo and the general average loss thus sustained must be made good in part by a general average contribution in which the defendants as ship-owners must share.

Then Kao v Owners of MV Lubok Nibong [1953] SCR 48 Supreme Court, Sarawak, North Borneo and Brunei

See companies and corporations, para VII [25].

Bee See & Tay v Ong Hun Seang & Ors (trustees of Zion Gospel Mission Ltd) & another appeal [1997] 2 SLR 193 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

The plaintiffs were the owners of the ship Grace Liberty II. The ship was time-chartered to an Indonesian company, PT Samudera Internusa ('the charterers'). The defendants were the charterers' agents in Singapore. The charterparty provided, inter alia, for the owners to have a lien over any bill of lading freight for all claims due from the charterers, under the charter. The defendants issued bills of lading as agents of the charterers and collected freight as well. The bills of lading contained a demise clause which stated that the charterers issued the bills solely as agents for the shipowners, the plaintiffs. The charterers failed to pay all the hire charges. On 21 September 1990, the owners gave notice to the agents that they were exercising their right of lien over the freight moneys and required the agents to hand over to them all freight moneys which they were holding or due to collect on behalf of the charterers. The agents agree to pay over moneys that they received after the notice to the owners. However, they claimed that they were entitled to set off moneys collected before notice against moneys owing to them from the charterers. The owners claim that under the terms of the bill of lading, the contracts of carriage were between them and the shippers and as such they were the ones entitled to all the freight and not the charterers and consequently the agents were not entitled to set off any of the freight collected against debts owing to them from the charterers. The plaintiffs obtained summary judgment against the agents for the moneys concerned. The agents appealed to the High Court.

Held, allowing the appeal: (1) by virtue of the demise clause, the shippers had entered into the contract of carriage with the owners, not the charterers; (2) the lien on the freight could only attach after notice was received by the agents, prior to payment of freight to the charterers; (3) by virtue of the demise clause, the owners were entitled to demand that the shippers pay the freight to them directly or to require agents to collect freight on their behalf. But the agents were also entitled, until directed otherwise, to pay the freight to the charterers. The owners were only entitled to the freight when there were outstanding hire charges; (4) there is an implied understanding that notwithstanding the existence of the demise clause, the freight due belongs to the charterers unless the owners intervene and demand payment or that the agents collect the freight on their behalf. It is not correct to say that all freight is collected on behalf of the owners; (5) the agents had authority to set off the moneys collected against moneys owing to them from the charterers. If the set off is bona fide it is as good as if payment had actually been made to the charterers; (6) this is an application for summary judgment where there is no dispute as to facts but a clear-cut question of law to be resolved. Rather than granting leave to defend, the court will hear full arguments as to the points of law.

Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1992] 1 SLR 197 High Court, Singapore (Chao Hick Tin J).

In this case, the appellants were ship's agents and shipbrokers. They were instructed by the second respondents (Hai Nguan) to find vessels to carry fertilizer from Rumania to Indonesia. One Hiswara of PT Bina Alam, an Indonesian firm, had agreed to buy the fertilizer from a Rumanian company but he had arranged with Phillips Petroleum International Inc (Phillips) for Phillips to be the purchasers who would resell the fertilizer to PT Bina Alam. Hiswara instructed, unknown to each other, Phillips and the second respondents, Hai Nguan, to find vessels for carrying the fertilizer. Phillips instructed Stott Neilson and Hai Nguan instructed the appellants. The appellants negotiated with the shipbrokers, Polfracht, to charter vessels in the belief that the charterers were Phillips. They conducted the negotiations by telex throughout using as the basis for negotiations the standard form of contract known as 'Nuvoy Voyage Charter Party 1964'. A charterparty was eventually prepared and signed by Polfracht as agents for the first respondent. This was sent to the appellants for signature by Phillips. The manager of Phillips refused to sign the charterparty. The first respondent sued Phillips for breach of contract and the appellants for damages for breach of warranty. Phillips' defence to the claim was that the appellants were not their agents and that they had no knowledge of the contract. The appellants' defence to the claim was that there was no concluded contract. They further denied that they held out Phillips as the intended charterers but if they did it was with the express or implied authority and consent of the second respondents. The appellants joined the second respondents as third parties. In their defence to the third party claim, the second respondents denied that they instructed or authorized the appellants to negotiate or make any contract for Phillips. The issues before the trial judge were: (1) Whether agreement was reached at the end of the negotiations between the appellants and Polfracht acting on behalf of the first respondent? (2) Whether in these negotiations the appellants professed to be acting on behalf of Phillips? (3) Whether the second respondents instructed the appellants to act on behalf of Phillips? (4) Whether Phillips authorized the second respondents to instruct the appellants to act on behalf of Phillips? (5) What the measure of damages is? Choor Singh J held on issue (1) that there was a concluded agreement. On issue (2) the learned judge held that the appellant professed to be acting on behalf of Phillips and on issue (3) that the second respondents did not instruct the appellants to act on behalf of Phillips. On issue (4) the learned judge held that Phillips did not authorize the second respondents to instruct the appellants to act on their behalf. The appellants appealed against the decision of the learned judge on issues (1) and (3).

Held: (1) the negotiations carried on by telexes between the appellants and Polfracht did not result in a concluded contract between Polfracht on behalf of the first respondent and the appellants on behalf of Phillips. Accordingly the appeal against the judgment in favour of the first respondents should be allowed; (2) as it has been decided that there was no concluded contract entered into by the appellants on behalf of Phillips it was unnecessary to consider the appellants' appeal against the judgment of the learned judge dismissing their claim for an indemnity against the second respondents; (3) however in the opinion of the court, in this case the second respondents, having regard to the course of dealings between them, had implicitly ratified the appellants' reply that Phillips were the charterers signing the charterparty.

CF Sharp & Co (Malaya) Pte Ltd v Grace Shipping Inc & Anor [1982] 1 MLJ 53 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Chua JJ).

Shaikh Faisal t/a Gibca v Swan Hunter Singapore Pte Ltd (formerly known as Vosper Naval Systems Pte Ltd and Vosper-QAF Pte Ltd) [1995] 1 SLR 394 High Court, Singapore (Chao Hick Tin J).

See CONFLICT OF LAWS, Vol 3, para 947.

The plaintiffs, an insurance company, claim against the defendant for premiums totalling $29,587.35 collected by the defendant as its agent under an agency agreement dated 20 August 1982. Under para 8 of the agreement, the defendant should within 14 days from receipt of the monthly statements from the plaintiffs give written notice of any item disputed by him, failing which the balance due from the defendant was assumed to be confirmed as correct by him. The plaintiffs' sole witness, its marketing manageress, one Miss Pauline Tan, gave evidence that the amount due from the defendant to the plaintiffs was $29,587.35. He received personally from her all the monthly statements from August 1982 to September 1983. At no time did he challenge any of the monthly statements which he received, including the sum of $9,809 brought forward.

Held: (1) the defendant did not exercise his right to challenge the amount brought forward and that the amount of $9,809 is covered by para 8 of the agency agreement; (2) the learned trial judge was satisfied that the defendant owed the sum of $29,587.35. Judgment with costs for this sum was entered for the plaintiffs, with interest at 6% from 1 October 1983.

Borneo Insurance Sdn Bhd v Martin Loh [1986] 1 MLJ 274 High Court, Bandar Seri Begawan (Roberts CJ).

In this case, the facts alleged against the appellant, a director and secretary of the respondent co-operative society, was that he, knowing that the vendor of certain lands in Penang had purchased it for $456,000, failed to disclose to the society the transaction; that as a result the society purchased the land for $944,000; and that he after the purchase of the land without the knowledge and consent of the society received for himself the sum of $122,000 as a bribe or secret commission. The respondent society claimed compensation for loss or damage suffered by it and also the secret commission. The learned trial judge gave judgment on the claim for secret commission but dismissed the claim for compensation. The appellant appealed against the judgment on the secret commission and the respondent society cross-appealed against the dismissal of the claim for compensation.

Held, dismissing the appeal and allowing the cross-appeal: (1) on the facts, the learned trial judge was justified in holding that the money received by the appellant was a secret commission from the vendor; (2) the law is that where an agent who has been bribed to do so, induces his principal to enter into a contract with a person who has paid the bribe and the contract is disadvantageous to the principal, the principal may recover from the agent the amount of the bribe which he has received and therefore in this case the learned trial judge was right in holding that the respondent society was entitled to recover the secret commission received by the appellant; (3) the authorities show that the principal is entitled to recover from the agent both the bribe and compensation for loss suffered by the principal and, in this case, as the facts showed that the loss suffered by the respondent society was the direct result of the appellant's misconduct or breach of duty, the respondent society was entitled to get compensation from the appellant.

Mahesan v Malaysian Government Officers Co-operative Housing Society Ltd [1975] 1 MLJ 77 Federal Court, Kuala Lumpur (Azmi LP, Suffian CJ (Malaya).

The plaintiff claimed damages for breach of contract on an alleged failure of the defendants to supply the plaintiff with 300 bales of cotton. The facts as found by the court showed that the defendants had placed the order for the goods on behalf of Sultan Textile Mills (Karachi) Ltd of Karachi, Pakistan, a named foreign principal of the defendants.

Held: in the circumstances, there was privity of contract between the plaintiff and the foreign principal and therefore the defendants were not liable on the contract.

Wong Yan Mok v Indo-Malaya Trading Co 1975 High Court, Singapore (Winslow J).

By a written contract dated 6 May 1976, the plaintiffs contracted to sell a ship, MV 'Yanti' for scrapping to Silooka Steels Ltd ('the buyer') for US$383,130, payment to be made by a confirmed irrevocable letter of credit. The vessel then at Colombo, Sri Lanka, was to be delivered to the buyer at Karachi. Pakistani law allowed remittance abroad of purchase price in foreign currency if a scrap vessel was imported under an approved letter of credit. However, if the importation was on a collection basis, such remittance was subject to the approval of the state bank. The buyer established a confirmed irrevocable letter of credit with the defendant bank on 11 June 1976 to expire on 24 September 1976 in favour of the plaintiffs for US$383,130. On 5 July 1976 the buyer amended the letter of credit to allow for negotiation through Banque Nationale de Paris (Singapore) ('BNP'). BNP appointed the Muslim Commercial Bank ('MC Bank'), its Karachi correspondents, to act as its collecting agent in Karachi. Subsequently, on 17 May 1977 the defendant bank was substituted as BNP's collecting agent in Karachi. On 1 March 1977 the MC Bank at the buyer's request had sent the defendants a complete set of documents ('the documents') received from BNP including a bill of exchange ('the bill') for the price of the vessel in US dollars, drawn by the plaintiffs on the buyer for payment to BNP, to be forwarded to the buyer strictly on payment of the bill in US currency against delivery of the documents. The vessel did not arrive in Karachi until 8 May 1977 due to several repairs which had to be effected on it, by which time the letter of credit had expired. The importation of the vessel was therefore treated as on a collection basis. The buyer could not remit the purchase money in US dollars without prior approval of the state bank. Consequently, the defendants advised the MC Bank of the need to obtain approval for payment in US dollars and requested authorization to deliver the documents to the buyer against an equivalent Pakistani rupees payment. On 17 May 1977, MC Bank wrote to the defendants to request that they abide by BNP's instructions for collection in US dollars and also advised that it, MC Bank, would be requesting BNP to instruct the defendants directly concerning delivery of the documents against provisional payment in Pakistani rupees. On receipt of the letter, the defendants cabled BNP for authorization to release the documents to the buyer against provisional Pakistani rupees deposit pending remittance and also wrote to explain in detail the circumstances necessitating the cable request. On 25 May 1977 BNP telexed MC Bank to convey to the defendants, on BNP's behalf, that BNP was acceding to the request and the defendants could deliver the documents to the buyer/drawee of the bill against provisional Pakistani rupees deposit pending remittance. The defendants accordingly informed the buyer of the new arrangement. On 23 June 1977 the buyer requested the defendants to produce the original bill of sale dated 30 July 1976 to the Mercantile Marine Department, Karachi for inspection. The defendants complied, with the result that the vessel which had arrived on 8 May 1977 was allowed to beach. The plaintiffs executed a second bill of sale dated 26 October 1977 in respect of the vessel, naming Panama as its port of registry, but otherwise the bill was the same in every respect as the original bill of sale, dated 30 July 1976. On 29 October 1977 the buyer asked the defendants to deliver documents including the original legal bill of sale (30 July 1976) to the defendants' clearing agents to finalise assessment of the vessel for customs duty by the customs authorities. The defendants in compliance eventually on 16 November 1977, sent to its clearing agents the original of the bill of sale dated 30 July 1976, the original of the bill of sale dated 26 October 1977 (amended), memorandum of agreement and a copy of the invoice. These documents were returned to the defendants immediately at their request on 14 December 1977. Meanwhile, both the plaintiffs and BNP had been in correspondence with the buyer and the defendants respectively since July 1977 to query the delay in payment. Finally on 1 January 1978 the defendants returned all the documents including the bill to the MC Bank as the proper non-encumbrance certificate of the vessel had not been submitted. The defendants informed BNP by telex of the same. On 7 January 1978, BNP sought confirmation from the defendants that at no time had they parted with the documents without receiving payment as instructed for BNP was given to understand that the buyer had alread y taken delivery of the vessel. In their reply telex of 10 January 1978 the defendants informed BNP, inter alia, that the buyer/drawee had neither deposited the Pakistani rupees equivalent of US$383,130 nor taken delivery of the vessel. The plaintiffs thereafter commenced the action, claiming, inter alia, that the defendants were the plaintiffs' collecting agents and as such had been in dereliction of their duties thereby causing the plaintiffs to suffer loss and damages.

Held, dismissing the action: (1) the general rule is that a principal cannot sue a sub-agent for want of privity between them. The rule will not apply where the principal was a party to the appointment of the sub-agent, or has subsequently adopted his acts, and it was the intention of the parties that privity of contract should be established between them. The rights and liabilities of a sub-agent vis-a-vis the principal flow from the nature of the relationship between them, whether contractual or otherwise; (2) the appointment of the defendants as collecting agents in Karachi was made directly by BNP, the plaintiffs' collecting bankers in Singapore, without in any way consulting the plaintiffs. The plaintiffs were not parties to nor did they have anything to do with the appointment; (3) there being no privity of contract between the defendants and the plaintiffs, the plaintiffs could not sue the Habib Bank who were the agent of BNP, the collecting bankers in Singapore and therefore this action must stand dismissed. If the defendants had breached their duties while acting as collecting agents on behalf of BNP then the plaintiffs' remedy would lie against BNP, who themselves would have a remedy over against the defendants; (4) in the event that there was privity of contract between the plaintiffs and the defendants, on the facts, the defendants were not in breach of their duties as collecting agents to the plaintiffs.

AA Valibhoy & Sons v Habib Bank Ltd 1982 High Court, Singapore (Rajah J).

The respondent gave a written option to his agent one N for the sale of his property at Kings Road, Singapore. Although there was no mention of vacant possession in the option N on 23 February 1963 represented to the appellant that the property was for sale with vacant possession. What transpired after this was not very clear but the appellant maintained that the parties had entered into a formal written contract on 9 April 1963 (although this was never produced in court) which the respondent denied. The respondent's case was that the appellant had given two options one of which stipulated the sale was with vacant possession and the other did not. The appellant sued for specific performance of the contract for the sale of the property or alternatively damages for breach of contract. The respondent counterclaimed for refund of the deposit for failure on the appellant's part to complete. In the court below the trial judge dismissed the appellant's claim and allowed the counterclaim ([1966] 2 MLJ 226). On appeal,

Held: (1) in the second option by the palpable omission of all reference to this express condition his authority was limited to sell without vacant possession. Therefore in writing the letter of 23 February 1963 and in stating that vacant possession would be given in 60 days, N was acting outside and beyond the scope of his authority; (2) in the circumstances of this case, the second option clearly cut down and limited the agent's original authority to effect a sale. In the first option he had express authority to sell with vacant possession;there was no binding contract entered into between the parties on 23 February 1963. The court however was not prepared to disturb the finding of the trial judge that a formal contract was entered into between the parties on 9 April 1963 although the contract was never produced in court and had mysteriously disappeared.

Tan Tian Quee v Kuppusamy [1967] 2 MLJ 66 Federal Court, Singapore (Wee Chong Jin CJ, Tan Ah Tah FJ and Buttrose J).

The plaintiffs brought an action against the defendant, an advocate and solicitor, for damages for breach of warranty of authority with regard to an agreement of sale of a piece of land. The plaintiffs became interested in buying the piece of land after they learnt through a broker that it was for sale. They contacted their solicitor, PW1. After making a search which revealed that the land was free from encumbrances, PW1 contacted the defendant who was acting for the owner of the land. After negotiation, an agreement of sale was entered into. On payment of the balance of the purchase price, the memorandum of transfer was executed by the vendor. However, PW1's application for registration of the transfer was rejected by the land office on the ground that two caveats had been lodged against the land. It was then discovered that the defendant's client had fraudulently held himself out to be the registered owner of the land. The plaintiffs commenced proceedings against the defendant claiming damages on the following grounds: (a) breach of warranty of authority and (b) the defendant owed a duty of care to the plaintiffs to ensure that he was acting for the real owner of the land.

Held: (1) a warranty can be said to be a form of guarantee, assurance or undertaking that is collateral to another contract and simultaneously independent of that contract, the breach of which may give rise to a claim for damages regardless of whether the aggrieved party can treat the other contract as repudiated. A warranty may also be express or implied by law. The question in this case was whether the defendant had impliedly warranted throughout the transaction leading to the signing of the agreement of sale that he had the authority to act for and was representing the true registered owner of the land. The fact that the defendant was an innocent party of a fraud perpetrated by his client would seem to be irrelevant in an action against him for damages for breach of warranty of authority. An agent's liability in such cases arises not from any wrong or omission of right on his part, but from an implied contract made by him that the authority which he professes to have does exist. In this case, the defendant had asserted that he had the authority of the registered owner and by this had induced the plaintiffs to enter into the agreement of sale of the land which the plaintiffs would not have entered into but for that assertion, and since that assertion has turned out to be untrue, to the injury of the plaintiffs, it must be taken that when the defendant made the assertion, he undertook that it was true, and that being so, he is liable personally for the damage that had occurred; (2) as to the second issue, which is essentially one of tort, the defendant owed a duty of care to the plaintiffs which duty existed during the pre-contractual negotiations and survived the making of the written contract which was the outcome of the negotiations. It is clear that the defendant never had authority to act for the registered owner of the land and he had failed to ensure that he was acting for that person. Therefore the defendant would also be liable to the plaintiffs for damages for the tort of negligence; (3) damages have been defined as the sum of money which a person is entitled to receive from the wrongdoer as compensation for the wrong. Based on contractual principles the correct measure of damages would be an award which serves to put the plaintiff in the position he would have been in if the representation had been true. In tort it would be an award which serves to put the plaintiff in the position he would have been in if the representation had not been made to him. In this case the defendant has been sued in contract as well as tort. However, if two sets of damages are awarded, that is, both in contract and in tort, that would amount to a double recovery which would cause injustice to the defendants. The object of an award of damages is only to give the plaintiffs compensation for the damage, loss or injury he has suffered and thus the measure of damages has to be based on the actual damage directly from the representation. Actual expenses incurred are also recoverable in the form of damages. As the damages which the plaintiffs have suffered are represented by the various sums of money they have expended, it is these sums which they are entitled to recover as damages; (4) (obiter) in most agreements of sale and purchase of land, it is a term and condition of the contract that the vendor shall sell the land free from encumbrances. Although a second search by the purchaser's solicitor may be appropriate under certain circumstances, generally, there does not appear to be a duty on the purchaser's solicitor to make a further search before the balance of the purchase price is paid to the vendor.

Lau Tek Sen & Ors v SK Song Civil Suit No 419 of 1982 High Court, Johor Bahru (Mohd Ghazali JC).

This is an appeal from the decision of D'Cotta J (see [1978] 1 MLJ 196) in the court below. The property in question was No 95 Jalan Senang. The defendant/appellant offered to purchase it from the respondent for $164,000 subject to contract. The appellant paid the 10% deposit to her own solicitors. Negotiations as to the terms of the contract ensued between the parties' solicitors. The document of transfer and restriction had been executed by the parties but the appellant refused to complete. The respondent subsequently sold the property to another purchaser for $142,000 and sued the appellant for $22,000 and interest as damages for breach of contract. The trial court allowed the respondent's claim. The court had to decide whether on the true construction of the letters passing between the respondent's solicitors and the appellant's solicitors there was a concluded contract between the parties for the sale of the said property.

Held, allowing the appeal: (1) the law is settled that solicitors are not, in the absence of specific authority, agents of their clients to conclude a contract for them; (2) there was no evidence in this case that the appellant had authorized her solicitors to negotiate and conclude such a bargain for her; (3) the respondent had therefore failed at the trial to prove that there was a binding agreement between her and the appellant for the sale of the said property.

Yeo Gek Lang v Alice Wee 1978 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

The plaintiff brought an action for goods sold and delivered. The defendants counterclaimed that the plaintiff had unjustly and deliberately terminated their appointment as his distributor of the goods. The plaintiff had terminated the agency because of late payments.

Held: on the facts the plaintiff had sufficient cause to terminate the agency and therefore the counterclaim should be dismissed.

Chan Chow Kian v International Trading Co [1969] 2 MLJ 223 High Court, Kuala Lumpur (Abdul Aziz J).

The appellant went to the United Kingdom on a Negri Sembilan state scholarship. In December 1952 he applied for a loan of £100 through the director of Colonial Studies in London. This application was sent to the Federal government, who referred it to the state government, which in turn referred the application to the respondents who are the trustees who administer the Scholarship Fund. The respondents sanctioned the loan before payment. The appellant signed a receipt acknowledging receipt from the Negri Sembilan government. In 1954, the state government took action in its own name to recover the loan but this suit was withdrawn when it was discovered that the money lent was in fact the property of the respondents. Subsequently the respondents brought the action against the appellant. The magistrate gave judgment for the respondents.

Held: (1) the respondents were undisclosed principals and as such were fully entitled to sue the appellant; (2) the respondents were not estopped by the previous proceedings brought by the state government from bringing the action.

Mohamed Din bin Ali v The Trustees of the Negri Sembilan Scholarship Fund for Higher Education & Training of Malays [1958] MLJ 19 High Court, Kuala Lumpur (Smith J).

In this case, the second plaintiff acting as agent of the first plaintiff (undisclosed principal) had entered into an agreement with five defendants (who were the only shareholders of Leeng Land Sdn Bhd) to purchase their shares for $8.1 million; $2 million were paid at the time of the execution of the agreement, balance of $6.1 million was paid later within the extended time according to the agreement. The said amounts were paid to the vendors' solicitors. On full payment the vendors were to hand over all share certificates together with transfer deed in escrow to the solicitors for handing over to the purchasers. Purchasers were also to apply to Foreign Investment Committee ('FIC') for approval of the sale, however, late approval or non-approval would not affect the sale. Even after full payment the vendors did not hand over the share certificates to the solicitors. The plaintiffs then brought an action for specific performance of the contract. The defendants raised an objection as regards the locus standi of the first plaintiff as the agreement was entered into only with the second plaintiff. The defendants also took the plea that they were not bound by the agreement as approval of FIC had not been sought.

Held: (1) the vendors all along knew that the second plaintiff was acting for an undisclosed principal. An undisclosed principal might require the performance of the contract and as such he had the locus standi as a plaintiff; (2) the purchasers had fulfilled their part of the contract by paying the total purchase consideration in full; (3) the agreement itself provided that the sale of shares would not be affected by the late approval or non-approval of FIC; (4) this was a case involving the purchase of land by means of the purchase of the shares of the company owning land and as such was a proper case for specific performance.

MAA Holdings Sdn Bhd & Anor v Ng Siew Wah & Ors [1986] 1 MLJ 170 High Court, Kuala Lumpur (George J).

The plaintiffs claimed against the defendants on an alleged breach of the contract of bailment allegedly entered into between the plaintiffs and the defendants for the non-delivery of Konica films in the value of S$133,136. In the alternative, the plaintiffs also claimed damages for conversion. The plaintiffs alleged that they engaged GK Express to collect and store the films and to effect deliveries of parts of the consignment to customers of the plaintiffs in Singapore. There was no evidence that GK Express was the agent of the plaintiffs. The plaintiffs relied on the principle of undisclosed principal.

Held, dismissing the claim: (1) if a person is an undisclosed principal in connection with a contract, it is the law that the undisclosed principal can sue the other party to the contract simply because the underlying principle is that the other party had known or ought to have known that he was contracting with the undisclosed principal. This common law doctrine is in recognition of the growing multiplicity of parties involved in transactions; (2) each case must turn on its own facts. There is nothing here on the evidence given by the plaintiffs to suggest that what they have said about ownership was enough to impute on the defendants the knowledge that they were entering into an agreement with the plaintiffs.

Jacky's Electronics Pte Ltd v Komrades Air/Sea Forwarders Pte Ltd Suit No 1920 of 1989 High Court, Singapore (Lai Kew Chai J).

An action for money had and received has nothing in common with an action in contract. In the case of contract the obligation arises from the agreement of the parties and in the present case it was for the performance of this obligation that the security was given. In the case of an action for money had and received, the obligation is created by operation of law once certain facts which do not include agreement between the parties are established.

Kartar Singh v Pappa [1954] MLJ 193 High Court, Ipoh (Thomson J).

The first plaintiff was a company incorporated in Singapore by the second plaintiff (a Malaysian businessman who resided in Kuala Lumpur) for purposes of trading in securities. The first plaintiff was a customer and operated a trading account with the defendants. Arising out of such trading, the plaintiff incurred substantial losses and the defendants instituted proceedings and obtained judgment against both the plaintiffs (the second plaintiff was a guarantor for the first plaintiff's account). The parties negotiated and subsequently entered into an agreement (the settlement agreement) whereby the defendants agreed to withhold further proceedings in the suit provided the plaintiffs paid a certain sum in full and final settlement of the defendants' claim. The second plaintiff paid one instalment of the overdue interest and thereafter no further payments were made. The plaintiffs claimed that when the settlement agreement was made, it was orally agreed that the defendants would not enforce the judgment against the plaintiffs and the plaintiffs would deposit shares/collateral in excess of S$2m in value with the defendants. They contended that the settlement agreement stipulated that the collateral (in the form of Promet shares) would not be released or sold by the defendants for less than S$0.50 per shares and that the defendants had breached the oral agreement and the settlement agreement by disposing of the Promet shares below the agreed price. The plaintiffs thus prayed for full accounts of the sale of the shares held by the defendants as collateral as well as damages.

Held, dismissing the plaintiffs' claim: the court found neither merit nor truth in the second plaintiff's contention that there was such an oral collateral agreement, which terms also contradicted those of the settlement agreement.

Makin Nominees (Pte) Ltd & Anor v Ong & Co Pte Ltd Suit No 1501 of 1993—High Court, Singapore (Lai Siu Chiu J).

The respondents purchased an apartment unit with vacant possession from the appellant. The sale and purchase agreement was executed on 25 October 1982. It was silent regarding the date of delivery of vacant possession. Three-and-a-half years later, on 22 January 1986, the delivery of vacant possession was finally made. In their amended statement of claim, the respondents averred that delivery of the flat with vacant possession must be made within a reasonable time, which was 24 months under the Housing Developers (Control and Licensing) Regulations 1982. However, as the appellant had not done so, the respondents therefore claimed for the loss and damage suffered as a result of this late delivery. The appellant, however, argued that the amended statement of claim disclosed no cause of action.

Held, allowing the appeal: (1) a reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleadings are considered. The amended statement of claim in this instance disclosed no reasonable cause of action; (2) the written agreement did not fix any time for the performance of the contract. It must therefore be performed within a reasonable time, which was, however, a question of fact, having regard to the state of things at the time when notice was given; (3) the amended statement of claim had failed to plead the vital issue that notice was given to the appellant to complete the delivery of vacant possession within a reasonable time. This notice was necessary since time by which performance was to be completed had not been stipulated, nor made the essence of the contract; (4) the Housing Developers (Control and Licensing) Regulations 1982 was inapplicable as the appellant was an exempt body under s 2 of the Housing Developers (Control and Licensing) Act 1966.

Penang Development Corp v Khaw Chin Boo & Anor [1993] 2 MLJ 161 High Court, Penang (Mohamed Dzaiddin J).

The appellants had engaged the respondent to extract timber in seven blocks of forest land referred to as Blocks A to G in Trengganu. The respondent sued the appellants for breach of contract and alleged in his statement of claim that he had completed felling timber in the said forest land and in breach of the agreement the appellants had failed to pay in full for the services rendered. He claimed $88,916.31 as special damages made up of (i) refund of $10,031.80 deposit paid by the respondent under the agreement, (ii) $43,173.63 for wages of workers from March to May 1979, and (iii) $35,710.88 for additional wages. In their defence the appellants claimed that the respondent did not in fact complete the work as he had stopped work before all the timber was completely felled and removed. The appellants counterclaimed for $190,148.62 as damages incurred in engaging other contractors to fell the remaining trees. The dispute in this case was which party committed the breach of the logging agreement. The learned trial judge came to the conclusion on the evidence that the respondent was free from blame but it was the appellants who were guilty of breach of the agreement. He accordingly gave judgment for the respondent in respect of the refund of the deposit and for the wages of workers. However, he dismissed the claim in respect of extra wages. The appellants appealed against the decision while the respondent cross-appealed against the disallowance of the claim for additional wages.

Held: (1) the appeal in this case on the issue of breach of contract was entirely against the finding of facts by the learned judge. Having regard to the evidence, the findings of facts by the learned judge were supported by evidence and the inferences made by him from primary facts were also made on correct principles and on reasonable assessment of the evidence. It would be wrong for the appellate court to disturb the finding that the breach of agreement was in fact committed by the appellants. The respondent was therefore entitled to the refund of the deposit and for wages of workers; (2) in regard to the claim for additional wages, there was no equitable estoppel in this case nor would s 26(b) of the Contracts Act 1950 (Act 136) apply since the compensation promised to be paid was subject to two preconditions, that it was payable only at the end of the contract and it must be subject to good performance, and both had not been proved to have been properly discharged by the respondent; (3) in any case s 26(b) of the Contracts Act refers to a promise to compensate a person who has already voluntarily done something for a promisor or something which the promisor was legally compellable to do. The logging work done by the respondent was not voluntary nor can the work of extracting timber be described as something which the appellants were compellable to do. The promise to pay the additional wages cannot come under the purview of s 26(b) of the Act.

Leong Huat Sawmill (Pte) Ltd v Lee Man See [1985] 1 MLJ 47 Federal Court, Kuala Lumpur (Wan Suleiman, Mohamed Azmi and Hashim Yeop A Sani FJJ).

The respondent had exclusive rights to fell and extract timber in a number of forest areas. It entered into a logging agreement with the appellant for the purpose of extracting timber from a forest reserve. The appellant completed constructing a road linking the JKR road with the boundary of the forest reserve and it also transported for the respondent most of the roadside logs which were felled because of the road construction to the respondent's log pond. The appellant subsequently ceased work and left the area. It alleged that having completed the road to the boundary of the forest reserve it was entitled to be supplied with approved blocks for timber extraction and as the respondent had failed or delayed to supply the blocks this constituted a breach of the agreement. The respondent on the other hand denied the allegation of breach by it and alleged that it was the appellant who broke the agreement. It claimed that the appellant had not constructed the road in accordance with the agreement so as to satisfy the Forest Department and enable the permit to enter the reserve to be given. The respondent maintained that the road to be built must be both outside and inside the contract area and as the appellant had not completed the road construction it was in breach of the agreement. The learned trial judge accepted the respondent's contention and held that it was the appellant, not the respondent, who was in breach of the agreement. He held that the appellant was entitled to payment for the work it had done in constructing the road and in transporting the logs but dismissed its claim for general damages. The learned judge also made no decision on the respondent's counterclaim as it was agreed that this should await the outcome of the appellant's suit. The appellant in the meantime appealed.

Held: the learned trial judge was correct in holding that it was the appellant who was in breach of the agreement and therefore the appeal must be dismissed.

Wadkin Lumber Co v Lawas Lumber Sdn Bhd [1982] 2 MLJ 312 Federal Court, Kuching (Lee Hun Hoe CJ (Borneo).

The plaintiffs and the defendants executed a timber sales agreement wherein the defendants agreed to sell all the merchantable timber on the land to the plaintiffs. There was also a power of attorney by the defendants to the plaintiffs and a timber extraction agreement between the defendant and R. The plaintiffs applied for an order of specific performance of the agreement by the defendants in that the defendants were to extract all the merchantable timber standing on the land and deliver the same to the plaintiffs, and an injunction to restrain the defendants from committing a breach of the agreement in selling the extracted timber to any other individual or company, except the plaintiffs. The defendants claimed that the plaintiffs failed to perform satisfactorily the obligations under the power of attorney and that the agreement and power of attorney constituted an assignment of the rights of the defendants in contravention of the Forests Enactment 1968 (`the Enactment') and was thus illegal. The plaintiffs contended that power of attorney had been revoked leaving only the timber sales agreement. It was not disputed that H was a common director of the plaintiffs and R and a signatory to both the timber sales agreement and the timber extraction agreement.

Held, dismissing the application: (1) s 24(6) of the Enactment stated, inter alia, that a licence should be personal to the holder and should not be transferable in any manner whatsoever. The power of attorney also gave the plaintiffs all-encompassing powers which included the powers to make the final selection of the licensed area, to apply for permits, to pay for royalites, to deal with the government authority, to institute and defend judicial proceedings and to even appoint substitutes; (2) it was the court's finding that the plaintiffs were very well aware of the contents and implications of the timber sales agreement as well as the power of attorney; (3) there was no document of revocation of the power of attorney produced by the plaintiffs. It was only the words of their witness, who was found to be quite deceptive. In the absence of any evidence to the contrary, the power of attorney had not been revoked; (4) upon the reading the contents of both the timber sales agreement and the power of attorney, the irresistible conclusion was that upon their execution, the defendants had nothing more to do with the timber licence but to merely sit back to collect the balance of their dues as agreed for parting with their rights thereunder. They had parted with all their interests in the timber licence for financial consideration. And that should make the arrangement illegal being in contravention of s 24(6) of the Enactment. Hence any claim based thereon could not succeed by reason of illegality.

Cynsan Development Sdn Bhd v Majunis bin Tumpi @ Mohd Arifen & Ors Suit No S23-20 of 1996—High Court, Sandakan (Richard Malanjum J).

The appellant by an agreement in writing sub-contracted to the respondents who were logging contractors, the extraction of timber logs from an area of timber land. The respondents alleged that they had completed the removal of the timber from the land and the camp supervisor of the appellant had certified that all timber from the area had been extracted and those left unextracted were in an area not accessible by tractor. In a claim by the respondents for the payments due under the agreement, the appellant counterclaimed for general damages on the ground that the respondents had not totally performed the contract. The learned trial judge dismissed the counterclaim and the appellant appealed.

Held, dismissing the appeal: the learned judge was correct in dismissing the counterclaim as the respondents had performed the contract, so far as it was possible.

Nyap Kui Fah v Len On Contractor [1978] 1 MLJ 208 Federal Court, Kota Kinabalu (Lee Hun Hoe CJ (Borneo).

By an agreement made between the plaintiff and the second defendant, the second defendant engaged the plaintiff to fell and extract merchantable timber logs from a particular forest area. The second defendant subsequently granted the first defendant a power of attorney in connection with the logging operation. There was a stoppage in the logging operations and the plaintiff claimed that there was a repudiation of the agreeement by the second defendant through the first defendant as agent when it instructed the plaintiff to cease logging operations. The defendants argued that the agreement did not expressly prohibit temporary suspension of logging activities and that only damages, not rescission, could be claimed for.

Held, allowing the plaintiff's claim in part: (1) the agreement provided no clause for temporary stoppage and as there was no prior discussion with the plaintiff nor was the stoppage indicated to be temporary, it was the court's view that the instruction to stop work and the stoppage itself went to the root of the agreement. The conduct of the second defendant through the first defendant amounted to a repudiation of the agreement by the second defendant; (2) for the second defendant to instruct suddenly to stop work without due consideration of its effects upon the plaintiff could be described nothing less than a blatant breach/repudiation of the agreement thereby entitling the plaintiff to rescind it; (3) the plaintiff had failed to adduce sufficient evidence to establish on a balance of probabilities his damages in connection with the loss of the benefit of the agreement due to the repudiation; (4) the plaintiff should only be entitled to nominal damages of RM1,000.

New Chew v KBC Sawmill Sdn Bhd & Anor Suit No MR 23 of 1983—High Court, Miri (Richard Malanjum J).

The plaintiffs, a United Kingdom company, had agreed to finance a company in Singapore in the course of its business in respect of bills and orders. The defendants agreed to guarantee payment of outstanding amounts. The plaintiffs sued the defendants for the outstanding amount and obtained summary judgment. The defendants appealed and on the appeal it was argued that there was a triable issue as to whether the transactions were moneylending transactions.

Held: the Moneylenders Ordinance (Ord 42/1951) relates only to pure money transactions. It did not apply to the transactions in this case, which was in essence the grant of credit facilities subject to payment of interest on the price of goods.

Gillespie Bros & Co v Ngui Mui Khin & Anor [1980] 1 MLJ 87 High Court, Johore Bahru (Syed Othman FJ).

The respondent had obtained an overdraft facility from The Selangor and Federal Territory Hawkers and Petty Traders Co-operative Society ('SAKAPP'). This was not repaid. By an Order called The Central Bank of Malaysia (Kewangan Usahasama Makmur Bhd Scheme) Order 1988, all assets held by SAKAPP were vested in the appellant. The appellant applied for summary judgment against the respondent, but this was dismissed by the sessions court. It therefore appealed. It was the respondent's argument that the loan had been repaid vide an agreement between SAKAPP and Hew Thai & Sons Housing Development Sdn Bhd wherein was stated that the latter undertook and guaranteed repayment of the total borrowings. This agreement had not been fully performed. As such, the appellant submitted that the respondent continued to be liable.

Held, dismissing the appeal: s 42 of the Contracts Act 1950 provides that 'when a promisee accepts performance of the promise from a third party, he cannot afterwards enforce it against the promisor'. For s 42 to be invoked, it is not necessary for the promise by the third person to have been performed in full.

Kewangan Usahasama Makmur Bhd v Hew Tian Soong Civil Appeal No R1-12-69-91 High Court, Kuala Lumpur (Wan Adnan J).

The defendant in this case held the letters of administration in respect of his deceased mother's estate. In February 1950, the defendant by a written agreement entered with the plaintiff agreed to sell part of the deceased's estate, to wit, a certain house and land, to the plaintiff for the sum of $17,000 and the plaintiff paid $5,000 by way of deposit. In the agreement, the defendant undertook without delay to seek the permission of the court to sell the house and land and he further undertook to take all the necessary steps to give a valid title to the plaintiff; the plaintiff undertook to pay the balance of the purchase price within two weeks of obtaining the court's permission to sell. In the event of the defendant's refusal to effect the transfer within two weeks of receiving court permission, he undertook to refund to the plaintiff the amount of the deposit ($5,000) and in addition, to pay to the plaintiff $5,000 by way of damages. The plaintiff, with the full consent of the defendant, had been in occupation of the premises since the date of the agreement. The defendant never applied for permission of the court to sell and had taken no steps whatsoever to carry out his part of the agreement. The plaintiff asked the court for an order for specific performance and such other further relief as might be just. The defendant, having denied the validity of the agreement, asked for damages, presumably in trespass, at the rate of $250 a month for the period in which the plaintiff and his tenant occupied the premises.

Held: (1) the estate was bound by the agreement; (2) the agreement was not an agreement to sell, but merely an agreement to obtain the permission of the court to sell after such permission had been granted; (3) the only proper relief the court could give to the plaintiff was to make an order for damages for breach of contract on the part of the defendant: $5,000 to be paid out of the estate and $5,000 to be paid by the defendant personally; (4) the defendant was not entitled to any relief on his counterclaim.

Gan Hong Hoe v Azib Beg [1954] MLJ 202 High Court, Seremban (Abbott J).

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).

See CONTRACT, Vol 3, para 1700.

The plaintiff, the registered owner of land with a factory building in question, entered into a written agreement with the defendant whereby the latter was granted a tenancy for a term of three years commencing from 12 October 1974 and ending on 11 October 1977 at the monthly rent of $5,928.75. Under the agreement of tenancy, the tenant was required not to do anything which may be a breach of any of the express conditions endorsed on the document of title under which the land with the building thereon was held. By a letter dated 11 February 1976, the tenant gave notice that he would vacate the factory building on 11 May 1976. By a letter dated 12 February 1976, the landlord, in reply, refused to accept the tenant's said letter, stating that provided the tenant continue to pay rent punctually, and without prejudice to the landlord's right, the landlord would be prepared to look for a new tenant. By a letter dated 12 May 1976, the tenant's solicitors advised that the tenant had vacated on 11 May 1976 the factory building and enclosed the keys thereto. By letter dated 21 September 1976, the landlord's solicitors informed the tenant's solicitors, of the inability to find a tenant so far and also asked for payment of rent due and up to 11 October 1976 amounting to $41,501.25. This was denied by the tenant. By letter dated 6 April 1977, the landlord's solicitors asked for the tenant's consent to the assigning of the tenancy to a prospective tenant found by the landlord at the same rental. By letter dated 22 April 1977, the tenant's solicitors wrote and referred to their previous letters. The facts revealed that the landlord was offered $4,000 rental a month by some prospective tenant but the landlord had refused to accept it, insisting instead on the monthly rent of $5,928.75 hitherto paid by the tenant. The landlord preferred to wait until April 1977 when a new tenant was found at the same rental.

Held: (1) a repudiation in advance by one party to a contract, that he will not perform it before the arrival of the time for the performance by the repudiating party, does not, by itself, amount to a breach of contract, though it may optionally be, of course, regarded as such a breach by the other party in treating it as at an end; (2) the need or duty to mitigate one's losses can only arise if there is a breach of contract. In this case the breach arose when the landlord finally accepted the anticipatory repudiation, ie when the landlord finally took in a new tenant as from 16 May 1977. The claim of the landlord for loss of rent up to 15 May 1977 was therefore valid and proper, and there was no need for the landlord to try to reduce the losses for which the tenant would be responsible. On the other hand, should the court be wrong on this, the landlord had done all it reasonably could in mitigating its losses, by inserting advertisements in the newspapers and passing the word round verbally about the factory building being available for letting; (3) the standard of conduct of plaintiffs in taking steps to mitigate their losses is one of whether the plaintiffs had acted reasonably, and it is a question of fact; (4) after crediting and therefore deducting the deposit of $11,857.50 paid by the tenant, the landlord should be awarded the sum of $71,910 being arrears of rent together with interest at 4% per annum thereon from 16 May 1977 to date of judgment and thereafter at the rate of 8% per annum to date of payment, with costs to be taxed.

Teh Wan Sang & Sons Sdn Bhd v See Teow Chuan [1984] 1 MLJ 130 High Court, Kuala Lumpur (Peh Swee Chin J).

3 [1612] CONTRACT Anticipatory breach – Impossibility of performance – Condition in sale and purchase of land breached – Rescission of option – Whether option must be exercised before rescission and recover of option money – European Asian Bank v Punjab and Sind Bank [1983] 2 All ER 508 (folld) Universal Carriers Corp v Citati [1957] 2 QB 401 (cited) United Dominous v Eagle Aircraft Services [1968] 1 All ER 104 (cited) Fullington v Penn Phillips Co (1964) 395 Pac Rep (2d) 124 (cited) McFerran v Herroux 44 Wash 2d 631 (cited) Tatum v Levi 177 CA 83 (cited) Burks v Davies 85 Cal 110 (cited) Unatin 7-Up Co V Anna Solomon 157 ALR 1304 (cited) Renol Holding v Lankenau 116 NYS 2d 861 (cited)

D granted P an option to purchase the property in question. $5,000 was paid as option money. The option was to be exercised by 4pm on 21 July 1987. The sale and purchase was subject to P's solicitors receiving satisfactory replies to requisitions, in particular regarding road lines. Clause 7 of the option provided that the purchase money would be refundable if the property was affected by a road line. At 2.30pm on 21 July 1987 P's solicitors wrote informing D's solicitors that the property was affected by a road line and asked for the return of the option money. D declined to refund the option money on the ground that the option had not been exercised. P sued for the return of the money. The deputy registrar of the subordinate courts gave D unconditional leave to defend. P appealed.

Held, allowing the appeal: (1) as the facts were not in dispute and the point was one of law, the learned judicial commissioner felt that he should decide the matter rather than grant D leave to defend; (2) an innocent party may rely on an anticipatory breach on the part of the other and treat himself as having been discharged from the performance of the contract. Anticipatory breach may be constituted by impossibility of performance as well as by renunciation. An inability to perform need not be due to a deliberate act on the part of the party in breach; (3) under cl 7 of the option, D had agreed to sell a property not affected by any road line. The property in question was affected by a road line. If P had exercised the option and asked for the return of the money paid, D would have had no defence. This was no different from a situation where it was impossible for D to fulfil his obligations. P was entitled to accept the anticipatory breach and sue for the return of the option sum; (4) alternatively, there was an implied term in the option agreement that P would be entitled to the return of the option money without having to exercise the option if the conditions of the contract were not met.

Lee Hooi Lian v Kuay Guan Kai [1990] 2 MLJ 345 High Court, Singapore (Chao Hick Tin JC).

On 26 April 1988, the appellants, who were buyers, entered into a FOB contract with the respondents, who were the sellers, for the purchase of centrifuged Malaysian latex. On 3 May 1988, the appellants sent a telex to Ng, the respondents' trading clerk, stating that they had booked space on a vessel called Majapahit of Pacific International Lines ('PIL') 'eta 13 June 1988' for loading from 10 to 15 June 1988 and that in the event of any revision the appellants would inform the respondents. On 25 May 1988, the appellants delivered by hand to the respondents a letter purporting to nominate Majapahit as the vessel to carry the contractual cargo. On the same day, however, the appellants sent the respondents a telex stating that if there was any inconvenience they should inform the appellants in advance. They also indicated to the respondents that there would be another vessel Gowa scheduled to arrive in Singapore on or about 27 June 1988. There was no reply from the respondents. On 28 May 1988, by another telex, the appellants confirmed their nomination of the Majapahit as 'final' and 'firm'. About ten days later, at about 5.05pm on 7 June 1988, the appellants sent a telex to the respondents requiring them to 'confirm by 12pm, 8 June 1988' that they had sent the cargo to PIL. On the same evening, the appellants informed PIL that their reservation on the Majapahit would be held until 5pm, 8 June 1988, and that otherwise the cargo would be loaded on the Gowa. The next day, at 5.55pm, the appellants informed the respondents that as there was no response from the latter, they had cancelled the reservation on the Majapahit. They also alleged that the respondents had breached the contract by failing to supply the goods. On 9 June 1988, the appellants sent to the respondents a telex stating that, while reserving their rights for damages, they were willing to nominate a fresh vessel Gowa, eta 27 June 1988. Not having heard from the respondents, the appellants, on 11 June 1988, despatched another telex to the former alleging that the contract had been repudiated by the respondents and informing the latter that the appellants accepted the repudiation. On 13 June 1988, the respondents replied by telex denying repudiation of the contract and stating that they would supply the appellants with the goods as soon as possible. On 14 June 1988, the appellants' solicitors demanded the return of their clients' letter of credit. On 15 June 1988, the respondents' solicitors returned to the appellants the letter of credit as requested. The appellants then commenced proceedings against the respondents. The action as dismissed by the High Court. The appellants appealed.

Held, dismissing the appeal: (1) as a general rule, in a FOB contract, in the absence of any express provision to the contrary, the buyer has the right to determine the exact time within the shipping period at which the goods are to be shipped. In the present case, therefore, the appellants were entitled to determine the time for shipment of the cargo within the month of June 1988. The telex of 28 May 1988 made it abundantly clear that the appellants had nominated the Majapahit to carry the cargo. There was therefore a valid nomination on 28 May 1988; (2) as the nomination was made on 28 May 1988 and the time of shipment was scheduled for 13 June 1988 or thereabout, the appellants had clearly given reasonable notice of their nomination to the respondents. However, the telex of 7 June requiring the respondents to deliver the cargo to PIL for shipment by noon on the following day was unreasonable in the circumstances. The Majapahit not having arrived, it was clearly premature to require the respondents to deliver the cargo to PIL for shipment; (3) with effect from 9 June, the respondents' obligation was to have the cargo ready for shipment on the Gowa on 27 June or thereabout, as the booking of the Majapahit had been cancelled. The appellants' telex of 11 June which purported to accept the respondents' alleged repudiation was in itself repudiation of the contract on the appellants' part, as there was no prolonged silence on the part of the respondents as would give rise to an inference that they would not be able to perform the contract when the time of performance came. The respondents accepted that repudiation by returning the letter of credit to the appellants on15 June as requested.

Dong Yuan Hang Trading Pte Ltd v Sunko (Singapore) Co Pte Ltd [1990] SLR 262 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

The appellants (TDK) entered into a quarry contract with the respondents (RDC) and RDC in turn entered into a leasing contract with TDK for the lease of equipment and vehicles for the purpose of the quarry works. As a result of the RDC's failure to deliver possession of site to TDK, TDK could not perform the quarry contract. RDC terminated the contract on the ground that TDK could not produce the contractual quantities and counterclaimed for liquidated damages as provided for under the quarry contract. RDC also terminated the leasing contract and counterclaimed for loss and damage arising under this contract. The trial judge below dismissed TDK's claim on the ground that TDK had failed to show that RDC had not cleared the initial area to the required depth and other grounds. The trial judge also invited RDC to amend their pleadings to include an alternative ground that TDK had repudiated the contract by abandoning the work and that RDC had accepted this repudiation. RDC did so and the judge held in favour of RDC on this alternative ground. TDK's appeal succeeded on both issues, ie that RDC had not fulfilled their obligation in relation to the removal of the overburden and therefore did not deliver possession of the site to TDK and that the application for amendments to plead the alternative ground should not have been invited or allowed (see [1994] 3 SLR 743). TDK applied by way of further arguments some four months after the final appeal on the matter was heard on 26 May 1993. Two issues were raised, namely, (i) the position with regard to nine leases of equipment and vehicles entered into between RDC as the owners and TDK as the lessees, all of which were terminated by RDC with effect from 3 June 1982, and (ii)Êthe finding that RDC were in breach of their obligations. The first issue was allowed to be argued as it was not dealt with in the judgment on appeal. The second issue was disallowed further arguments as it had been finally decided in the appeal.

Held, dismissing RDC's counterclaim for liquidated damages under the quarry contract and for loss and damage under the contract for the leases: (1) the parties had throughout treated the leasing contract and the quarry contract as 'linked', in the sense that a repudiatory breach of the quarry contract would entitle the other party to terminate the leasing contract; (2) accordingly, since RDC were in repudiatory breach of the quarry contract, the court should have gone on to hold that the termination of the leases was, by reason of the wrongful termination by RDC of the quarry contract, also wrongful, and dismissed RDC's counterclaim on the leases as well as on the quarry contract; (3) on the question of anticipatory breach, TDK's inability or difficulty in paying rentals under the leases was in all probability a direct result of their inability to carry on the quarry operations as a result of RDC's breaches. It was also RDC's breaches of the quarry contract that led to the abandonment of the contract by TDK and the anticipated impossibility of TDK continuing with the leases; (4) therefore, RDC not only failed in their counterclaim for liquidated damages under the quarry contract, they also failed in their counterclaim for loss and damages arising from their termination of the leases. Both heads of counterclaim should be, or should have been, dismissed; (5) RDC by their own wrongful termination of the leases were no longer entitled to the security documents executed by TDK for due performance of their obligation.

Teknikal dan Kejuruteraan Pte Ltd v Resources Development Corp (Pte) Ltd [1996] 3 SLR 145 Court of Appeal, Singapore (LP Thean JA, Rajendran and Warren LH Khoo JJ).

This was an appeal against the dismissal by Abdul Aziz J ([1969] 2 MLJ 223) of the appellants' counterclaim which alleged that the respondent by unilaterally terminating their appointment as sole distributors of respondent's products without cause was in breach of a contract for which he was liable in damages. On appeal there were two main issues: (1) the agreement they relied upon, and (2) breach of contract.

Held, dismissing the appeal: (1) the onus is on the person to prove the agreement he was relying upon. In this case on the facts, the appointment was made, not by the wholesaler, but by his agent who was a salesman, whose authority to do so was denied by his employer. What such agent represented as to the nature and extent of his authority was not binding on his principal; (2) where there is no firm agreement which binds the vendor in definite terms to supply goods to a purchaser at a price certain over a stipulated period the vendor is entitled to refuse to deal with the purchaser who has been in breach of his obligation to pay for goods already sold and delivered; (3) in this case, as the customer having been given notice that he would not be supplied any more goods on credit unless overdue bills were first settled, and he refusing to pay, it was he, and not the vendor who was in breach of contract.

International Trading Co v Chan Chow Kian [1970] 1 MLJ 192 Federal Court, Kuala Lumpur (Ong CJ (Malaya).

In a suit against the manager of a theatrical company by his employer, where the defendant kept no accounts and the plaintiff's account showed no payment or credit on account of the defendant's salary, but was merely a bare list of loans and advances made by the plaintiff to the defendant, and no balance was ever struck, the failure to draw each month's salary cannot be considered as a payment so as to allow of the application of the doctrine of appropriation of payments, ss 59, 60 and 61 of the Contract Enactment 1899, it being clear that defendant never had any opportunity of allocating and therefore no right could pass to plaintiff.

Daud v Abu Bakar [1924] 5 FMSLR 110 High Court, Federated Malay States (Sproule Ag CJC).

In this case, the appellants had supplied chicken feed to the respondents' poultry farm. The chicken feed was supplied on 30 days credit and the appellants kept a running and current account in respect of the supplies. The appellants obtained a judgment against the respondents for $139,804.55. However, despite this judgment the parties carried on their business relationship. Considering that the judgment remained unsatisfied, the appellants applied for and obtained a writ of seizure and sale to enforce judgment. The respondents applied to set aside the writ on the ground that they had fully satisfied the judgment by paying on various occasions a total sum of $157,716.87. There was no dispute that the respondents in addition to the judgment debt owed the appellants other debts, in respect of their dishonoured cheques and also new debts arising out of supplies of feeds delivered after the date of the judgment. The respondents made no appropriation when they made the payments totalling $157,716.87 but the appellants claimed that the payments were to be applied first to satisfy the amount of the dishonoured cheques and secondly to the amount of new debts and that only if there was a remainder would the balance be applied to the judgment debt. They claimed to have set out this method of appropriation in a letter to the respondents but the respondents denied receipt of the letter. The learned judge of the High Court set aside the appellants' writ of seizure and sale. The appellants appealed.

Held: (1) the appellants having asserted that they had made the appropriation it is for them to prove it but since the existence and contents of the letter relied on by the appellants were denied by the respondents the court was not in a position to hold that there was appropriation by the appellants; (2) in any event, the appellants kept their account continuously in one current account and therefore they have no right to make the appropriation; (3) the writ of seizure and sale against the respondents is misconceived and was therefore properly and rightly set aside by the learned judge.

Nam Joo Hong Chan Feedmills Sdn Bhd v Soon Hup Poultry Farm [1985] 2 MLJ 206 Supreme Court, Kuala Lumpur (Salleh Abas LP, Wan Suleiman and Syed Agil Barakbah SCJJ).

D entered into an agreement to purchase a parcel in a building ('the agreement'). P agreed to lend money to D to finance his purchase provided he agreed to assign his entire benefit of 'the agreement' to P. D duly executed an assignment in favour of P ('the bank assignment'). 'The bank assignment,' inter alia, provided that D would execute a charge in favour of P under the National Land Code 1965 upon the delivery by the developer of a subsidiary title to the parcel. 'The bank assignment' also stated that D could not deal with the parcel without P's consent. Upon D's failure to repay the loan P applied to the court and obtained an order for sale of the parcel. Before the auction sale of the parcel, X applied, inter alia, to intervene in the proceedings and to stay the sale. X claimed that he had purchased the parcel from D subsequent to 'the bank assignment'. X also alleged that D had assigned all his rights and interest in 'the agreement' to X ('the second assignment'). X had entered a private caveat in respect of the land on which the building containing the parcel was erected. X firstly argued that'the bank assignment' was not an absolute assignment but was an equitable one similar to 'the second assignment'. X relied on the provision in 'the bank assignment', whereby D agreed to execute a charge in P's favour, to support his argument that 'the bank assignment' was not absolute. X further argued that his equitable right was superior to that of P because X had caveated the land in question.

Held, giving judgment for P; dismissing X's application: (1) (2)'the bank assignment' is an absolute assignment because firstly D agreed to assign all his benefits, estate, interest or right whatsoever in the parcel to P. D thus held the parcel in trust for P as a bare trustee. Secondly D had agreed to allow P in the event of D's default, to take possession of the parcel as well as the right to sell it as its 'absolute unencumbered owner'; (3) the provision for D to execute a charge in P's favour merely provided an additional safeguard which was necessary because at the time when 'the bank assignment' was made, D had not been granted any registrable title under the Strata Titles Act 1985; (4) in equity the basic rule is that rights and interests primarily rank in order of creation. An important qualification to the basic rule is the doctrine of the purchaser without notice. A subsequent purchaser must have no actual, constructive or imputed notice of the earlier equitable interest; (5) in this case X had actual notice of 'the bank assignment' as manifested in the recital of 'the second assignment'. More importantly under 'the second assignment' X covenanted to settle D's debt due to P upon D's failure to repay P. Under such circumstances P had an equity which was better than that of X; (6) in an absolute assignment under s 4(3) of the Civil Law Act 1956 there must be an intention on the assignor's part to pass to the assignee complete control of any debt or money payable to or any legal chose in action of the assignor. In testing whether there is such an intention, the whole instrument of assignment must be considered regardless of the phraseology adopted in some particular part of it;an entry of a private caveat does not necessarily mean that the caveator has a better priority against another who has not entered a caveat. It could not therefore be accepted that just because X had caveated the land in question P's priority should be subservient to X's equity.

Bank of Tokyo Ltd v Mohd Zaini bin Arshad (Maria Pragasam, Intervener) [1991] 3 MLJ 50 High Court, Kuala Lumpur (Lim Beng Choon J).

By a sale and purchase agreement dated 2 September 1982 ('the agreement'), the respondents agreed to sell and the appellants agreed to purchase a piece of land with vacant possession together with a double-storey terrace house to be erected thereon ('the property'). It was stated in cl 7 of the agreement that time shall be the essence of the contract in relation to all the provisions of the agreement. To help finance the purchase of the said property, the appellants obtained a loan from United Asian Bank Bhd ('the bank'). The appellants in consideration of the bank having agreed to grant them the said loan, assigned unto the bank absolutely all their rights and interests in and to the said property and under the said agreement. By cl 24 of the assignment, the appellants appointed the general manager or the assistant manager of the bank as their attorney in dealing with the said property on their behalf. On the allegation of late delivery of the said property by the respondents and wrong payment to the respondents of interest on late payment on their part, the appellants issued a summons in the magistrate's court for liquidated damages and for the wrong payment made. The respondents in their defence disputed the liability on the ground that the appellants did not have the locus standi to institute proceedings against them in view of the absolute assignment of all the appellants' rights, title and interest in the said agreement to the bank. The appellants argued that the assignment to the bank by the appellants was not absolute within the context of s 4(3) of the Civil Law Act 1956 ('the Act'). The appellants further argued that the assignment was not an absolute one and that the bank was merely an agent of the appellants, especially having regard to cl 24 of the assignment. Furthermore, there was no written notice in writing of the assignment given to the respondents as required by s 4(3) of the Act. The learned magistrate dismissed the claim of the appellants on the ground lack of locus standi on the part of the appellants to sue the respondents.

Held, dismising the appeal: (1) the assignment to the bank was indeed an absolute assignment not purpoting to be a charge only within the meaning of s 4(3) of the Act. The appellants being the assignor therefore cannot maintain the action against the respondents without joining the bank as co-plaintiff, or as a co-defendant in this action against the respondents; (2) the provision in cl 24 is necessary for the purpose of enforcement against the property in the event of default committed by the appellants in respect of the loan granted. Therefore it cannot be said that the bank was merely an agent of the appellants in dealing with the said property; (3) by delivery of a true copy of the said assignment which is in writing to the respondents, the fact that the assignment by the appellants of all their rights, title and interest in and to the said property and under the said agreement and the full benefit granted thereby and all the remedies for enforcing the same to the bank had been expressly communicated to the respondents, served as an express notice in writing given to the respondents for the purpose of s 4(3) of the Act; (4) the said assignment passed all the rights of the appellants as assignor in the debt or chose in action to the bank as assignee absolutely. As such, the appellants as assignor have no locus standi to institute this action against the respondents.

Christina Angelina a/p William Bastian & Anor v Newacres Sdn Bhd [1996] 5 MLJ 549 High Court, Kuala Lumpur (Abdul Kadir Sulaiman J).

The respondent was a licensed bank. It lent RM1m to a company called Hipparion (M) Sdn Bhd (`Hipparion'). The loan was secured by two separate instruments: (i) a deed of assignment under which Hipparion absolutely assigned its right, title and interest in a floor of a building (`the subject property') to the respondent; and (ii) a guarantee executed by the appellant who was a director of Hipparion. Hipparion failed to meet its obligations under the loan agreement. The respondent took steps to recover its money by enforcing the assignment and seeking an order for vacant possession and liberty to sell the subject property. The High Court granted the relief claimed. Hipparion then appealed to the Supreme Court which affirmed the orders made by the court below and dismissed the appeal (see [1988] 2 MLJ 62; [1989] 2 MLJ 149). The Supreme Court held that the deed of assignment of the subject property was absolute in nature and not by way of charge only as argued by Hipparion. The proceeds from the sale of the subject property were insufficient to meet Hipparion's liability to the respondent in full. The respondent therefore sued the appellant upon his guarantee. That was the suit which formed the subject matter of the present appeal. The appellant argued that the respondent took an assignment of the subject property as consideration for the loan. It was further argued that since the Supreme Court had in the earlier proceedings between the respondent and Hipparion held that the assignment of the subject property was absolute and not by way of charge only, the respondent should be estopped from arguing that the deed was by way of security only. It was contended that, applying the law governing consideration for contracts, the debt was extinguished by the assignment. The guarantee was therefore not extant and consequently not available for enforcement.

Held, dismissing the appeal: (1) the argument that the deed of assignment was absolute and therefore satisfied the loan in full upon its execution overlooked the fact that the point under discussion, namely whether the deed was absolute or by way of charge only, arose in the earlier proceedings between the respondent and Hipparion in a procedural context. It was never Hipparion's case in the earlier proceedings that its debt had been extinguished upon the execution of the deed in question. Therefore, as a matter of principle, the finding by the courts at all levels in the Hipparion proceedings that the deed of assignment was absolute and not by way of charge only was made in the context of the procedure adopted by the instant respondent to effect a sale of the subject property. The decision of the Supreme Court in the Hipparion proceedings did not facilitate the argument that the debt owed by Hipparion had been extinguished by the absolute assignment it gave the respondent. Further, as a matter of policy, countenancing the appellant's argument would have the effect of frustrating the recovery of loans in all cases where a financial institution took an absolute assignment because there was unavailable a title capable of being subject to a registered charge. The construction and sale of multi-storeyed residential and commercial premises would grind to a halt because no financier will ever lend money if the law were to declare all sums due under a loan agreement irrecoverable because a deed of assignment absolute of particular premises has the effect of extinguishing the debt. The court was unable to countenance a proposition that would produce so radical an effect; (2) the second reason for rejecting the appellant's argument was to be found in the doctrine of estoppel. An estoppel, whether procedural or substantive, had to be mutual. The appellant was not a party to the Hipparion proceedings. Neither was he, as a director of Hipparion, its representative in interest. Therefore, he was a stranger to the Hipparion proceedings. The determination of the issues in those proceedings did not in any way affect his rights. The proceedings taken against him to enforce the guarantee were separate and distinct from the Hipparion proceedings. Accordingly, there was no mutuality between the parties or interest. Absent mutuality, the appellant's argument could not stand. Hence, there was no injustice done to him if the respondent went behind the four corners of the deed of assignment to show the true purpose for its creation; (3) (obiter) it was trite that a creditor was entitled to pursue all the remedies available to him in law and in equity for the purpose of recovering moneys due to him from the debtor and his surety.

Raju Jayaraman Kerpaya v Chung Khiaw Bank Ltd [1997] 2 MLJ 590 Court of Appeal, Kuala Lumpur (Gopal Sri Ram, Siti Norma Yaakob and Ahmad Fairuz JJCA).

In this case, the premises had been let by the respondents at some time probably before 20 July 1953, on an oral monthly tenancy to one Abdullah. The terms of the monthly tenancy did not prohibit an assignment by the tenant. The tenancy was protected under the Control of Rent Act (Cap 266, 1970 Ed). An agreement was made between Abdullah, as vendor, one Murugaiyan as attorney and the appellant as the purchaser. The agreement recited that the vendor was the principal tenant of the premises and that the attorney had been appointed to manage the premises. The agreement also recited that the attorney had agreed to sell to the purchaser all fixtures and furniture in the said premises and the purchaser agreed to pay the purchase price of $3,300. It was further agreed that the vendor shall cease to be the principal tenant of the premises. The vendor and attorney also covenanted with the purchaser that he had the power to transfer the tenancy into his name and the purchaser undertook on his own account to have the tenancy transferred into his own name. The appellant was in possession of the premises from 1953 onwards. In 1976 the respondents served in the premises notice to quit addressed to the vendor and brought proceedings for possession against the appellant on the ground that he was a trespasser. In the district court the landlord's claim for possession was dismissed on the grounds that the appellant was the tenant of the premises and was entitled to protection under the Control of Rent Act. On appeal to the High Court the appeal was allowed and an order for possession against the appellant allowed on the ground that the agreement was merely an agreement evidencing the sale and transferring the possession of the furniture and fittings of the premises. An appeal to the Court of Appeal was dismissed Ð see [1982] 2 MLJ 298. The appellant appealed. The question which arose in the case was whether the agreement sufficed to assign the tenancy to the appellant.

Held: in the circumstances of this case, the 1953 deed effected an assignment of the tenancy to the appellant. The appeal should therefore be allowed and the order of the district court restored.

VM Peer Mohamed v Great Eastern Life Assurance Co Ltd 1984 Privy Council Appeal from Singapore (Lord Scarman, Lord Elwyn-Jones, Lord Roskill, Lord Brandon of Oakbrook and Lord Templeman).

X Sdn Bhd entered into an agreement with D whereby X Sdn Bhd purchased a lot in a building which was being constructed by D ('the agreement'). Under 'the agreement' D was to obtain a strata title for the building lot and until then X Sdn Bhd was required, inter alia, to pay maintenance charges to D. 'The agreement' also provided that X Sdn Bhd would not re-sell the building lot without D's consent. X Sdn Bhd borrowed money from P to pay the balance of the purchase price of the building lot. In consideration of the loan X Sdn Bhd agreed to assign absolutely to P the full and entire benefit of 'the agreement' ('the assignment'). 'The assignment' however provided that X Sdn Bhd would undertake to pay all liability due under 'the agreement'. D consented to 'the assignment'. X Sdn Bhd was subsequently wound up and P obtained leave of the court to re-sell the building lot. D however was only prepared to consent to the re-sale upon payment of maintenance charges which were due from X Sdn Bhd to D under 'the agreement'. P applied to the High Court to compel D to consent to the re-sale.

Held, dismissing the application: (1) it was clear that the intention of all the parties was that 'the assignment' did not do away with X Sdn Bhd's obligations under 'the agreement'. It was a condition precedent to D giving its consent to the re-sale that it be satisfied that all obligations of X Sdn Bhd under 'the agreement' had been met; (2) an assignee is not entitled to obtain performance of what the assignor himself would not be entitled since the assignee's rights are merely derivative.

Bank of Commerce Bhd v Promet Development Sdn Bhd Originating Summons No D3-24-298-90 High Court, Kuala Lumpur (VC George J).

An execution creditor can only attach an interest in property to which, at the time of the attachment, the debtor was beneficially entitled. By a letter dated 17 September 1932, and stamped as an assignment, a judgment-debtor (a contractor) assigned to the respondent his interest in the sum of $390 due to him from the Public Works Department. Meanwhile the appellant obtained judgment against the judgment-debtor and, in pursuance of that judgment, served a prohibitory order, obtained under s 273 of the Civil Procedure Code, on the Senior Executive Engineer, Klang on 26 October 1932, in respect of the $390.

Held: that when the judgment-debtor executed the assignment of 17 September 1932, purporting to transfer his interest in the $390 to the respondent, he had in fact, transferred such interest and accordingly, nothing remained for the appellant to attach.

Motor Emporium v Arumugam [1933] MLJ 276 High Court, Federated Malay States (Terrell Ag CJ).

P bought a piece of land on which a house was to be built thereon by the housing developer, X. By way of an assignment, D agreed to purchase the property from P. D had paid the price of the property by way of post-dated cheques in P's favour. Some of D's cheques were honoured but not the rest. P claimed for the total sum of the dishonoured cheques under the Bills of Exchange Act 1949. D argued that the assignment was void ab initio for failure of consideration because the house had not been constructed and delivered to D.

Held, allowing P's claim: (1) P had furnished consideration for the assignment by assigning all the rights, interests and benefit under the sale and purchase agreement with X to D. D was therefore the equitable owner of the house built or yet to be built. D could sue X for damages for non-performance; (2) a cheque is to be treated as cash. Under s 47(2) of the Bills of Exchange Act 1949, when a bill is dishonoured by non-payment, an immediate right of recourse against the drawer and indorser accrues to the holder. Accordingly, once P served notice of dishonour on D in accordance with the 1949 Act, D was liable to P.

Chu Yin Foh v Wong Yau Ket Civil Suit No K428 of 1988 High Court, Kota Kinabalu (Syed Ahmad Idid JC).

Public Finance Bhd v Scotch Leasing Sdn Bhd (In Receivership) (Perwira Habib Bank Malaysia, Intervener) [1996] 2 MLJ 369 Federal Court, Kuala Lumpur (Lamin PCA, Peh Swee Chin and Wan Yahya FCJJ).

See COMPANIES AND CORPORATIONS, Vol 3, para 70.

Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 Federal Court, Kuala Lumpur (Anuar CJ (Malaya).

See CONTRACT, Vol 3, para 2108.

P sued D for breach of a written agreement entered into between the parties. Having obtained judgment against D, P applied for a garnishment order nisi against M for money due from them to D. The registrar granted the order. In the meantime, K applied to intervene in the proceedings under O 49 r 6 of the Rules of the High Court 1980. K claimed that they were entitled to the money due from M by virtue of a deed of assignment entered into earlier between them and D2, where in consideration of a loan granted by them to D2, the latter assigned all payments and debts due from M to them. K submitted that they had priority on the moneys due from M over P. K also submitted that an earlier letter written by D2 to M, authorizing M to forward all payments or debts due to D direct to K, constituted a valid equitable assignment which ranked in priority to the garnishment order. After hearing the parties, the registrar made a garnishment order absolute, ordering M to forthwith pay to P the sum in question. K appealed to the High Court against the decision of the registrar.

Held, allowing the appeal: (1) in the instant case, the deed of assignment in question was a valid one. It was an absolute assignment with no conditions attached. There was no evidence to show that the deed of assignment was made mala fide; (2) the letter signed by D2 and given to M, which was duly acknowledged, constituted a valid equitable assignment by D2 in favour of K. Being the equitable assignee, K had priority over P with respect to the moneys due from M, the subject matter of the garnishment order absolute; (3) for the above reasons, the court rescinded the garnishment order and ordered that all moneys held hereunder be paid to K under the deed of assignment.

Tay Way Boon & Ors v Omar Marican Holdings Sdn Bhd & Ors [1991] 1 MLJ 122 High Court, Penang (Mohamed Dzaiddin J).

Public Finance Bhd v Scotch Leasing Sdn Bhd (In Receivership) (Perwira Habib Bank Malaysia, Intervener) [1996] 2 MLJ 369 Federal Court, Kuala Lumpur (Lamin PCA, Peh Swee Chin and Wan Yahya FCJJ).

See COMPANIES AND CORPORATIONS, Vol 3, para 70.

The appellants had, under a deed of assignment dated 27 July 1987, accepted an assignment to them by the assignors of the sum of S$26,872.53 due to the assignors from the respondents. Upon failure on the part of the respondents to pay the said sum, the appellants commenced the present action. In the defence filed, the respondents admitted being indebted to the assignors only to the extent of S$18,945.68. The learned trial judge gave judgment for the appellants on the basis that the deed of assignment clearly confirmed that the total amount owed by the respondents was S$26,872.53. On the appeal to the High Court, the learned judicial commissioner held that as the respondents were not a party to the deed, the respondents could not be bound by the contents thereof and accordingly, he set aside the decision of the trial judge. The appellants appealed. The issue centred mainly on the question of where the burden of proof lay.

Held, allowing the appeal: (1) this is a case where the respondents asserted a defence which went beyond a mere denial of the appellants' claim. The respondents admitted that a sum of S$86,064 was due to the assignors and claimed that of this sum, a total of S$67,118.32 had been paid; (2) having in their defence asserted that they had made payments the respondents had to bear the burden of proving their assertion; (3) the respondents, however, produced no evidence in support of their claim of payment.

United Malayan Banking Corp Bhd v Chip Hup Realty Pte Ltd [1992] 2 SLR 879 Court of Appeal, Singapore (Rajendran, Warren LH Khoo and Karthigesu JJ).

In this case, the respondents had entered into a written agreement with the receiver and manager of a company in Singapore then in liquidation for the supply of Lesey clay. Subsequently, the appellants informed the respondents that they had taken over the operation of the company and requested the respondents to continue the supply of Lesey clay to the appellants. The respondents continued to do so for some time, until they received a letter from the appellants asking them to suspend all supplies. The respondents complied and waited for a request from the appellants to resume delivery. However, no such request came. The respondents had to store the clay at their godown. The respondents brought an action for breach of contract and obtained judgment for the sum of $90,838.35 as damages and the sum of $27,480 as storage charges. The appellants appealed.

Held, dismissing the appeal: (1) in this case, there was an assignment of the agreement by the receivers to the appellants who thereupon committed breach of trust by failing to take deliveries of more than 3,000 tons of clay as agreed; (2) the award of damages for breach of contract was fair and reasonable and the respondents were also entitled to obtain the storage fees.

Housing and Development Board v Lee Sem Yoong Sdn Bhd [1987] 2 MLJ 204 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

P and D were involved in a housing project in which D had employed P to construct the houses in question. P commenced action against D alleging that D had defaulted in its progress payments to them. D disputed the liability to pay the sum as claimed. D contended that it had assigned to P all its rights and benefits under an agreement entered into between it and the Persatuan Bekas Perajurit Malaysia. Under this agreement, D was to build houses for the Persatuan for sale to the latter's individual members. P applied for an injunction to restrain D from dissipating the purchase moneys obtained from the purchasers of the houses. Before the application by P for the injunction, D had filed an application for stay of proceedings pending reference to arbitration of the disputes between the parties pursuant to the agreement entered into between them.

Held, allowing P's application: (1) the assignment in question was in substance a purported assignment of the burdens of D to build and pay the Persatuan. It is clear that neither at law nor in equity can D transfer the burdens to P without the consent of the Persatuan unless there was a three-party novation agreement involving P, D and the Persatuan; (2) in the instant case, the court thought it just that the injunction asked for should issue to preserve the status quo of the parties pending the decision of the arbitrator.

Kwong Fook Seng Co v Yee Hoong Loong Corp Sdn Bhd Civil Suit No 22-267-89 High Court, Ipoh (Peh Swee Chin J).

D1 was granted a scholarship by A to study law. D1 undertook under the scholarship agreement to serve A for a period of 10 years upon completion of his studies, failing which he would pay A liquidated damages of M$70,000. D2-D3 guaranteed D1's performance of the scholarship agreement. After the completion of D1's studies, he commenced work in A's 'bank regulations department' in June 1984 but left A's employment in November 1984. D1 then wrote letters to A admitting liability under the scholarship agreement but requesting to pay the liquidated damages in instalments over a period of time. In 1986, A in a letter to D1 ('the 1986 letter'), agreed to release D1 under the scholarship agreement provided D1 would serve in the Attorney General's Chambers ('the Chambers') for the balance of the ten-year period. D1 applied for a job in 'the Chambers' but his application was rejected in 1987. A claimed from D1-D3 in respect of the M$70,000 and applied for summary judgment. The senior assistant registrar gave summary judgment for A but this was reversed by the High Court. A appealed to the Supreme Court. D1-D3 firstly argued that A had breached a condition precedent to the scholarship agreement by failing to provide D1 with a post consistent with his legal qualification and D1's liability under the scholarship agreement was thus extinguished. D1-D3 further contended that A was estopped from suing because A had agreed in 'the 1986 letter' not to take any action if D1 had consented to serve in 'the Chambers'.

Held, allowing the appeal; Gunn Chit Tuan SCJ dissenting: (1) to order summary judgment, the court has to be satisfied on affidavit evidence that the defence has not only raised an issue but also that the issue is triable. Where an assertion, denial or dispute is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable in itself, the court has a duty to reject such assertion or denial, thereby rendering the issue as not triable; (2) if a legal point is understood and the court is satisfied that it is unarguable, the court is not prevented from granting summary judgment merely because 'the question of law is at first blush of some complexity and therefore takes a little longer to understand'; (3) D1's assertion that the post given to him was inconsistent with his legal qualification, was absolutely inconsistent with his letters of admission of liability under the scholarship agreement. D1's assertion was also equivocal and lacking in precision considering the obvious fact that he knew or ought to know when he entered into the scholarship agreement that at all material times A was engaged in the business of central banking and not the business of a legal firm. The High Court therefore erred in taking such an assertion as a triable issue; (4) 'the 1986 letter' gave rise to a contingency agreement of novation or assignment of right of the scholarship agreement. The contingency or condition precedent to which A had agreed to release D1's services under the scholarship agreement, was that D1 must be employed by 'the Chambers'. On the facts, such a contingency did not materialize and D1 therefore could not bring himself within either s 63 of the Contracts Act 1950 or the common law principle; (5) on the facts, the issue of estoppel by conduct ought to have been rejected without sending it for trial; (6) since the High Court had erred in law in not exercising its discretion judicially under O 14 of the Rules of the High Court 1980 by accepting uncritically D1's assertions although they were equivocal, lacking in precision as well as being inconsistent with undisputed contemporary documents, the appellate court was entitled to hear full argument on the legal points and exercised its power to grant summary judgment instead of sending it back to the High Court.

Bank Negara Malaysia v Mohd Ismail bin Ali Johor & Ors [1992] 1 MLJ 400 Supreme Court, Malaysia (Jemuri Serjan CJ (Borneo).

Interschiff Schiffahrtsagentur GmbH v Southern Star Shipping & Trading Pte Ltd 1982 High Court, Singapore (Lai Kew Chai J).

See CONTRACT, Vol 3, para 1529.

The plaintiff entered into a factoring agreement with Beauty Industries Sdn Bhd ('the supplier') whereby the plaintiff agreed to factor and to be assigned the debts due under the invoices issued by the supplier to the defendant for goods sold. On each invoice, there was an indorsement stating that the account had been purchased by the plaintiff and any dispute must be reported within seven days of receipt. The plaintiff wrote to the defendant by letter of 4 October 1993 notifying it of the factoring agreement and the need for subsequent credit notes to bear the indorsement of the plaintiff to be binding. The defendant acknowledged the existence of the said agreement and confirmed the correctness of the debt. Pursuant to six invoices, the defendant owed the plaintiff a sum of RM390,449.63. As a result of non payment, the plaintiff commenced a civil suit and applied for summary judgment. The defendant contended that the goods were defective and had been returned to the supplier for which credit notes to the sum of RM390,449.63 were issued without the plaintiff's indorsement. The application for summary judgment was dismissed by the senior assistant registrar. The plaintiff appealed to the judge in chambers.

Held, allowing the appeal: (1) a factor rests his claim in law on the premise that he would have a claim of ownership of the debt or debts which he had purchased. It is trite law that a debt is a chose in action and the way to acquire a right over a chose in action is by way of an assignment. In the case of a factoring agreement, an assignment is manifested when a creditor assigns a particular debt to a factor without even the need of a debtor's consent; (2) one of the terms of the factoring agreement was that the plaintiff had the discretion to decide whether to purchase a particular debt and once the invoice was stamped with an indorsement, it was deemed to have been accepted by the plaintiff and a valid assignment constituted; (3) as the defendants did not complain of the defective goods within the seven-day limit and there was no plaintiffs' indorsement on the credit notes, the defendants were estopped from asserting that there was nothing due on the invoices. There was thus clearly no triable issue.

Hong Leong Leasing Sdn Bhd v Far East Knitting Sdn Bhd [1996] 2 MLJ 251 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

P entered into a factoring agreement with X whereby X factored its book debts to P ('the agreement'). X gave notice to D of 'the agreement' ('the letter'). Similarly P also notified D of 'the agreement'. D subsequently entered into letters of indemnity with X and P ('the indemnity letters'). Certain invoices issued by X to D contained the endorsement stating that the invoices had been assigned to P ('the legend'). P claimed from D in respect of invoices which were issued by X to D but were unpaid by D. The senior assistant registrar gave summary judgment for P and D appealed to the High Court. P firstly contended that 'the agreement' amounted to an assignment in P's favour of all debts due to X from D. P alternatively argued that 'the legend' on X's invoices constituted an assignment in its favour. P further contended that 'the letter' might also constitute an assignment in its favour. P also asserted that in 'the indemnity letters', D had acknowledged the assignment.

Held, allowing the appeal: (1) 'the agreement' was a facultative agreement because although X was bound to offer every debt arising from its sales to P, P had the right to decline to accept any debt; (2) 'the agreement' itself did not constitute an assignment of the debts because implicit in 'the agreement' was that such an assignment was to be done by a separate act; (3) 'the legend' served only as a notice of assignment and could not be regarded as a proper assignment; (4) 'the letter' was only a letter notifying D that X had entered into an arrangement with P whereby X's 'receivables' were assigned to P. 'The letter' did not constitute an assignment because 'the letter' itself referred to a written assignment; (5) in 'the indemnity letters' D merely acknowledged and consented to a proposal to assign. When 'the indemnity letters' were signed, there was no written assignment; (6) even if assuming 'the agreement' constituted an assignment in P's favour, P was not entitled to summary judgment. Section 4(3) of the Civil Law Act 1956 requires express notice of the assignment to be given to the debtor. Not all of X's invoices bore 'the legend' and these invoices therefore failed to comply with s 4(3) of the 1956 Act. Moreover D had paid to P for the invoices which bore 'the legend'.

Arab Malaysian Merchant Bank Bhd v Esso Production Malaysia Incorporated Civil Suit No D4-23-2684-1988 High Court, Kuala Lumpur (Zakaria Yatim J).

The appellants ('Showa') were a leasing and factoring company. Alliance Apparel Pte Ltd ('Alliance') were at all material times garment manufacturers and the respondents ('Dodwell') were customers of Alliance. By a factoring agreement made between Showa and Alliance, the latter assigned to Showa all their present and future debts and receivables under their credit sales. Notice of assignment was given to Dodwell by a letter from Alliance which copy Dodwell duly acknowledged and thereby agreed to direct to Showa all future payments due to Alliance. Dodwell purchased garments from Alliance under an invoice but paid Alliance instead of Showa. Subsequently, Showa as debenture holders put Alliance into receivership. Showa demanded payment from Dodwell on the invoice. Dodwell refused, contending that the invoice was not stamped with any assignment clause as a result of which Dodwell made payment to Alliance. The trial judge dismissed Showa's action. Showa appealed.

Held, allowing the appeal: (1) the law does not require that an equitable assignment must be in any particular form or wording so long as the intentions of the parties are clear and value is given; (2) an equitable assignment need not be in writing although it is desirable since until he receives it, the debtor is entitled to pay the original creditor; (3) the oral arguments clearly established that Dodwell had a running account with Alliance and all invoices relating thereto were factored to Showa; (4) Dodwell paid Alliance at their peril on the invoice when Showa had not notified Dodwell that the invoice was not factored; (5) the court rejected the argument that agreement could not cover an assignment of future debts but only those that arose upon signing of the agreement.

Showa Leasing (Singapore) Pte Ltd v Dodwell Singapore Pte Ltd District Court Appeal No 47 of 1994 High Court, Singapore (Lai Siu Chiu J).

Chong Yoong Choy v UOL Factoring Sdn Bhd [1996] 1 MLJ 421 Court of Appeal, Malaysia (Gopal Sri Ram, Siti Norma Yaakob and Ahmad Fairuz JJCA).

See CONTRACT, Vol 3, para 2115.

In this case, a company, Syarikat Ulu Bukau, had obtained a timber concession. The first defendant alleged that he had bought the concession from the company and had combined with the plaintiff and the other defendants to work the timber concession and for that purpose, had formed a company. The condition of the licence for the timber concession in this case was that it was non-transferable. Disputes arose between the parties and the plaintiff brought an action against the defendants, inter alia, for accounts of the company and accounts of the operations. It was held that as the transfer was illegal, no action could be brought by any of the parties relating to it. The action was therefore dismissed with costs.

See Leng Yap v Lee Moong Lin & Ors [1990] 1 MLJ 17 High Court, Kuala Lumpur (Abdul Razak J).

H Sdn Bhd had purchased from D the property in question and had executed an agreement in respect of it. P granted H Sdn Bhd a loan to finance the purchase of the property. By way of security, H Sdn Bhd assigned absolutely to P all its right, title and interest in and to the property. When P submitted the deed of assignment to D for its consent, D refused to give its consent and demanded payment from P for a sum of money, being arrears of service charges and interest due and owing by H Sdn Bhd to D under the sale agreement. P applied for a declaration that they were not liable to pay D the said sum.

Held, allowing P's application: (1) in an assignment of a contract, it is an accepted principle that the burden or liability cannot be transferred so as to discharge the original contractor without the consent of the contractee. However, in certain circumstances, an assignee may not be able to enjoy the benefits assigned without also assuming the obligations; (2) the question in the instant case was whether the agreement merely granted qualified or conditional rights, the qualification being the due observance of the obligations, or whether the agreement granted unqualified rights and imposed independent obligations; (3) on the true construction of the loan agreement and the assignment, the intention of the parties was to create the benefit of an interest in the property and possession thereof which was distinct and independent from the burden created in the payment of service charges. In the circumstances, the liability of H Sdn Bhd for the sum in question cannot be assigned to P. Hence, P cannot be made liable to D for the said sum.

Chung Khiaw Bank Ltd v Penang Garden Sdn Bhd Originating Summons No 24-596-1989 High Court, Penang (Mohamed Dzaiddin J).

Perkayuan OKS No 2 Sdn Bhd v Kelantan State Economic Development Corp [1995] 1 MLJ 401 Federal Court, Kuala Lumpur (Eusoff Chin CJ, Chong Siew Fai and Lamin FCJJ).

See contract, Vol 3, para xxx.

See evidence, para III [79].

Tan Chee Lan & Anor v Dr Tan Yee Beng [1997] 4 MLJ 170 High Court, Melaka (Augustine Paul JC).

Arab Malaysian Merchant Bank Bhd v Esso Production Malaysia Incorporated Civil Suit No D4-23-2684-1988 High Court, Kuala Lumpur (Zakaria Yatim J).

See CONTRACT, Vol 3, para 1583.

Public Finance Bhd v Scotch Leasing Sdn Bhd (In Receivership) (Perwira Habib Bank Malaysia, Intervener) [1996] 2 MLJ 369 Federal Court, Kuala Lumpur (Lamin PCA, Peh Swee Chin and Wan Yahya FCJJ).

See COMPANIES AND CORPORATIONS, Vol 3, para 70.

Arab Malaysian Merchant Bank Bhd v Esso Production Malaysia Incorporated Civil Suit No D4-23-2684-1988 High Court, Kuala Lumpur (Zakaria Yatim J).

See CONTRACT, Vol 3, para 1583.

This appeal concerned the beneficial ownership of a single storey semi-detached house known as No 59 Walmer Drive Singapore ('the property') held under a 999 year leasehold commencing from 1 January 1953. The property originally belonged to the respondent's father who assigned it to the respondent in January 1977. The respondent mortgaged it to a finance company, Overseas Union Trust Limited ('OUT') for $80,000. He fell into arrears in his mortgaged repayments and OUT finally decided to exercise their mortgagee right of sale. The appellant, who had known the respondent for eight years, offered to help by obtaining a loan from her employers, the Urban Renewal Authority, to pay the purchase price. However, the respondent paid all the legal fees and the stamp and registration fees relating to both the assignment and the new mortgage. He also paid $500 into the appellant's account with her bank every month. The leasehold was thus transferred under the Land Titles Act (Cap 276, 1970 Ed) by the respondent to the appellant on 5 November 1979. Within two months of the transfer and after the appellant had left for Hawaii on a two-year scholarship course, the respondent broke off relations with the appellant and married a third party one year later. The appellant then took steps to sell the property whereupon the respondent filed a caveat under the Torrens System to protect his interest and possession of the property. On 13 October 1981, the appellant served on the respondent a notice to quit the property. Both parties then commenced proceedings in the High Court, the respondent seeking a declaration that the appellant was the trustee of the property for his benefit and for an order that she transfer the property to him upon his payment of all moneys necessary to discharge the new mortgage. The appellant, on the other hand, asserted that it was an outright sale. The learned trial judge found for the respondent (see [1984] 2 MLJ 192). The appellant appealed.

Held: (1) in the absence of express provisions to the contrary in the written agreement for sale and purchase, the learned trial judge was right in noting that all the legal costs of the purchaser and of the new mortgage should have been borne by the appellant if she had been the outright purchaser; (2) the respondent had been and was paying into the appellant's account with her bank the sum of $500 every month since the assignment of the property. The learned trial judge rightly found that the said sum was not paid by way of rental; (3) the respondent's account of the matter in dispute did not necessarily involve proof that he had intended to deceive the Urban Renewal Authority and Credit POSB into granting a loan which they would not have otherwise granted. In these circumstances, the court was unable to say that the respondent had founded his cause of action upon an immoral or an illegal act and that he must be denied the court's aid and process.

Teo Ai Choo v Leong Sze Hian [1986] SLR 75 Court of Appeal, Singapore (Wee Chong Jin CJ, Sinnathuray and Lai Kew Chai JJ).

P sold a floating dock to D on the express stipulation that D would have it scrapped and would provide evidence of scrapping. The dock was sold at below market price for a floating dock, since it was meant for scrap. P desired evidence of scrapping so that the dock would not be used as a dock in competition with them. D sold the dock to S. P requested evidence of scrapping repeatedly. When D failed to comply, P brought the present proceedings for specific performance or alternatively, damages.

Held, granting the claim: (1) the fact that D had sold the dock to S did not afford a defence to the claim. The obligation to ensure that the dock was scrapped was personal to them and could not be passed to S without the consent of P; (2) judgment was granted for specific performance to be effected within two months, failing which there would be judgment for damages to be assessed.

Sembawang Shipyard Ltd v Ban Choon Shipping Pte Ltd Originating Summons No 1188 of 1990 High Court, Singapore (Selvam JC).

The appellant and the respondent entered into an agreement ('the main agreement') whereby the appellant, formerly known as Perkayuan OTP Sdn Bhd, was allowed to carry out logging in a timber concession of 40,000 acres of forest land. Under cl 18 of the main agreement, the appellant could not assign, lease, sublet or transfer its rights without first obtaining the written consent of the respondent. By another agreement ('the second agreement'), between the appellant and Sykt Kempadang Bersatu Sdn Bhd ('Kempadang'), the appellant engaged Kempadang as a contractor 'to fell logs and remove timber from the contract area' subject to the terms and conditions therein contained. The respondent terminated the main agreement after its solicitors served a notice on the appellant alleging that the appellant had breached the main agreement by: (i) assigning the main agreement to OKS No 2 without the respondent's written consent in breach of cl 18; (ii) leasing, subletting and/or transferring the appellant's rights under the main agreement to third parties on various occasions without the respondent's written consent in breach of cl 18; (iii) misrepresenting to the Menteri Besar of Kelantan that the second agreement had been cancelled; and (iv) having a subsisting agreement with Kempadang, giving away the appellant's rights under the main agreement without the respondent's written consent. The trial judge held, inter alia, that the second agreement was an assignment to Kempadang in breach of the main agreement and therefore the respondent's termination was valid. The appellant appealed.

Held, allowing the appeal: (1) the appellant's change of name did not affect the entity of the company in the face of s 23(6) of the Companies Act 1965 and the certificate of incorporation on change of name of company issued by the registrar of companies. There was therefore no breach of cl 18 of the main agreement; (2) the notice was inadequate as the particulars set out were unspecific, ambiguous and vague. The allegation that the appellant had assigned its rights under the main agreement to third parties on 'various occasions' lacked details on the identity of the third parties. The allegations must be sufficiently particularized to enable the appellant to admit or deny them. Such a vague notice was no notice in law; (3) there was no provision in the main agreement requiring the parties to keep the Menteri Besar informed of the progress of the logging activities. Therefore, any misrepresentation by a party to the Menteri Besar would not entitle the other party to terminate the main agreement. In any event, there was no evidence of misrepresentation by the appellant. There was no provision in the main agreement requiring the parties to keep the Menteri Besar informed of the progress of the logging activities. Therefore, any misrepresentation by a party to the Menteri Besar would not entitle the other party to terminate the main agreement. In any event, there was no evidence of misrepresentation by the appellant to the Menteri Besar and the notice did not state how the misrepresentation came about or what had been misrepresented; (4) under the second agreement, the appellant had engaged Kempadang to fell the timber in conformity with its directions and the security deposit under the main agreement remained in the appellant's name, implying that the logging was to continue under the main agreement. Furthermore, by cl 12 of the second agreement, the second agreement would subsist for so long as the main agreement remained in force. These indicated that the second agreement was not an assignment but was in fact a sub-contract. Therefore, it did not breach cl 18.

Perkayuan OKS No 2 Sdn Bhd v Kelantan State Economic Development Corp [1995] 1 MLJ 401 Federal Court, Kuala Lumpur (Eusoff Chin CJ, Chong Siew Fai and Lamin FCJJ).

HTF Bhd let a tyre shovel to D1 under a hire-purchase agreement. D2 was D1's guarantor. It was agreed that the Hire Purchase Act 1967 does not apply to a tyre shovel. P alleged that it was HTF Bhd's agent and guarantor. As such, D1 was requested to pay the hire-purchase instalments to P who in turn would pay to HTF Bhd. P further alleged that D1 only paid the down payment and the first instalment. Upon D1's default in payment, P had to pay the full amount to HTF Bhd. When P had completed paying HTF Bhd, HTF Bhd assigned all its legal rights under the hire-purchase agreement to P. P averred that it had sent notice of the assignment to D1 but the notice as produced in court by P, was only a carbon copy to which D challenged. P tried to repossess the tyre shovel but it could not be traced. As such, P claimed for the balance due under the hire-purchase agreement.

Held, dismissing the claim: (1) P had not succeeded to prove that there was a written notice of the assignment given to D1. Accordingly P had failed to comply with s 4(3) of the Civil Law Act 1956; (2) since there was no notice given to D1, the assignment to P was only an equitable one. The assignee may sue in his own name provided he makes the assignor a party to the action, as plaintiff if he consents and as a defendant if he does not consent. The assignor, HTF Bhd, must be joined as a party in this case.

Lian Mah Motor Sdn Bhd v Ding Nguk Bing & Anor Civil Suit No 327 of 1982 High Court, Kuantan (Lamin J).

The custom that contracts for the sale of opium are not assignable is bad.

Wee Soon Chew v Nathan [1897] 4 SSLR 8 High Court, Straits Settlements (Cox CJ).

See CONTRACT, Vol 3, para 2443.

The plaintiff, a licensed bank, entered into an agreement ('the loan agreement') with the defendant, an incorporated company, whereby the plaintiff granted a loan ('the loan') to the defendant, repayable with interest. By way of security for the loan, the defendant executed a deed of assignment ('the assignment') whereby it assigned absolutely to the plaintiff all its rights, title and interest in certain immovable property ('the property') and in the sale and purchase agreement. It was further provided in the loan agreement that the defendant would remain in possession of the property only as contractual licensee of the plaintiff and that within seven days after its licence to occupy the property has been terminated, it would have to give immediate vacant possession thereof to the plaintiff, and thereafter the plaintiff would have the right to enter upon the property and to deal with all its rights, title and interest in the property. The defendant defaulted in making payments due under the loan agreement, in consequence whereof the plaintiff, after notification to the defendant, commenced the proceedings herein by way of originating summons praying for, inter alia, an order for sale of the property.

Held, applying contractual principles to determine the rights and obligations of the parties: (1) the defendant's right to possession of the property vis-a-vis the developer is an incident of his rights and benefits under the sale and purchase agreement (under which the defendant was the purchaser and the developer the vendor), which right had been assigned to the plaintiff under the assignment; (2) the defendant's rights to possession subsequent to the execution of the assignment depended entirely upon the contractual licence granted to him by the plaintiff; (3) the plaintiff had lawfully exercised its right to terminate the licence and was entitled to enter upon the property and to deal with all the rights, title and interest in the property; (4) if the security constituted by the documents concerned is a security relating to land, it is still a valid security. The requirements of the National Land Code, which concern the creation of a security in respect of land held under registered title, are without application in the present case, as the property is not as yet held under a registered title; (5) the security concerned, being a security relating to a chose in action, that is to say, an assignment of the defendant's rights, benefits and interest in and under the sale agreement of the property, to wit, a parcel of a sub-divided building, in respect of which strata title has yet to be issued, this court has jurisdiction under s 41 of the Specific Relief Act 1950 and/or it has inherent jurisdiction to grant the declaration prayed for by the plaintiff and an order for sale of the property; (6) if the security herein is not a security relating to a chose in action, but a security relating to land, then the court would hold that it has jurisdiction under O 31 r 1(1) of the Rules of High Court 1980 to make an order for sale of the property.

Chung Khiaw Bank Ltd v Hipparion (M) Sdn Bhd [1988] 2 MLJ 62 High Court, Penang (Edgar Joseph Jr J).

[Annotation: Affirmed on appeal. See [1989] 2 MLJ 149.]

The Court of Appeal found that the plaint was confused and unsatisfactory and the trial judge had based his decision on a ground which was not tenable. The appeal was allowed and an order made striking out of the plaint, liberty being given to file a fresh plaint.

M Pakiam v YP Devathanjam [1952] MLJ 58 Court of Appeal, Ipoh (Pretheroe Ag CJ, Thomson and Briggs JJ).

When land is sold for arrears of rent of $4 and knocked down for $5 to a purchaser who knows that a valuable house stands on it and the sale is afterwards found to be void for irregularity, the purchase for gross undervalue by itself is not fraud. The state was a trespasser and it is not for it to set up allegations of legal or technical fraud. The measure of damages is the present price of the property; the rule in Bain v Fothergill LR 7 HL 158 does not apply in this country.

Vyramuttu v State of Pahang [1924] 4 FMSLR 277 Supreme Court, Federated Malay States (Sproule Ag CJC).

The doctrine of res ipsa loquitur is a rule of evidence and not a rule of pleadings and under s 42 of the Civil Procedure Code (Cap 7) the plaintiff alleging a contract of bailment and negligence must plead such contract and must also plead negligence.

Ong Ee Lim v Government of the FMS [1937] MLJ 40 Court of Appeal, Federated Malay States (Terrell Ag CJ, Whitley and Aitken JJ).

This was an appeal against the decision of the High Court ([1971] 1 MLJ 110) allowing an appeal from the decision of the magistrate allowing a claim by the plaintiffs/appellants for the sum of $936 being the value of one case of locksets lost while in the custody of the defendant/respondent. The learned magistrate had found as a fact that four cases were delivered into the custody of the respondent, but when the appellants' agent went to collect them, only three cases were to be found in the respondent's warehouse. These findings were affirmed by the learned judge who heard the appeal. The magistrate took the view that, in the circumstances, the doctrine of res ipsa loquitur applied, that there was prima facie proof of negligence and that 'the onus is thrown on the defendants to show that there was no negligence on their part or, at least, to give an explanation of the accident which is consistent with the absence of negligence'. This the defendant failed to do: consequently r 91(1) of the Port Swettenham Authority By-laws 1965 which provided that 'The Port Authority shall not be liable for any loss, destruction or deterioration arising from delay in delivery or detention or misdelivery of goods or for any other cause unless such loss...has been caused solely by the misconduct or negligence of the Authority or its officers or servants', did not relieve the defendant of the onus of proving that the loss was not due solely to its own negligence or that of its officers or servants. On appeal, the learned judge took the contrary view of the rule and held that for the (present) appellants to succeed, the onus was upon them to show that the loss was due solely to the negligence of the respondent or its officers or servants. The issue before the Federal Court was whether, on the true construction of r 91(1) the operation of common law principles is by that rule excluded so as to shift the burden of proving how the goods came to be lost from the bailee for reward to the bailor.

Held, allowing the appeal: (1) the contra proferentem rule should apply to the construction of r 91(1) just as much as it does to any exemption clause in a contract. The very fact that serious controversy had arisen as to whether the rule had placed the onus of proof on the bailor or bailee to show how the goods came to be lost, clearly demonstrates that it suffers from ambiguity; (2) in the case of non-delivery all that the bailor need plead is the contract and a failure to deliver on demand. That puts on the bailee the burden of proving either loss without his fault (which would be a complete answer at common law) or, if the loss was due to his fault that it was a fault from which he is excluded by the exemption clause. Mere non-delivery, therefore, is prima facie evidence of negligence Ð this being a case of res ipsa loquitur. And 'once negligence on the part of the defendants had been established and this negligence could have caused the loss, it was eminently reasonable to ask them to prove that in fact it did not'; (3) upon the evidence in this case, the learned magistrate was fully justified in coming to the conclusion that the loss had been caused 'solely by the negligence of the Authority or its officers or agents'. There was no suggestion on the part of the defence that it was otherwise Ð and pure speculation as to other possibilities cannot take the place of evidence; (4) in this case the evidence was conclusive in the appellants' favour; the onus as a determining factor therefore, did not arise.

Sharikat Lee Heng Sdn Bhd v Port Swettenham Authority [1971] 2 MLJ 27 Federal Court, Kuala Lumpur (Ong CJ (Malaya).

In this case, the defendants had entered into a contract with the plaintiff to carry the tobacco products of the plaintiff to its distributors. On 20 December 1922, the defendants sent their motor vehicle to the premises of the plaintiff to collect a consignment of cigarettes and tobacco for delivery to Malacca and Johore. The driver and an attendant of the said vehicle were at the material time employees of the defendants and the said consignment was stolen whilst under the care, custody and control of the defendants and/or their servants. The plaintiff had insured the goods and had been paid by the insurers, who then sued the defendants for the loss suffered.

Held, granting the application: (1) where as in this case there is a bailor and bailee relationship, the bailee is under a duty to take all reasonable precautions to protect the goods from theft and if the bailee entrusts that duty to his servants or agents he is answerable for the manner in which those servants or agents carry out their duty. If the servants or agents steal the goods or make away with them the bailee, as master, is liable; (2) the onus was on the bailee to prove that the loss of the goods bailed was not caused by any fault of his or any of his servants or agents to whom he entrusted the goods for safe keeping. In this case the defendants have not shown how the goods were stolen and have failed to discharge the onus, which was upon them, of proving that what happened was not the result of their negligence or the negligence and/or misconduct of their servants. In fact the defendants were negligent in having employed a driver without having taken reasonable care to make sufficient inquiries to check his character with regard to honesty and trustworthiness; (3) the insurance policy taken out by the plaintiff did not cover the liability of the defendants who must pay for the value of the goods if it had been delivered to them as per the delivery orders and without taking into consideration the proceeds of insurance; (4) judgment should be given for the plaintiff as prayed. As the insurance company was subrogated to the rights of the plaintiff and has brought the action in the name of the plaintiff, it would therefore be entitled to recover the sum claimed with interest.

Rothmans of Pall Mall (M) Bhd v Neo Kim Har & Anor [1988] 3 MLJ 478 High Court, Kuala Lumpur (Gunn Chit Tuan J).

This was an appeal from the judgment of the High Court ([1975] 1 MLJ 15). The facts adduced showed that 93 cases of pharmaceutical goods had been unloaded at Port Klang and kept in the custody of the Port Swettenham Authority. Subsequently only 29 cases were collected by the respondents. Subsequently part of the missing goods were recovered in shops in Kuala Lumpur. The respondents brought an action for breach of contract and/or conversion of the remaining 64 cases. It was held that the appellants, the port authorities, were liable as they had failed to show that they had exercised due care and diligence. The appellants appealed.

Held, dismissing the appeal: (1) in cases where the bailor and bailee relationship has been established all that the plaintiff has to do is to prove that he entrusted the goods to the defendant who could not deliver them on demand. It would then be for the defendant as bailee to show that the loss was not due to his negligence; (2) in this case the learned judge was correct in holding that the appellants were negligent considering the circumstances under which the goods disappeared, the nature, bulk and weight of the goods and the system of security; (3) byelaw 29 of the Port Swettenham Authority Byelaws did not affect the onus of proof but only dealt with limitation of liability.

Port Swettenham Authority v TW Wu and Co (M) Sdn Bhd [1975] 2 MLJ 73 Federal Court, Kuala Lumpur (Suffian LP, Lee Hun Hoe CJ (Borneo).

The facts in this case were that 93 cases of pharmaceutical goods had been unloaded at Port Klang and kept in the custody of the port authority (the appellants). Subsequently only 29 cases were collected by the respondents and some of the contents of the missing cases were recovered in shops in Kuala Lumpur. The respondents brought an action against the appellants for breach of contract and/or conversion of the remaining 64 cases. The learned trial judge (Abdul Hamid J, [1975] 1 MLJ 15) found that the onus lay on the appellants to prove that the goods had not been lost because of their negligence or misconduct or that of their servants, and that they had failed to discharge that onus. Accordingly he gave judgment for the respondents. The appellants' appeal to the Federal Court was dismissed ([1975] 2 MLJ 73). The appellants appealed.

Held: (1) the onus is upon the appellants under ss 104 and 105 of the Contract Act to prove that they had taken as much care of the respondents' goods as a port authority of ordinary prudence would under similar circumstances have taken of its own goods of the same bulk, quality and value as the 64 lost cases; (2) if there is nothing in the provisions of the Contract Act to establish with certainty whether the onus is upon the bailor to prove the default or upon the bailee to disprove it, those provisions must be interpreted in the light of the common law; (3) at common law the onus is always upon the bailee, whether he be a bailee for reward or a gratuitous bailee, to prove that the loss of any goods bailed to him was not caused by any fault of his or of any of his servants or agents to whom he has entrusted the goods for safe keeping. Accordingly the onus of proving that the loss of the goods deposited with the appellants in this case, was not caused by the negligence or misconduct of their servants, lay on the appellants; (4) the appellants in this case have failed to discharge the onus which lay upon them.

Port Swettenham Authority v TW Wu and Co (M) Sdn Bhd [1978] 2 MLJ 137 Privy Council Ð Appeal from Malaysia (Lord Wilberforce, Viscount Dilhorne, Lord Salmon, Lord Fraser of Tullybelton and Sir Garfield Barwick).

In this case it was shown that 173 cartons of teets and soothers were unloaded at Port Kelang and were in the custody of the appellants. The respondents managed to take delivery of only 70 cartons. The respondents obtained judgment for damages for the loss of the 103 cartons. The appellants appealed.

Held: (1) where a bailor and bailee relationship exists, then the position is the same as at common law, ie the onus is on the bailee for reward to show that the loss of the goods was not due to his negligence; (2) in this case there was no reason for the appeal court to interfere with the finding of the learned trial judge that the appellants had not taken all reasonable care of the consignment in their custody.

Port Swettenham Authority v Borneo Co (Malaysia) Sdn Bhd [1975] 2 MLJ 80 Federal Court, Kuala Lumpur (Suffian LP, Lee Hun Hoe CJ (Borneo).

The appellants were consignees of eight cases of Yashica cameras which were shipped from Hong Kong by a vessel belonging to the first respondents, discharged into a lighter belonging to the second respondents and brought to the godown of the Penang Port Commission, the third respondents. It appeared that some of the cases had been tampered with and eight cameras were found missing. The appellants sued the first respondents as carriers, the second respondents as independent contractors and the third respondents as bailees for negligence in failing to take or exercise reasonable care of the goods. All the respondents had adduced evidence to absolve themselves from liability by showing their modus operandi in connection with the goods in question. They claimed that they had done all they could to protect the appellants' goods. The learned President of the sessions court took the view that the damage to the cases and the theft of the cameras occurred in the godown and he therefore held that the third respondents were negligent and liable for the loss. On appeal this decision was reversed by the High Court, the learned judge holding that the learned President was wrong on the evidence to hold that the third respondents had not discharged the onus on them that the loss was not due to their negligence. The appellants appealed.

Held, dismissing the appeal: the evidence in this case showed a state of things under which it was doubtful that the loss was caused by the third respondents' negligence. They had shown that they had taken reasonable and proper care of the goods and therefore had discharged the onus of showing that the loss was not due to their negligence.

Tithes Dental & Photo Supply Sdn Bhd v Empresa Lineas Maritimes Argentinas & Ors [1977] 2 MLJ 13 Federal Court, Penang (Lee Hun Hoe Ag LP, Ali Ag CJ (Malaya).

The plaintiffs claimed damages in respect of their goods which they had allegedly loaded into a container for shipment to their buyers in Nigeria. They had engaged the services of the defendants, as hauliers, to truck the loaded container to a terminal of the Port of Singapore Authority for shipment. They claimed that defendants' failure to collect the container as allegedly promised, the goods in the container had been lost. Their causes of action were (1) that the defendants had failed in their duty as bailee to secure and promptly take possession of the container; (2) breach of contract, and (3) negligence. The defendants, inter alia, denied making any promise to take possession of the goods on the night concerned, denied any duty of care to the plaintiffs and put the plaintiffs to proof that they did in fact load the goods into the container. Alternatively if they were liable, they claimed indemnity from the third party, who were the actual hauliers with whom the defendants had contracted to get the work done and who they alleged were liable to the same extent.

Held, disallowing the claim: (1) on the evidence, neither the defendants nor the third party had been in actual possession of the goods when they were stolen as there had been no physical transfer of the container load of goods by the plaintiffs to the defendants or their agents. It was generally the law that no one could be a bailee without possession of a tangible chattel; (2) as an extension of that law, a bailee's liability could, however, be imposed on any party who agreed to take possession of another's goods but failed through his own default to do so. On the evidence, the plaintiffs had not proved that the defendants had promised that a truck was on its way to collect the container on the day concerned. The plaintiffs were responsible for looking after their own goods and ensuring that the goods were secured if no truck turned up; (3) the plaintiffs had also not proved that they had more likely than not loaded the goods into the containers.

T Kishen & Co (a firm) v Birkart Southeast Asia Pte Ltd (Dyna Movers Pte Ltd, third party) Suit No 2684 of 1991 High Court, Singapore (Lai Kew Chai J).

In this case, the appellant bought and sold shares using overdraft facilities on the security of the shares deposited with the respondent bank. The stock market crashed and the respondent demanded payment of the overdraft. Eventually the respondent sold the shares for $46,945.20 leaving a balance of $13,174.59 on the overdraft account. The High Court gave judgment for this sum against the appellant. The appellant appealed and on the appeal it was argued, inter alia, that the respondent bank was a bailee or pawnee of the shares and was under a duty to ensure that the sale of shares was a provident one.

Held, dismissing the appeal: the question raised by the appellant was not alleged in the pleadings. The learned trial judge properly decided the case on the issues disclosed by the pleadings.

Kanagasabai Satkuru v United Malayan Banking Corp Bhd [1981] 2 MLJ 23 Federal Court, Kuala Lumpur (Suffian LP, Salleh Abas and Abdul Hamid FJJ).

This was an action for damages for breach of contract or for conversion. The plaintiffs were the consignees of cotton sewing thread which were shipped on board a ship belonging to the first defendants. All the goods were unloaded at the ship's side but subsequently a case and 15 cartons were stolen by a person or persons unknown somewhere between the ship's side and/or in shed No 6. The first defendants would be liable for breach of contract and conversion unless there was some term in the bill of lading protecting them. The first defendants relied on cll 2 and 15 of the bill of lading. Clause 2 provided that 'the shipping company shall not be responsible for any consequences arising or resulting from, inter alia, loss by robberies, thefts or pilferages, by land or water whether by persons in the employment or service of the company or otherwise'. Clause 15 provided that 'In any case the company's liability shall cease as soon as the goods leave the ship's deck and/or tackle'. The Port Swettenham Authority shall not be liable for any loss, destruction or deterioration arising from delay in delivery or detention or misdelivery of goods or from any other cause, unless such loss, or destruction has been caused solely by the misconduct or negligence of the Authority or its officers or servants'.

Held: (1) the exemption clauses in this case were wide enough to exonerate the first defendant from responsibility for the short delivery of the goods; (2) as in the present case the loss or short delivery was caused by theft by some person or persons unknown, and the act of such person or persons could not be considered to be the act of the first defendants, there was no fundamental breach of the contract; (3) the second defendants, as bailees, had exercised due care and diligence in keeping and preserving the goods entrusted to them and they had discharged the onus of showing that the loss of the goods in question was not due solely to their misconduct or negligence.

Malayan Thread Co Sdn Bhd v Oyama Shipping Line Ltd & Anor [1973] 1 MLJ 121 High Court, Kuala Lumpur (Raja Azlan Shah J).

The first defendant in these proceedings was sued under a block discounting agreement ('the master agreement') dated 21 September 1977, wherein the plaintiff claimed a sum of RM1,960,429.80 as being due and payable by the first defendant. The second defendant was sued as a guarantor under a guarantee, also dated 21 September 1977, wherein the second defendant was to indemnify the plaintiff for all sums due and payable by the first defendant under the agreement. The plaintiff had succeeded in its application to enter summary judgment against the defendants. The defendants appealed against the order raising, inter alia, the following issues: (i) whether the master agreement was only an agreement to agree, and (ii) whether the failure of the plaintiff to create any assignments of the properties in the hire-purchase agreements acquired by the plaintiffs had prejudiced the second defendant.

Held, dismissing the appeal: (1) as for the true nature of the master agreement, this must be scrutinized to ascertain the true intentions of the parties. Clauses 1Ð6 were the preambles stating the intentions of the parties. It was only from cl 7 onwards that the obligations of the parties were spelt out and it was clear that the agreement was for the sale by the first defendant of its contractual rights in various hire-purchase agreements with third parties and the purchase by the plaintiff of such contractual rights in those hire-purchase agreements. There was nothing ambiguous about it and therefore it was a legally binding contract; (2) by virtue of the amendments in the Banking and Financial Institutions Act 1989 ('the BFIA') extending the scope of a finance company's business to include acquiring debts due to any person, it was clear that by the retrospective effect of the amendments, contracts like the master agreement, which would not be enforceable under the Finance Companies Act 1969, were now enforceable by the amendments under the BFIA; (3) the purpose of any assignment was to pass the title of the assigned property to the assignee and in this case the assignee would be the plaintiff. That purpose had already been taken care of by cl 5 of the master agreement as the plaintiff had already been vested with such a title and as such the execution of any assignment becomes only a formality.

Mayban Finance Bhd v Aik Soon Auto Sdn Bhd (formerly known as Aik Soon Auto Finance Sdn Bhd) & Ors Suit No D2-22-1752-91 High Court, Kuala Lumpur (Siti Norma Yaakob J).

The second appellant (Soh) was a property developer. The first appellant (Fong) was, at all material times, a secretary working for a company where Soh was the managing director. The respondent (Yoong) was an advocate and solicitor whose main area of practice was conveyancing. Foo Peng Boon (Foo) was a property agent who was known to both Soh and Yoong. In late July 1994, Foo contacted Soh and asked the latter whether he was interested in purchasing a piece of property near Garlick Avenue for about S$300 per sq ft. Soh expressed his interest. Shortly after, Foo sent a fax to Soh (the Bangkok fax) which stated, inter alia, that the property was owned by a Hongkong public company through a Singapore nominee company. The Bangkok fax also stated that the decision to sell the property was controlled by a director of the Hongkong company and a Singapore lawyer. Soh and Foo then agreed that Foo would secure an option to purchase the property for S$12.8m and assign it to Soh for S$1.1m plus the refund of the option fee of S$256,000. There was an added condition that S$550,000 of the S$1.1m was to be paid immediately upon the assignment. In the meantime, on 13 August 1994, Foo contacted Yoong. He told Yoong that he was working for a Hongkong company that wanted to dispose of a piece of property in Singapore. The property was owned by a Singapore company that was controlled by the Hongkong company. Foo said that he had been granted an option to purchase the property and he had found a buyer to whom he would assign the option. Foo wanted Yoong to act as the solicitor in the sale. On 15 August 1994, at Soh's office, Foo produced an option to purchase the property purportedly obtained from Fontana Pte Ltd (Fontana). It was granted to Foo and/or his nominees. The purchase price was stated as S$12.8m and the option fee paid as S$256,000. Yoong was described in the option as Fontana's solicitors. Foo also showed Soh a resolution purportedly passed by the directors of Fontana which authorised the property to be sold and which appointed Yoong to act for Fontana in the sale of the property. Soh had some doubts as to the genuiness of this transaction. He told Foo that he wanted to see Yoong. At Yoong's office, Soh spoke to Yoong privately. What was said during the course of this conversation was the subject of conflicting evidence by Soh and Yoong at the trial. The judge accepted Yoong's version as more credible. This was as follows: Soh asked Yoong whether he was acting for Fontana; Yoong answered in the affirmative. Soh then asked Yoong whether it was true that Fontana wanted to sell the property, to which Yoong showed Soh the resolution. Soh next asked whether Yoong knew Fontana; Yoong's reply was that he did not and that he had been appointed to act in the sale by the resolution. Finally, Soh asked whether Yoong knew that the signatories of the resolution and option were indeed the directors of Fontana; Yoong answered that he could not confirm that they were the directors of Fontana but would carry out a company search to ascertain whether they were. Following this, Foo executed an assignment of the option to Fong, who had agreed to act as Soh's nominee for this transaction. Soh then handed to Yoong three cheques made out to Yoong - one for S$256,000 and the other two for S$550,000 each. Later that day, Yoong carried out an instant search on Fontana at the Registry of Companies and faxed the results to Fong. The search revealed that the persons named as the signatories in the option and the resolution were indeed the directors of Fontana. The next day, 16 August 1994, Fong authorised Yoong to release the money to Foo. Yoong drew two cheques in favour of Foo for S$550,000 and S$256,000 respectively. Foo cashed these two cheques immediately. It was soon discovered that all the signatures on both the resolution and the option were forgeries. By this time, Foo was nowhere to be found. The appellants brought an action against Yoong to recover the sum of S$806,000 in damages. They claimed that Yoong had breached his duty of professional care, skill and diligence owed to them as their solicitor, and had caused them to part with S$806,000 to Foo. Alternatively, they claimed that Yoong had negligently represented to them that Fontana wanted to sell the property and had appointed him as its solicitor. It was pleaded that the appellants had relied on this representation and had suffered loss. Each side called an experienced conveyancing lawyer to testify on their behalf. The evidence led by the appellants was to the effect that Yoong should not have held himself out as acting for Fontana in the sale of the property merely on the strength of the resolution. By doing so, Yoong put himself at risk of acting without proper authority. The evidence on behalf of Yoong was to the effect that there was no practice amongst conveyancing lawyers in Singapore to verify their instructions received by way of letter or company resolution, unless there was something on the face of the written instructions that gave rise to suspicion. Since everything appeared above board in this case, Yoong did not have to verify his instructions to act. The judge dismissed the appellants' suit on the main ground that Yoong's conduct as a solicitor had not fallen below the standard of a reasonably competent conveyancer. The evidence of the conveyancing expert on behalf of Yoong was wholly accepted by the court below, and it was held that Yoong was entitled to act on the basis that the documents presented to him were valid. On appeal, it was contended that the judge had erred in these findings. The appellants also applied by motion to further amend the statement of claim by adding a new cause of action, that is, breach of warranty of authority in that Yoong had warranted to the appellants that he was authorised to represent Fontana in the purported sale of the property and, in reliance of this warranty, the appellants authorised Yoong to release the sum of S$806,000 to Foo. The Court of Appeal allowed this motion as it was available on the existing evidence and would have caused no prejudice to Yoong.

Held, allowing the appeal: (1) the judge had failed to address the true question which formed the crux of the entire appeal: whether, in the circumstances of this case, Yoong ought to have verified with Fontana his instructions to act for Fontana in the sale of the property before acknowledging to the appellants that he had been so instructed merely on the strength of Fontana's resolution and option. The answer to this question was in the affirmative; (2) the evidence of the conveyancing lawyer, who testified on Yoong's behalf, that he would have acted for Fontana on the strength of the resolution and option without further verification because, in his opinion, it was not the practice in Singapore for solicitors to verify their instructions was beside the point. The question was not really what the practice was or what a particular solicitor would have done in a particular situation but the extent of the legal duty in a given situation, which was a question of law; (3) by failing to verify his instructions to act for Fontana, there was clearly a foreseeable risk that Yoong would be acting without authority. This risk could have been avoided by Yoong taking steps to confirm his authority to act for Fontana or, if he could not have done so, to at least warn the appellants of the risk that he could have been acting without proper authority, as he could not confirm his instructions with Fontana directly. Yoong took no such avoiding action before proceeding to act for Fontana in the sale, with the result that he acted without authority and the appellants suffered loss. Therefore, Yoong did not meet up to the standard required by him of a reasonably competent conveyancing solicitor in Singapore and he should have been held to have been in breach of his duty of care and skill to the appellants; (4) the learned judge was right in finding that Yoong did not make the representations Soh alleged Yoong had made, ie that the option and resolution were genuine, but that Yoong, on his own admission, responded to Soh's questioning by showing Soh the resolution; (5) even if Yoong had not uttered a single word during his private conversation with Soh but in response to Soh's question had simply pointed to the resolution, that act alone would be a sufficient representation and a warranty that Fontana really wanted to sell the property and that Yoong represented Fontana in the sale; (6) in the circumstances of this case, it was a logical inference that at least one factor in Soh's decision to go ahead must have been the fact that Yoong had given him the misleading impression that Fontana wanted to sell the property. After all, Soh's whole purpose of seeing Yoong was to confirm that Fontana truly wanted to sell the property. The law did not require that the negligent misrepresentation had to be the sole or decisive factor in inducing the representee to act; it was sufficient that it played a real and substantial role in causing the representee to act to his detriment; (7) the facts as found on the negligent misrepresentation cause of action equally applied to the cause of action founded on the breach of warranty, although the former was an action in tort and the latter an action on an implied contract. Where a defendant's liability in contract was concurrent with an identical duty in tort, the defence of contributory negligence was available to the defendant; (8) the judge had erred in concluding that the effective cause of the appellants' loss was Soh's own failure to disclose the Bangkok fax to Yoong to the extent that it negatived Yoong's negligence completely. The Bangkok fax had lost all relevance by the time Soh saw Yoong on 15 August 1994 as it had been superceded by the option and the resolution. Soh's failure to disclose the Bangkok fax to Yoong could in no sense have contributed to his loss; (9) however, Soh ought to have disclosed to Yoong his fears that there was some `trick' to the transaction since it was to allay these fears that he had wanted to see Yoong. Soh's failure to do so contributed to his own loss as in that event Yoong would have been put on his guard against Foo and less likely to have acted in the way he did; (10) where the relationship between the plaintiff and the defendant was one of a client and a professional where the client relied on the professional care and skill in the handling of the client's affairs, the courts would take into account the primary responsibility of the professional and a broad overview of the conduct of both parties in apportioning liability; (11) (per curiam) the conveyancing practices in other jurisdictions could serve as useful guidelines as to what constituted good conveyancing practice in Singapore in the absence of any settled or well-accepted practice. Paragraph 1.3.1 of Silverman, The Law Society's Conveyancing Handbook (1993) (England) and para 9.05 of The United Kingdom Law Society's Guide to the Professional Conduct of Solicitors (1990) truly reflected good conveyancing practice. They were sensible and helpful guidelines to practitioners engaged in conveyancing practice in Singapore and ought to be adopted and where possible followed so as not to be exposed to the risk of acting without authority; (12) although there was no clear authority as to whether the defence of contributory negligence was available in an action founded on an implied contract, the English Court of Appeal had decided that where a defendant's liability in contract was concurrent with an identical duty in tort, the defence of contributory negligence was available to the defendant. This view made much sense and should have been adopted with respect to the action for breach of warranty of authority.

Fong Maun Yee & Anor v Yoong Weng Ho Robert (practising under the name and style of Yoong & Co) [1997] 2 SLR 297 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

There was no evidence to establish usage and damages for breach of contract was assessed on the proper value of the logs, ie their value at the place of delivery.

Kwan Sun Ming v Chak Chee Hing [1965] 1 MLJ 236 Federal Court, Jesselton (Wylie CJ (Borneo).

The plaintiff allegedly engaged each of the defendants to execute certain work for her, to be completed within a specified period, in consideration of payment of agreed sums of money. In each case it was alleged that the work was unfinished despite her repeated requests to the defendants to complete such work. The plaintiff accordingly had to engage other persons to complete the work and she sought to recover from the defendants the estimated cost of completing the work.

Held: in their essence, the claims amounted to no more than simple actions for damages for breach of contract, the damages claimed being the estimated amount required to complete the contract breached, or, in the alternative, to actions for the recovery of moneys had and received for which consideration had not been given.

Jamaliah v Chik & Anor [1958] MLJ 128 High Court, Penang (Rigby J).

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).

See CONTRACT, Vol 3, para 1749.

The court has a right and duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally. A solicitor owes a duty to the court to conduct litigation with due propriety and to assist in promoting in his own sphere the cause of justice. If, therefore, a solicitor becomes aware in the course of proceedings that his client is obstructing the interest of justice, it is his duty to advise his client as to the conduct which he ought to follow and if the client still persists in his wrong conduct, he should decline to act for him further.

Yee Chang & Co Ltd v NV Koninklijke Paketvaart Maatschappij [1958] MLJ 131 High Court, Singapore (Whyatt CJ).

[Annotation: The decision of the High Court was affirmed by the Court of Appeal in [1959] MLJ 97.]

The plaintiff claimed against the defendants for a sum of RM229,820 under an agreement for electrical works in connection with a project which the defendants had undertaken to do for ABJV. The defendants claimed that the contract between them and the plaintiff is subject to the terms of the contract which the defendants had signed with ABJV and that: (i) the plaintiff did not use material of the nature and standard specified in the contract; (ii) there were salaries for workers which the defendants had paid on behalf of the plaintiff; (iii) the plaintiff failed to obtain a provisional licence from the Department of Electrical Inspectorate; (iv) the plaintiff only did three out of eight items relating to the borehole intake.

Held, allowing the claim in part: (1) the specifications in the seven documents apply to the contract made between the plaintiff and the defendants as they were in fact handed to the plaintiff by the defendants before the execution of the seven documents; (2) the defendants cannot claim the sum of RM133,461.20 as damages arising from the plaintiff's failure to supply selangan batu poles as the ABJV did not require the defendants to replace the installed poles with selangan batu poles and hence they have not suffered any loss; (3) the defendants also fail in their counterclaim regarding the payment of salaries to the plaintiff's workers as the defendants had testified that the servants were in fact working for the defendants to complete the works after their employment were terminated by the plaintiff; (4) as there was no evidence submitted by the defendants to substantiate whatever has been alleged in the debit notes and the payment of labour charges, the defendants also fail in this claim; (5) since it is the obligation of the plaintiff to obtain a provisional licence from the Department of Electrical Inspectorate and they had failed to do so resulting in the defendants expending a sum of RM6,000 to obtain the same, as required under the specification document, all the defendants' expenses in this regard are recoverable as damages arising as a breach of that obligation; (6) the defendants denied that the plaintiff had performed all eight items. It became incumbent on the plaintiff to prove that they had performed all eight items. This the plaintiff failed miserably to do since not a shred of evidence was adduced to establish that.

Syarikat Letrik Sabalan Sdn Bhd v Sazone Contractor Sdn Bhd Suit No K (22) 132 of 1003 High Court, Kota Kinabalu (Ian Chin J).

Under a contract of sale entered into between the plaintiff and the defendant, two new hydraulic excavators were sold and delivered to the defendant by the plaintiff. The defendant subsequently alleged that the said excavators were not suited to the purpose for which he had purchased them, and that he was entitled under an oral collateral warranty allegedly given by the plaintiff, to return the said excavators, which he did, to the plaintiff without incurring any financial obligations, in the event that he found the said excavators to be unsuitable. The plaintiff repossessed the said excavators and sued for breach of the contract of sale, claiming for the loss of the depreciated value of the said excavators, and also for the recovery of rentals for two other units of excavators which he alleged were rented out to the defendant pending the delivery of the new excavators which the defendant had purchased. The issues before the court were : (1) whether the existence of the alleged oral collateral warranty had been established by the defendant; (2) if such a collateral warranty was in existence, was the defendant justified in returning the said excavators and in refusing to pay the purchase price; (3) if no such collateral warranty existed, was the defendant's refusal to pay the purchase price tantamount to a repudiation of the said contract; (4) whether the plaintiff was entitled to receive rentals for the two other old excavators; and (5) the quantum of damages to which the plaintiff would be entitled if there was a breach of the said contract by the defendant.

Held, allowing the plaintiff's claim in part: (1) the term 'collateral warranty' as used by the defendant was improper since he was not suing for damages based on the oral statement allegedly made by the plaintiff, but was seeking the right to terminate the said contract. Therefore, the oral statement allegedly made by the plaintiff cannot be interpreted to mean a 'collateral warranty', but should properly be taken to mean a 'collateral contract' which may exist side by side with the main contract but is separate from it; (2) the onus of establishing the existence of a collateral contract is upon the party asserting it. The defendant has not adduced sufficient evidence to satisfy the court as to the existence of the alleged collateral contract. The only evidence was the mere assertion by the defendant's sole witness that it existed, and that witness was not even called to testify. Hence, no collateral contract was established to be in existence; (3) even if the existence of the alleged collateral contract could be established, the proposition that the defendant would have the right, by virtue of that alleged collateral contract, to terminate the main contract is misconceived. If that alleged collateral contract entitled the defen-dant to return the said excavators without any financial obligation, the main contract would become meaningless as the defendant was no longer under any obligation to buy the said excavators under the main contract. Any representation made by a party to a contract which has the effect of destroying the main contract, cannot become a collateral contract, as a collateral contract normally relates to a warranty and not to a fundamental term of the main contract; (4) in any case, the breach of a collateral contract only entitles the aggrieved party to a right to sue for damages for misrepresentation, or breach of condition or warranty under that collateral contract, and not to a right to repudiate the main contract; (5) the action of the defendant in requesting the plaintiff to repossess the said excavators was one which clearly went to the root of the main contract of sale, and which amounted to a repudiation of the said contract as it evinced an intention not to proceed with the said contract of sale anymore. And it did not matter that at that particular point in time when the defendant returned the said excavators to the plaintiff, payment of the purchase price was not yet due. The plaintiff could rightfully treat the defendant's said action as an anticipatory breach of the said contract; (6) although the plaintiff succeeded in proving a breach of the contract of sale on the part of the defendant, only nominal damages were granted to him as he was unable to adduce any evidence to prove his claim that the said excavators had depreciated in value by the time they were recovered from the defendant; (8) the plaintiff's claims for transport and repossession charges, as well as for the cost of repairing and servicing the said excavators whilst they were in the possession of the defendant, were allowed.

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

The defendants had agreed to build a house for the plaintiff. The plaintiff caused certain extra items to be done which she claimed were necessary to conform to the original plan. The defendants claimed the work were extras and demanded payment of them. On failure of such payment the defendants purported to repudiate the contract and sold the property to another person. The plaintiff claimed damages.

Held: (1) the delay or refusal of the plaintiff to pay for the extras cannot be regarded as showing an intention no longer to be bound by the contract and the defendants were not justified in repudiating the whole contract; (2) the extra works became necessary to make the building conform to the original plan and therefore the plaintiff was not liable to pay for them and the defendants were not justified in repudiating the contract when the plaintiff refused to pay for them; (3) the defendants therefore were in breach of contract and liable for damages to the plaintiff.

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

The plaintiffs had contracted to build certain houses for the defendant, and the contract provided, inter alia, (cll 2 and 3) that the houses should be completed by a given date, and that if they were not so completed, then for each day's delay they would pay the defendant $3 for each house, as liquidated damages. By a further clause 8, it was provided that if the plaintiffs did not continue to execute and advance the works to the satisfaction of the architect or should delay the same from any other cause than the default of the defendant, and should continue such default six days or more after notice in writing thereof given to them under the hand of the architect, then in any of those cases the defendant might, if he thought fit, determine the contract, and in that case all money then due to the plaintiffs, and all penalties for non-fulfilment of contract, and all materials, should be forfeited to the defendant. By a subsequent cl 9, it was provided that in case of any breach of the contract on the part of the plaintiffs, it should be lawful for the defendant, by writing under his hand, to determine the contract, without any previous notice to the plaintiffs. The plaintiffs did not complete the house by the date named, but the defendant consented to allow them 20 days further time, by reason of there having been an error in the plans and delay in pointing out the sites of the intended houses. On the evidence, the court held the plaintiffs were entitled to certain further time for certain alterations in the plans and otherwise. After the date named in the contract for the completing of the house, but before the expiration of the 20 days given by the defendant, and the further time allowed by the court, the architect gave the plaintiffs, notice in writing, notifying to them that they were not executing and advancing the works to his satisfaction, and for six days thereafter the plaintiffs still continuing to progress slowly and not to the satisfaction of the architect, the defendant, on the date of the expiration of the 20 days extension given by him as aforesaid, by notice in writing, determined the contract, and stated that he required the plaintiffs to have 40 men a day at work on the building. The defendant then proceeded to complete the buildings, which cost him more than he would have had to pay the plaintiffs under the contract. The plaintiffs sued the defendant for wrongfully determining the contract, but the court found on the evidence, it would not have been possible for the plaintiffs, progressing as they had done, to have completed the buildings even within the further time allowed them by the court. Under the circumstances,

Held: (1) but even if it did, it could only do so after there was a 'breach' of the contract, but there could be no 'breach' on the score of delay, until the requirements of cl 8 had been complied with; (2) that if the first part of cl 8 had stood alone, it would have been sufficient for the court to have before it the certificate of the architect, expressing dissatisfaction with the non-advancement of the work, but as it also provided for delay caused otherwise than by the default of the defendant, which was a provision unclogged with the expression of satisfaction or dissatisfaction by the architect, and the six days' default after notice applied to both parts, it was necessary that there should be a notice from the architect expressing dissatisfaction, but it was the duty of the court to determine whether the delay had not been caused by the defendant, and whether the notice from the architect was, under all the circumstances of the case, a reasonable one; (3) and the requiring of the 40 men to be at work was no waiver of the determination; (4) that under the peculiar wording of the whole contract, cl 8 which provided for the forfeiture of 'penalties' on the contract being determined, could only have reference by the use of the word 'penalties', to cl 3, which was the only clause in the whole contract, which provided for a penalty, and as that penalty could only accrue after the date named in the contract for completion, cl 8 itself implied that it could be enforced after the date, even independently of the extension of time; (5) cl 9 did not apply to the case of delay in advancing the works, which was specially provided for by cl 8;that the court being satisfied there was no delay on the part of the defendant, and the architect's notice was a reasonable one, the defendant had a right by reason of such extension of time to determine under cl 8, the contract, after the date named in the contract and within the extended time;that as the defendant determined the contract prior to the expiration of the extended time, he could not, at the same time claim the penalty at $3 per house per day, under cl 3, which only applied to default to complete beyond the given and the extended date; but, he was entitled to damages against the plaintiffs for all moneys spent by him, in completing the houses according to the contract, beyond the amount to be paid to the plaintiffs under the contract. On appeal, this judgment was affirmed.

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

On 26 September 1978, the plaintiffs entered into a sale and purchase agreement ('the agreement') for the purchase from the defendants of a shop unit in a building then under construction. The agreement incorporated The (Revised) Singapore Conditions of Sale 1948. The shop unit sold was described in the agreement as having an approximate floor area of 458 sq ft but the actual floor area of the completed unit was 17.9% less than this. The plaintiffs sued the defendants for damages. The defendants claimed that the plaintiffs' claim was time-barred (with the time being assessed from the date that the plaintiffs had notice of the shortfall in floor area) and that the plaintiffs had waived their claim by completing the agreement.

Held, allowing the plaintiffs' claim: (1) the delivery of the duplicate subsidiary strata certificate of title ('the COT') to the plaintiffs' solicitors would have given the plaintiffs notice that the defendants would not give them title to the unit with the contractual floor area. The plaintiffs could then decide to accept the renunciation and treat it as discharging them for further performance and sue for damages, or they might wait until actual completion and then sue; (2) since the plaintiffs completed the sale, the time for limitation started not from the date of delivery of the COT but from the date of completion. Hence, the plaintiffs' action was not statute-barred; (3) condition 11 of the agreement gave the plaintiffs, in the event of a substantial shortfall, the option of either annulling the agreement or completing the purchase and suing for the shortfall. Therefore, completion was not consistent only with waiver by the plaintiffs of their claim. It was not a clear and unequivocal representation that would have led the defendants to believe that the plaintiffs would not pursue their claim.

Ling Kai Seng & Anor v Outram Realty Pte Ltd [1991] SLR 818 High Court, Singapore (Goh Joon Seng J).

An action based on the omission of the bankrupt before he was adjudicated a bankrupt to perform the terms of a contract does not fall within the category of actions dealt with by s 74 of the Bankruptcy Ordinance 1949, and can be brought without notice being given and within the period of limitation.

Official Assignee v Lian Hong & Ors [1964] MLJ 422 Federal Court, Kuala Lumpur (Thomson LP, Barakbah CJ (Malaya).

In an agreement where the plaintiff undertook to build a house for defendant for a specified sum and received an advance before the work was commenced but afterwards broke the contract owing to defendant's refusal to make further advances, an action could not be maintained upon the contract. The plaintiff sued the defendant for what he is entitled to, the court assumed that from the act of the defendant in the transaction a promise to pay was to be inferred and allowed the plaintiff only his actual claim.

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

This was an appeal by the plaintiff against the decision of the deputy registrar of the subordinate courts in which, upon an application by the plaintiff for summary judgment against the first defendant, the deputy registrar granted the defendant conditional leave to defend the action. The plaintiff claimed against the first defendant under a deed dated 8 July 1986 made between the second defendant, the first defendant and the plaintiff. It was recited in the deed that (1) the plaintiff had been carrying on the business of the basement lounge at the Indian Association since 1 June 1985; (ii) the plaintiff had transferred the said business to the second defendant on 16 December 1985; (iii) in consideration of the transfer, the second defendant had agreed to pay to the plaintiff a sum of $24,000 of which a balance sum of $11,250 was then still owing and unpaid by the second defendant; and (iv) the second defendant had transferred the said business to the first defendant on 2 April 1986. The first defendant did not deny that he had failed to pay to the plaintiff the sum of $11,250 or any part thereof. The first defendant contended, inter alia, that the plaintiff did not at the time when he carried on the business registered his business under the Business Registration Act (Cap 32, 1985 Ed) ('the said Act') and therefore he could not under s 17(1) of the said Act enforce his rights under the deed against the first defendant.

Held, allowing the appeal: (1) where the issue raised was one of law and it was clear-cut and could be decided upon, then the judge hearing it, or, upon an appeal, the appellate court, should decide on it rather than to let it go to trial; (2) s 17(1) of the said Act did not apply to the contract as the contract contained in the deed was not made or entered into at any time while the plaintiff was in default; (3) s 17(1) of the Business Registration Act did not disable the plaintiff from enforcing his rights under the deed against the first defendant. The first defendant therefore had no defence to the claim.

Jaya Kumar v Subramaniam Mohana Krishnan & Anor [1981] SLR 314 High Court, Singapore (Thean J).

This was an appeal against the decision of the deputy registrar of the subordinate courts giving interlocutory judgment against the defendants for breach of contract arising out of the carriage by sea of the plaintiffs' goods from Genoa, Italy to Singapore. The goods were office furniture. They were shipped in a container on board a vessel which was not owned by the defendants. When the container was opened in Singapore on delivery to the plaintiffs, the goods were found in such a damaged condition as to become a total loss. The plaintiffs claimed damages of S$37,288.37 and interest. The defendants contended that they were acting as freight forwarders and not carriers and therefore were not liable for the damage to the goods which occurred during the voyage.

Held, dismissing the appeal with costs: (1) the functional difference between a freight forwarder and a carrier is clear. One makes the arrangement for the carriage of the goods and the other carries the goods. However, this does not mean that because of his function, a freight forwarder is always acting in the capacity of an agent of the owner of the goods or of the carrier, as the case may be. The legal relationship between a freight forwarder and a customer depends on the terms and conditions on which he undertakes to forward the goods. He can do so as principal and he can do so as an agent; (2) they did not merely ask for reimbursement of the freight paid by them to the carriers. This was consistent with the defendants having sub-contracted the carriage to the carriers; (3) on the facts of the case, it was clear that the defendants contracted with the plaintiffs as principals. The plaintiffs left it entirely to the defendants to ship the goods to Singapore. They contracted with the defendants and no one else. The defendants did not inform them that they were merely acting as agents. The defendants charged the plaintiffs directly for the freight;furthermore, in issuing their own bill of lading, the defendants intended to act as principals.

Corten Furniture Pte Ltd v Merzario (S) Pte Ltd DC Suit No 622 of 1991 High Court, Singapore (Chan Sek Keong J).

P and D entered into a deed by which P purchased from D two shophouses. Under cl 3 of the deed, D was to procure a loan for the balance of the purchase price in respect of the two lots and unless and until the loan was obtained, D would not call for any further progress payments comprised in the balance of the purchase price. P paid D a sum of money towards the purchase price. D subsequently terminated the agreement in respect of the two properties. P alleged that the repudiation was wrongful and claimed repayment of the sum paid to D towards the purchase price. P applied for final judgment against D under O 14 of the Rules of the High Court 1980. D submitted that no moneys were paid by P to it and that the deed was executed under undue influence. The senior assistant registrar found in favour of P and D appealed to the High Court.

Held, dismissing the appeal: in the instant case, there was no defence to P's claim. The law is clear that evidence cannot be introduced to contradict, vary, add or subtract from any terms of a contract in writing except in any of the situations spelled out in the provisos to s 92 of the Evidence Act 1950. There was nothing in D's allegations which showed situations coming under the provisos to s 92 so as to allow the admission of extrinsic evidence for impugning the deed.

Koh Siak Poo v Patani Motor (K) Co Sdn Bhd Civil Suit No 23-41-87 High Court, Alor Setar (KC Vohrah J).

P had earlier obtained summary judgment against D1 and D2 who were sued as the principal debtor and the guarantor of two equipment leases. In their appeal against the order for summary judgment, D1 and D2 contended, inter alia, that there was delay on the part of P in filing the O 14 application, that s 11 of the Civil Law Act 1956 had been contravened in that there was a charge of interest upon interest and that P had failed to prove that the sums claimed were reasonable under s 75 of the Contracts Act 1950.

Held, dismissing the appeal: (1) in the instant case, the 2% per month interest claimed by P was in conformity with the two leases which allowed P to charge such a rate of interest as late charges. As this was a contractual term incorporated in both leases which had been agreed to by D1, D1 could not now dispute such a charge as being contrary to s 11 of the Civil Law Act 1956; (2) in the instant case, the sums claimed by P were computed in accordance with both leases and as this computation was a contractual term agreed to by D1, s 75 of the Contracts Act 1950 had no relevance to the facts of the case; (3) the delay of three months from the time of the setting aside of the judgment in default of defence which had been entered against D1 and D2 to the filing of the O 14 application could not materially affect the liabilities of D1 and D2 as delay, per se, without more, could never form the basis of a triable issue; (4) in the circumstances, as D1 and D2 had failed to show any triable issue, the court dismissed their appeal against the O 14 judgment.

Kesang Leasing Sdn Bhd v DB Construction Sdn Bhd & Ors Civil Suit No D4-24-3434-87 High Court, Kuala Lumpur (Siti Norma Yaakob J).

The appellants and the respondents entered into an agreement dated 29 March 1994 (the March Agreement) whereby the appellants agreed to sell to the respondents all the issued shares of their subsidiary, Nicol & Andrew (Far East) Pte Ltd (the company), for the sum of S$5m. On 4 April the respondents received a detailed draft agreement from the appellants setting out the terms of the March Agreement but also containing two other provisions which, in effect, stipulated that the company would be sold without trade debtors and trade creditors. The respondents did not agree to these two provisions. Subsequent discussions took place between the parties but up to the date scheduled for completion, which was 28 May 1990, the appellants insisted that it was agreed that the sale of the company would be without trade debtors and trade creditors. The respondents refused to complete on such terms and on 12 June 1990, instituted High Court proceedings claiming specific performance and damages for breach of contract. However, the parties continued to negotiate with a view to seeking an amicable solution. In the meanwhile, the appellants secretly entered into an agreement to sell the shares of the company to a third party, which was completed on 27 July 1990. The trial judge held that on a plain reading of the March Agreement there was nothing to indicate that the company would be sold without trade debtors or trade creditors and the appellants had failed to prove that there was a further oral agreement that the company would be sold as such. The trial judge also held that there was no evidence that the respondents did not have the necessary funds to complete the purchase of the company. As to the question of damages, the trial judge rejected the respondents' claim of loss of profits amounting to S$9,562,415 on the ground that the projected profits submitted by the respondents were highly speculative and instead awarded damages on the basis of loss of the chance to make a profit. The trial judge took 15% of the projected profits of the company as representing the value of the loss chance and awarded a sum of S$1,430,000. The appellants appealed.

Held, allowing the appeal in part: (1) it was not a term of the agreement between the parties that the company would be sold without trade debtors or trade creditors; (2) the respondent bore the onus of proving that they were ready and willing to complete. However, by insisting up to completion date that the sale was to be without trade debtors and trade creditors, the appellants had indicated unequivocally that they would refuse to complete on the terms of the March Agreement. This dispensed the respondents from performance of their obligation to tender the purchase price and relieved them from showing that they were ready and willing to perform their obligation to complete. In any event, the respondents had proven that they were ready and willing to complete; (3) since the trial judge found that there was a real chance of the respondents making a profit if they had been successful in the acquisition, he was right in awarding damages for loss of the chance to make profit. Under this head of damages, the amount awarded had to be a lump sum which, in the opinion of the trial judge, was fair and reasonable, after taking into account various contingencies. In the case at hand, there were, however, several relevant factors which had not been brought to the attention of the trial judge and which ought to have been taken into account when making the award. In light of this, the sum awarded for loss of the chance to make a profit was reduced to S$250,000 as the chance the respondents had lost, in the court's assessment, was worth at least that amount, if not more.

Straits Engineering Contracting Pte Ltd v Merteks Pte Ltd [1996] 1 SLR 227 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

This was an appeal from the decision of the High Court ([1971] 1 MLJ 271). The defendant/appellant had agreed to sell a metal melting furnace to the plaintiff/respondent and had given an undertaking that the melting furnace would have a temperature of not lower than 2,600 degrees F. This specification was not satisfied. The respondent brought an action alleging breach of an express condition of the contract and claimed the total sum of $29,301.38 as damages. The learned trial judge held that the failure on the part of the appellant to supply a furnace according to specifications constituted a breach of the condition of the contract entitling the respondent to treat it as a breach of warranty, and awarded a total sum of $7,501.38 as damages for loss of profits. The defendant appealed.

Held, dismissing the appeal: (1) the learned trial judge was correct in finding that there was a breach of a condition of the contract which entitled the respondent/plaintiff to waive it and to elect to treat the breach as a breach of warranty within the meaning of s 13(1) of the Sale of Goods (Malay States) Ordinance; (2) this case fell within the provisions of s 74(1) of the Contracts (Malay States) Ordinance, ie when the damages arising are such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

Tham Cheow Toh v Associated Metal Smelters Ltd [1972] 1 MLJ 171 Federal Court, Kuala Lumpur (Azmi LP, Suffian and Ali FJJ).

This is an appeal against the decision of Rajah J (see [1981] 1 MLJ 80). The facts are briefly as follows. By a contract in writing dated 4 June 1971 the respondent, a contractor agreed to erect a large building for the appellants at Robinson Road, Singapore. The said contract contained conditions of contract. Subsequently, the parties entered into a supplementary agreement which made certain variations to the contract. The conditions of contract contained an arbitration clause. Disputes and differences having arisen between the parties within the scope of the arbitration clause an arbitrator was appointed to hear and determine such disputes. During the carrying out of the works by the respondent, the appellants purported to exercise their rights under cl 34(a) of the conditions of contract to determine the contract under cl 34(a) of the conditions of contract. The respondent argued that the purported determination was unjustified on the facts and the procedure prescribed by cl 34(a) and cl 1A(d) of the conditions for determination of the contract was not followed. On 25 October 1974, the superintending officer gave notice to the claimant pursuant to the provisions of cl 34(a) that in his opinion the claimant failed to proceed with reasonable diligence with the works and that the claimant was accordingly in default under the provisions of cl 34. The said notice also stated that in the event that such default should continue for seven days after 25 October 1974, the said superintending officer reserved the right to determine the contract. On 2 November 1974, the chairman of the appellant Board gave notice to the claimant terminating the contract with effect from the date of notice. Both notices of 25 October 1974 and 2 November 1974 bore the words 'AR Registered' but were sent by hand. Several questions were posed before the High Court (1) Is the notice of 25 October 1974 invalid on account of its having been given by the superintending officer? (2) Is the notice of 25 October 1974 invalid on account of its not having been sent by registered post? (3) Is the notice of 2 November 1974 invalid on account of there being no valid notice of default? (4) Is the notice of 2 November 1974 invalid on account of its not having been sent by registered post? (5) Does the arbitrator under cl 40 have power to review and revise the notice of 25 October 1974. The High Court answered questions (1) and (5) in the negative and questions (2), (3) and (4) in the affirmative. The appellants appealed against the decision of the High Court in respect of questions (2), (3) and (4) and the respondent appealed against the decision of the High Court in respect of questions (1) and (5).

Held: (1) the giving of the first notice under cl 34(a) is the taking of action on behalf of the Board and on the true construction of cl 1A(d) is reserved to the chairman alone. Accordingly, the answer to the first question should have been in the affirmative; (2) The provision of this method of service no doubt was also intended for the purpose of avoiding subsidiary disputes between the parties to the contract as to whether the notice was given or received as it provides for a mode of service and receipt of the required notice which can be corroborated from an independent and official source. The trial judge was correct in answering question (2) in the affirmative; (3) it follows from the answer to question (1) that the answer to question (3) must be in the affirmative; (4) it follows from the answer to question (2) that the answer to question (4) must be in the affirmative; (5) the requirement of registered post is for the protection of the contractor in that he is duly warned that the determination procedure has been operated and must take immediate steps to rectify the specified defaults within the time limit prescribed in the clause;cl 40 empowers the arbitrator 'to review and revise any...notice'. The arbitrator is clearly empowered to review and revise a notice even if it is a notice which is a procedural step in a forfeiture clause. The said clause also contemplates that the arbitrator shall have power to go behind a notice, including procedural notices. If a dispute arises as to whether a factual situation had arisen as would justify a notice under cl 31(a), then that dispute falls within the expression 'all matters in dispute which shall be submitted to him in the same manner as if no such notice had been given'. In the present case, the qualifying event is if the contractor is in default which is a factual situation which is in dispute; the answer to question (5) should have been in the affirmative.

Central Provident Fund Board v Ho Bock Kee 1980 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Choor Singh JJ).

This was a claim for damages for breach of contract for the sale of goods. The goods in question were steel pipes manufactured in Germany. The plaintiffs were stockists, who resold steel pipes locally and to overseas buyers. The defendants' main business was galvanizing steel products. As a subsidiary business, they also imported steel pipes in bulk to sell wholesale in Singapore. The contract of sale between the defendants as sellers and the plaintiffs as buyers dated 22 June 1988 was evidenced by a 'sale confirmation letter' from the defendants to the plaintiffs. The material contents of that letter included the specifications of the pipes required and price. Six different kinds of pipes were ordered. Partial delivery was permitted in that shipment was to be effected between June and August 1988 subject to availability of shipping space. The letter also promised that 'mill certificates will be provided.' At the time the sale confirmation letter was signed, the fourth and fifth lots were on the way to Singapore or were already in Singapore. On 25 June 1988, the last two lots were delivered by the defendants. No mill certificate accompanied the delivery. The delivered pipes did not conform to the specifications with regard to length in that some of the pipes exceeded the stipulated length. Those pipes were sent to the defendants for shortening to conform to the required length. The plaintiffs took the excessive lengths with them and paid the defendants for the cutting and galvanizing services. The invoice together with the mill certificate was delivered about two weeks after the delivery of the pipes. The plaintiffs paid the full price of the invoice. Disputes arose out of the delivery of the first four lots of smaller diameter and thickness. The plaintiffs in their pleadings asserted that the first and second lots were longer than the permitted specification and that they were pitted. As regards the third and fourth lots, the plaintiffs having examined them after their arrival in Singapore accepted them as being within the specification. Later, the plaintiffs rejected them and refused to take delivery. Their pleaded case was that there was no mill certificate accompanying those two lots. The defendants admitted the over-length but denied liability as the only ground for rejection which the plaintiffs gave at the time of the delivery of the first two lots was that the pipes were pitted; there had been no mention of over-length or the absence of the mill certificate. The defendants asserted that the plaintiffs had agreed to appoint a surveyor to inspect the first two lots but had delayed in doing so. Eventually, when a survey did take place, the surveyor had found no pitting; it was then that the over-length was noticed. The defendants contended, further, that neither over-length nor nondelivery of the mill certificate entitled the plaintiffs to reject the goods, relying on the previous acceptance of two lots even though there had been over-length and mill certificates had not accompanied them.

Held, dismissing the plaintiffs' claim: (1) where there was a contract for the sale of goods by description, there was an implied condition that the goods should correspond with the description. A buyer was entitled to a reasonable opportunity of examining the goods before deciding whether to accept or reject them. On the facts, the plaintiffs had been given a reasonable opportunity to examine the goods. Such examination, if performed, would have revealed that there was over-length. The over-length was in disconformity with the description and it gave the plaintiffs a right to reject the pipes; (2) where a buyer rejected goods on the grounds of non-conformity with the terms of contract, the seller was entitled to make another delivery of goods answering the terms of the contract provided the second delivery was within the contractual time for delivery. The plaintiffs, however, had initially not stated that over-length or failure to deliver the mill certificate were grounds for rejection. If these grounds had been raised, the defendants could have cut off the over-length and galvanized the ends of the pipes when they took them back, and taken action to procure the mill certificates; (3) where a buyer rejected goods by giving no reason or by giving a wrong reason, he could still subsequently justify his rejection on a fresh ground provided such ground did in fact exist at the time of rejection. This principle did not apply if the seller within the contractual time of delivery could have rectified the non-conformity and made another delivery within the contractual time. Although the two other grounds for rejection had been open to the plaintiffs in August, they could not raise these grounds subsequently: the plaintiffs' failure to raise the grounds in August denied the defendants the opportunity to correct the non-conformity before the survey and to offer a second delivery. Since there was no express time limit for delivery, the goods only had to be delivered within a reasonable time. The conduct of the plaintiffs showed that December had not been too late for the defendants to make a redelivery as they were prepared to take delivery after inspection in December. Thus, the plaintiffs were precluded from raising the grounds in January 1989 as it precluded the defendants from making a second delivery. Alternatively, such a ground had been waived and could not be revived after the protracted delay; (4) further, with regard to the mill certificate, the term which called for it was not a condition in the sense that a breach of it could allow the innocent party to treat the contract as repudiated, and to reject the goods concerned. A condition was a term 'so essential to its very nature that its non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all.' It was the delivery of the goods which constituted substantial performance of the contract, not delivery of the mill certificate, which was only of secondary importance; (5) in any case, it was not an implied term of contract that the mill certificate must be provided simultaneously with the delivery of the goods. The court, when asked to imply terms into a contract, would first ask whether the implication alleged was necessary. On the evidence before the court, including the failure of the plaintiffs to insist on the mill certificates from the beginning and the previous acceptance of goods without mill certificates, the court could not hold that such an implication was necessary.

Chuan Hiap Seng (1979) Pte Ltd v Progress Manufacturing Pte Ltd [1995] 2 SLR 641 High Court, Singapore (GP Selvam J).

The plaintiff was the registered owner of a piece of land. In 1943 for reasons which were not known the defendant (the plaintiff's brother) became the beneficial owner of a third undivided share in the land, but the defendant's interest was never registered. In 1956 a shophouse was erected on the land financed by a loan from a bank on the security of the land. The defendant was to have a one third share in the shophouse and the defendant agreed to bear responsibility for $3,500 towards his share of the shophouse. Later, an agreement was entered into by the plaintiff, her husband and the defendant by which the plaintiff agreed to pay off the defendant's debt with one C and his liability to the bank in consideration of a charge over the defendant's share in the property. The defendant was to forfeit his rights in the land if he did not pay off within three years. On the defendant being unable to repay towards the bank loan the plaintiff commenced proceedings seeking declarations that the rights to and the interest of the defendant in the land have ceased and that the plaintiff is the absolute owner of the land and building thereof.

Held:]be] it would be unconscionable to permit the plaintiff to obtain possession of the defendant's share merely because the condition of the contract as to the time of repayment had been broken.

Zubaidah v Zulkathar [1963] MLJ 63 High Court, Muar (Adams J).

A, the registered owner of land, charged it to D in consideration of a loan granted by D. A defaulted in repayment of the loan and D obtained an order for sale of the land from the High Court. The order for sale, inter alia, provided for the purchaser to complete the sale on or before the completion date which was three months from the payment of the deposit. Pursuant to the order for sale, the senior assistant registrar made an order setting the procedure for the sale of the land. The senior assistant registrar's order provided that the Johore Conditions of Sale would be applicable. X successfully bid for the land at the public auction and he paid 25% of the purchase price with the balance to be paid on or before the completion date. X applied for a bank loan to finance his purchase and he discovered that Y had entered a private caveat in respect of the land. Y purported to have entered into a sale and purchase agreement with A after the order for sale was granted. Before the completion date, X and his wife, Z, applied to the senior assistant registrar to extend the completion date. In this application, the names of X and Z replaced D's name, while Y's name replaced A's name. X and Z made the application ex parte. The senior assistant registrar extended the completion date for another three months. A got to know of the extension and he applied to the senior assistant registrar to set aside the extension. The senior assistant registrar dismissed A's application and A appealed to the High Court. Pending this appeal, X applied and was granted further extension of the completion date by the senior assistant registrar. A again applied to set aside this further extension but the senior assistant registrar dismissed his application. A made another appeal against the senior assistant registrar's order of further extension of the completion date. Both appeals were heard together. X subsequently paid the balance of the purchase price and the transfer to him was registered.

Held, allowing both appeals: (1) the application for the first extension of the completion date, was incorrect because it included X, Y and Z, persons who were not parties to the original action. The parties in the original action, A and D, were left out completely. There was no application to include X, Y and Z who were foreign to the original action, as parties under O 15 r 6 of the Rules of the High Court 1980; (2) the application for the first extension of the completion date was made ex parte and it completely ignored the rights of A, D and Y; (3) once an order for sale is made, the chargor's rights are not completely lost. The chargor abrogates his rights and power to dispose of the land to the chargee on the condition that the sale is carried out in accordance with the order for sale and other consequential orders. In the event the order for sale and the consequential orders are breached, the sale is aborted and the chargor's rights are restored pending fresh orders. In this case, any variation of the completion date would affect the chargor's rights and he should be heard. Any delay in the completion of the sale would prejudice the chargor in having to bear further interest levied by the chargee; (4) extension of the completion date is a variation of the order for sale. The senior assistant registrar has no power to vary the order for sale issued by the High Court. An application for extension of time must be by way of variation of the order for sale and must be heard before a High Court judge; (5) the court has power under s 417 of the National Land Code 1965 to set aside the transfer which was registered in X's name because X had breached the terms and conditions of sale. The Johore Conditions of Sale provided that X shall be deemed to have full knowledge of the state and conditions of the land. X proceeded to bid for the land with his eyes opened. X therefore bought the land with any encumbrances thereon; (6) the Johore Conditions of Sale provided for forfeiture of the deposit and initial payment if the bidder fails to complete the sale on time. X had failed to pay the balance of the purchase price on or before the completion date. X's deposit and initial payment will be forfeited to D to set off A's outstanding sum due to D. The sale to X will be aborted and the balance of the purchase price to be refunded to X.

Development & Commercial Bank Bhd, Johore Bahru v Kim Ming Choon [1991] 2 MLJ 246 High Court, Johore Bahru (James Foong JC).

The respondents were the owners of the bulk carrier Mosgulf, which operated as a tramper. They contracted with the appellants for the supply of an Aggreko generator on a monthly basis with standard and specified attachments. Consumables were to be billed separately. Subsequently, the generator was installed. In January 1990, while the ship was at the Black Sea Russian port of Yushny, the ambient temperature fell to approximately minus 20¡C. The cooling water of the generator froze, causing cracks to the cooling pipes and casings. The generator became unworkable and was returned to Singapore in May 1990. The cause appeared to be the absence of antifreeze agent in the cooling water of the generator. The appellants commenced proceedings for arrears of hire charges and for breach of the respondents' duty of care as bailees of the generator. The respondents counterclaimed, contending that the appellants, by failing to supply the antifreeze agent, had breached the term implied by s 9(5) of the Supply of Goods and Services Act 1982 [UK] ('the Act') that the generator would be fit for its particular purpose. At first instance, the learned judicial commissioner held, dismissing the appellants' claim and awarding the respondents the full sum of their counterclaim, that the appellants had indeed breached the implied term. The appellants appealed.

Held, allowing the appeal: (1) the implied term as to fitness of goods for a particular purpose is governed by s 9(4), (5) and (6) of the Act. By s 9(6) no such term is to be implied when the circumstances show that the bailee does not rely, or that it is unreasonable for him to rely on the skill or judgment of the bailor. It was clear that at no time did the respondents rely on the skill and judgment of the appellants; (2) the respondents as bailees of the generator had a duty to take reasonable care of it whilst it was in their possession. The onus fell on them to show that they had discharged this duty.

The 'Mosgulf'; Fast Marine Supply Pte Ltd v Owners of the Ship or Vessel 'Mosgulf' [1994] 1 SLR 354 Court of Appeal, Singapore (Karthigesu JA, Goh Joon Seng and Chao Hick Tin JJ).

The plaintiffs, who purchased a warehouse unit in a warehouse complex from the defendants under an agreement for sale and purchase ('the agreement'), because a part of the unit suffered from waste water seepage, are claiming rescission of the agreement, return of the moneys paid thereunder, and damages arising out of the rescission of the agreement and out of the loss of use of the area suffered. They also claim to be indemnified against claims by third parties whose goods stored at the unit were damaged as a result of the bursting of a pipe. By reason of the above-mentioned damage, the plaintiffs have been exposed to liability to third parties on account of damage to the goods of the third parties who had stored them in the unit. It is not disputed that the plaintiffs had joined the defendants as third parties in all four sets of proceedings in the subordinate courts (under district court summonses).

Held, allowing the plaintiffs' claims in part: (1) where the property which the defendants as vendors have agreed to convey is not substantially the same as the property contracted to be sold, the plaintiffs as purchasers are entitled to repudiate. They may not repudiate for trifling defects which may properly be matters for compensation; (2) in the court's judgment, the plaintiffs would not be getting a warehouse unit which they had agreed to buy. The unit suffered from and is still suffering from the serious problem of seepage of waste matter which affected and would continue to affect some 38.55% of the unit and the defendants have failed to rectify the cause or causes of the seepage; (3) the court did not accept the plaintiffs' conduct as acts of affirmation, as submitted by the defendants. First, the plaintiffs at all material times did not know of the structural defects which were mentioned by the engineers. Secondly, the plaintiffs had remained in possession in exercise of their lien for the extent of the purchase price which they had paid, and their payment of the maintenance charges were consistent with their maintenance of their lien and not necessarily with the affirmation of the agreement; (4) as for damages, the serious problem of seepage had continued after December 1986 and is still continuing, and the claim for loss of use of both the areas directly and indirectly affected should be allowed. It will be the storage charges which the plaintiffs would have earned from bailors of goods using that part of the unit. The court ordered that the amount of compensation should be assessed by the registrar and in doing so, the plaintiffs should not be allowed to claim reimbursement of the maintenance charges which they had paid as such bailors of goods would not have paid a proportion of the maintenance charges; (5) the court would disallow the plaintiffs' claim of $1,000 per month for management time as it had not arisen directly and naturally from the defendants' breach of the agreement.

Bima Investment Pte Ltd v Hong Fok Realty Pte Ltd [1990] SLR 254 High Court, Singapore (Lai Kew Chai J).

The plaintiffs in this case claimed that they had carried out and completed all the works and supplied all the necessary materials in accordance with eight orders and consequently were entitled to payment. The defendants on the other hand claimed that the plaintiffs had failed to perform the contracts in accordance with the specifications and that the workmanship and materials were poor and defective.

Held, allowing the plaintiffs' claim and dismissing the counterclaim: (1) the plaintiffs had performed the work in accordance with the invoices and confirmation orders as set out in the claim and as such they were entitled to payment; (2) the remedy for the defendants if, as they alleged, the work, was not performed according to the specifications, or that part of the work was not done, or that materials supplied were defective and that generally the work was badly done, was to bring a cross-claim for the defects and omissions in a proper manner with supporting evidence, or, alternatively set them up in dimunition of the price; (3) the onus was upon the defendants to show that such was the case but from the evidence, the defendants had failed to discharge that onus.

Henry & Co (Pte) Ltd v John Gouw & Anor 1980 High Court, Singapore (D'Cotta J).

Leong Huat Sawmill (Pte) Ltd v Lee Man See [1985] 1 MLJ 47 Federal Court, Kuala Lumpur (Wan Suleiman, Mohamed Azmi and Hashim Yeop A Sani FJJ).

See CONTRACT, Vol 3, para 1553.

The respondent had entered into an agreement with one Lim Sian Soon, whereby the latter agreed to sell a portion of his land to the respondent. Lim Sian Soon subsequently mortgaged the whole of his land to a bank. The respondent thereupon brought an action for specific performance and damages. While the action was pending, Lim Sian Soon died and the appellants were appointed to represent the estate and were substituted as defendants in the action. Probate had, however, not been granted to the appellants. The respondent took out a notice of motion for judgment and the learned judge made an order for damages for breach of contract against the appellants. The appellants thereupon appealed to the Federal Court.

Held: (1) the respondent in the present case had clearly elected to treat the contract as in force notwithstanding the appellants' default and therefore the claim for damages was not sustainable as an independent claim; (2) the appeal must therefore be allowed and an order by way of specific performance made to require the appellants eventually to transfer the portion of the land to the respondent.

Lim Siew Leong & Anor v Vallipuram [1973] 1 MLJ 241 Federal Court, Johore Bahru (Azmi LP, Suffian Ag CJ (Malaya).

The appellants, who were tour and travel operators ('the employer'), appointed the respondent ('the employee') as their tour representative. Pursuant to an agreement entered between the employer and the employee ('the agreement'), the employee undertook to serve the employer for a minimum period of three years in consideration for the on-the-job training given to him. Under art VI of the agreement, the employee further agreed to pay RM20,000 as agreed compensation to the employer if he failed to fulfil his obligations the agreement. The employee tendered his resignation after having served only two years and 2[1/2] months, and the employer sued him for the liquidated sum of RM20,000. The employer succeeded in their claim in the sessions court. The High Court, however, reversed the decision of the sessions court on the grounds that: (i) the RM20,000 claimed being a penalty was unenforceable; and (ii) it was incumbent upon the employer to prove the actual damage incurred by them for providing the on-the-job training for the employee. The employer appealed. The issue before the court was the interpretation to be given to art VI read together with s 75 of the Contracts Act 1950 ('the Act').

Held, dismissing the appeal: (1) a clause in an agreement falling within s 75 must be subject to the court's determination that such agreed damages is reasonable compensation for the injured party; (2) despite the qualifying words 'whether or not actual damage or loss is proved to have been caused thereby' in the Act, damages allegedly suffered must be proved; (3) the qualifying words in s 75 are limited to those cases where the court would find it difficult to assess damages for the actual damage or loss; (4) in this case, the measure of damages stated in the agreement was enforceable provided that there was proof by the employer that they had suffered loss or damage limited to the extent of the quantum of the 'agreed compensation'. The loss suffered by the employer here was, inter alia, the expenses incurred for providing on-the-job training to the employee, which was not difficult for the employer to provide. The trial judge, however, found that no such proof was forthcoming from the employer, and this court find no reason to disturb the judge's finding.

Reliance Shipping & Travel Agencies v Low Ban Siong [1996] 2 MLJ 543 Court of Appeal, Kuala Lumpur (Siti Norma Yaakob, VC George JJCA and Ahmad Fairuz J).

On 24 January 1986, the appellants bought 880,000 shares in Malayan Tin Printing Co Ltd (MTP) 'by order and for account' of the respondents on a ready basis at $3.75 per share (the second contract). The second contract was subject to the bye-laws of the Stock Exchange of Singapore Ltd (the bye-laws). On 31 January 1986, being the due date for the fulfilment of the second contract, the respondents failed to pay up. The price on the open market for MTP shares was $2.60 per share. Six months before the second contract was entered into, the appellants entered into a contract with Prima Ltd (Prima) to buy from Prima one million MTP shares at the price of $3.60 per share (the Prima contract). Notwithstanding an extension of time to 21 April 1986 given by Prima for the payment and delivery of the shares, the appellants could not pay and take delivery of the shares. Prima claimed damages based on the difference between the contractual price of $3.60 per share and the then prevailing market price of $1.09 per share with interest, amounting to a total of $2,561,665.18. This amount was proved in the liquidation of the appellants. Subsequently, the appellants commenced these proceedings against the respondents for damages based on the respondents' breach of the second contract. The appellants obtained interlocutory judgment with damages to be assessed. The assistant registrar found that the appellants acted as principals and not as agents in entering into the second contract with the respondents and that the respondents knew that the appellants were acting as such. He also found that the respondents knew of the Prima contract. He held that the amount which the appellants had to pay to Prima was a direct and foreseeable consequence of the breach by the respondents of the second contract. He allowed the appellants the sum of $2,254,265.36, being the amount of the loss attributed to 880,000 MTP shares out of the one million MTP shares which the appellants had purchased under the Prima contract. He also allowed the difference between the total price due under the second contract and the sum representing the proportionate amount agreed to be paid by the appellants to Prima for 880,000 of the MTP shares as the appellants' loss of profits. On appeal, the judge found that there was no nexus between the sale of 880,000 MTP shares by the appellants to the respondents and the sale of the one million MTP shares by Prima to the appellants. The appellants had failed to show how the appellants' loss arising out of the breach of the Prima contract could be charged to the respondents. He assessed the damages as nil and awarded costs to the respondents. (See [1995] 3 SLR 495.) On appeal, it was contended that the judge erred in reopening the question of liability. Secondly, the amount of damages should not have been reduced to nil.

Held, allowing the appeal: (1) the judge did not agree with the assistant registrar's basis for awarding damages. He did not reopen the question of liability; (2) on the evidence, the appellants' breach of the Prima contract could not be attributed to and was not occasioned by the breach of the second contract on the part of the respondents. The basis of assessment of damages adopted by the assistant registrar was in error; (3) however, under the bye-laws, in a sale transaction of shares on a ready basis, the obligation to pay for shares arises before the obligation to deliver the shares. The respondents' failure to pay on the due date of 31 January 1996 for the 880,000 MTP shares sounded in damages as of that date. It was immaterial whether the appellants intended to apply part of the MTP shares which they had purchased from Prima or to buy from the open market to fulfil their obligation to deliver the shares; (4) in a contract for the sale of shares, the measure of damages upon a breach by the purchaser was the difference between the contract price and the market price at the date of the breach, with an obligation on the part of the seller to mitigate the damages by getting the best price he could upon that date. At the date of breach on 31 January 1986, the market price of an MTP share was $2.60. Damages were awarded on the basis of the difference between the contractual price of $3.75 per share and the prevailing price on the market of $2.60, amounting to $1,012,000 for 880,000 MTP shares with interest. Costs were also awarded to the appellants.

City Securities Pte Ltd (in liquidation) v Associated Management Services Pte Ltd [1996] 1 SLR 727; (1996) CSLR XIII[2352] Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

In this case, the appellants had contracted to supply timber to the respondent to be delivered at the site of the sawmill to be erected by the respondent. The timber was delivered in three lots. The learned trial judge found that the second lot of 198 logs and 4 of the 22 logs in the third lot were not delivered to the respondent, as they were dumped at a distance of more than 500 feet from the sawmill. The learned trial judge gave judgment for the appellants for $9,892.41 being the balance due under the contract and also awarded damages to the respondent on his counterclaim for breach of contract for the sum of $13,192.40.

Held, dismissing the appeal in respect of the claim and allowing the appeal in respect of counterclaim by reducing the amount: it was the duty of the respondent in this case to take reasonable steps to mitigate the damage. There was no need for the respondent to have gone to the expense of buying logs from elsewhere when the logs were lying a few hundred feet away from the sawmill and all that was required was the additional expense for hauling them up to the sawmill. The appropriate damages to be awarded to the counterclaim was the approximate cost of hauling the logs to the sawmill, which amounted to $1,000.

Kabatasan Timber Extraction Co v Chong Fah Shing [1969] 2 MLJ 6 Federal Court, Kota Kinabalu (Azmi LP, Ismail Khan CJ (Borneo).

Whatever equitable rights an occupier of land held under an approved application may have, such rights would rest in contract and would entitle him to enforce specific performance. In such cases any claim founded on tort is not maintainable.

Tan Ah Boon v State of Johore [1936] MLJ 187 Privy Council Appeal from Malaysia (Lord Blanesburgh, Lord Russell of Killowen and Lord Roche).

[Annotation: See also Hee Cheng v Krishnan [1955] MLJ 103, and Mohammed v Ho Wai [1961] MLJ 7 where it was held that specific performance will only be granted in the discretion of the court in the case of executory contracts.]

Straits Engineering Contracting Pte Ltd v Merteks Pte Ltd [1996] 1 SLR 227 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, Vol 3, para 1626.

See contract law, para VII [32].

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

See contract, para I [22].

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).

The appellants purchased land with the intention of developing it. To finance the purchase and development, they applied for and was granted an overdraft facility by the respondent bank (`the bank'). The appellants later realized that they had insufficient funds to develop the land and applied to the bank by a letter dated 2 January 1983 for an extension of and increase in overdraft facility. The appellants reduced the number of buildings to be constructed on the land to 57 units of 16 two-storey semi-detached houses and 4 two-storey bungalows for Phase I, 28 two-storey terrace houses for Phase II and nine 31/2 storey shop houses for Phase III. On 28 March 1983, the overdraft extension was approved and an overdraft facility of RM2.5m was allowed, RM1m above the original facility. The extra financing was for the construction of the reduced number of buildings and was secured by the personal guarantees of the appellants and by a second legal charge over the same land. The bank additionally agreed to release a total of 11 titles of the subdivided lots, six to the appellants unconditionally, and five to the government by way of compulsory acquisition. This agreement was not included in the 28 March 1983 letter from the bank. The appellants sent the bank a letter dated 26 April 1983 seeking immediate release of six titles without any redemption payment. The bank confirmed the request for release in a letter of 20 June 1983, and the titles were released to the appellants on 22 June 1983, but the encumbrances on the titles were not discharged. The bank ultimately did not discharge the encumbrances on the titles until May 1992. Following the new arrangements with the bank, the appellants entered into a sale agreement with a third party on 29 May 1983 in respect of six titles, but the deal fell through because the bank failed to discharge its encumbrances on the land. Four years passed before the appellants wrote to the bank on 11 June 1987 seeking the release of all 11 titles and the bank responded by instructing its solicitors in its letter of 13 June 1987 to prepare a discharge of the charges over the 11 titles. The appellants then entered into fresh sale agreements with different purchasers to sell the six titles between 16-20 June 1987. These sales were again aborted because the bank had failed to discharge the encumbrances on the land. The appellants were then sued by some of the purchasers. The appellants sued the bank for unlawfully withholding the discharge of the encumbrances on the titles, stating that this action had made it impossible for the appellants to raise sufficient bridging finance to complete Phase III of the project that would have assured them of profits over the project. The facility extended by the bank was only sufficient to complete Phases I and II. They argued that the bank knew at the time they approved the new overdraft facility and agreed to release the titles, that this was to enable the appellants to finance the project and thus could foresee the resulting damage to the appellants if the discharge of the encumbrances was delayed. Additionally, the appellants argued that the letter of 20 June 1983 by the bank should be read as an undertaking to release specific titles free of encumbrances. The trial court allowed the action and ordered that an assessment of damages be made. The senior assistant registrar (`the SAR') determined that the bank had to pay the appellants RM3,401,820 for the projected profits that the appellants would have made but for the bank's failure to discharge the charge over the 11 titles since 13 June 1987, an additional 30% of the projected net profits for the shame suffered by the appellants and 8% interest as well as costs. The SAR rejected claims for other damage allegedly suffered when the appellants were sued by various third parties, such as the architects, etc of the six titles for sums allegedly due. The bank appealed against the amounts assessed for the two heads of damages, and the appellants appealed against the dismissal of their claims for damages when sued by the various third parties. In the appeal, the High Court ordered on 27 August 1994 that the appellants were entitled to damages following the bank's breach in delaying to perform its undertaking to release the 11 titles free of encumbrances, but that the measure of the damages based on the loss of profits caused by the delay was too remote or not proven. The bank's appeal was allowed, the order of the SAR was set aside, and the sum of RM5,000 was substituted as nominal damages suffered by the appellants, with interest of 8% pa from the date of the order to the date of realization. The SAR's finding relating to the other damage suffered by the appellant at the hands of various third parties was affirmed. The appellants appealed to the Court of Appeal on the adequacy of damages found.

Held, dismissing the appeal: (1) s 74(1), (2) of the Contracts Act 1950 (`the Act') was based on the rule in Hadley v Baxendale. Section 74(1) covered the situation where the damage suffered arose naturally from the breach. Section 74(2) covered the situation where the parties at the time of the contracting were aware that damage or loss was likely as result of a breach of the contract. Additionally, damages under either head could not be too remote or indirect; (2) the harm to the appellants by the bank's delay in discharging the encumbrances was only to the extent that the appellants could not transfer the titles free of encumbrances. It could not go beyond this as the raising of additional funds did not involve and were not controlled by the bank. The appellants were free to raise funds by further charging the titles notwithstanding they were encumbered. The bank could not be expected to know how the appellants intended to raise the additional bridging finance; (3) there was nothing wrong with the trial judge's finding that the properties in question increased in value between 1987 and 1992, as there was unchallenged evidence to this effect in the bank's valuation report. Hence, the loss of profits was not the natural and direct consequence of the bank's breach and the trial judge's finding that the compensation claimed under the first limb of s 74(1) of the Act was untenable should be confirmed; (4) under the second limb of s 74(1) of the Act, the bank did not have special knowledge at the time of contracting of the likelihood of damage as a result of their failure to discharge the encumbrances on the titles. The 26 April 1983 letter mentioned why the appellants wanted the six titles released but failed to state that the reason for the sales of the titles was to raise additional funds for the project. The letter did state that the discharge had to be made immediately, and the bank released the titles two days after its letter of 20 June 1983. The subsequent conduct of the appellants, for instance, waiting four years before writing to the bank again for the immediate discharge of the encumbrances supported the likelihood that the bank was initially mistaken as to the true intent and purpose surrounding the release of the 11 titles, and hence the bank was unable to foresee any loss that was likely to occur by the delay. Hence, the appellants could not base their loss on the second limb of s 74(1); (5) the bank nevertheless failed to discharge the encumbrances for more than four years after the 13 June 1987 instruction to their solicitors, and had to be accountable to the appellants for any loss or damage suffered by them during this period. The measure of such loss or damage could not extend to the loss of profit resulting from the appellants' inability to complete Phase III of the project because such loss was not the natural consequence of the bank's breach and it was not foreseeable. Damages should be limited to nominal damages only, and the trial judge's assessment was correct; (6) In any event, the appellants were under the burden of proving the amount of the projected net profit that was lost and they were unable to do so. Their feasibility report was lost in a flood and it was not up to the bank to produce this document. The appellants failed to call the maker of the report, and the witness called to lead the secondary evidence of the report was not qualified to do so, because there was no proof he had ever read the report; (7) the trial judge's decision that the other claims by the contractors, architects, etc were too remote to be claimed against the bank was correct. There was no proof that the claims of these third parties were due.

Dato Mohd Anuar bin Embong & Anor v Bank Bumiputra (M) Bhd [1997] 1 MLJ 642 Court of Appeal, Kuala Lumpur (Siti Norma Yaakob, VC George and Mokhtar Sidin JJCA).

By an agreement dated 16 November 1976 (the first agreement) the defendants agreed to sell to a company, JC Tuin (Pte) Ltd (Tuin), a unit of a flatted factory which was then under construction. The unit was duly constructed and payment of the purchase price made. On 15 June 1982 or thereabout, Tuin agreed to sell the unit to the plaintiffs. It was agreed that Tuin would deliver a deed of assignment assigning to the plaintiffs all the former's rights and interests under the first agreement. At that time, the subsidiary strata certificate of title of the unit had not yet been issued. On 24 September 1982, Tuin executed and delivered to the plaintiffs the deed of assignment and the defendants and the plaintiffs entered into a sale and purchase agreement (the second agreement) whereby the defendants agreed to sell to the plaintiffs the premises. Due to certain events, there was a delay in obtaining the subsidiary strata title of the premises and the sub-division approval. On 30 October 1984 the plaintiffs took out this originating summons against the defendants. They claimed specific performance and damages. By the time the action came to be heard, the sub-division approval and the subsidiary strata title were then obtained. The original claim of the plaintiffs for specific performance therefore became irrelevant. The plaintiffs claimed damages. There were two issues to be considered, ie (a) whether there was such delay in obtaining the sub-division approval under s 9(3) of the Planning Act (Cap 232, 1985 Ed) and subsidiary strata title of the premises as to amount to a breach of cl 11 of the second agreement, and (b) if the answer to (a) is in the affirmative, whether the claim of the plaintiffs for damages is barred by the concluding part of cl 11 which stated, inter alia, that such delay shall not be a ground for any claim for damages by the purchaser (plaintiffs) against the vendor.

Held: (1) the defendants took a long time in obtaining sub-division approval and the subsidiary strata certificate of title of the premises. The delay was due or attributable to the fault of the defendants' architect. However, the defendants must be treated as having control in relation to matters dealt with or ought to have been dealt with by their professional adviser (the architect). The defendants must be held responsible for any act or omission on the part of their adviser and cannot escape liability by showing that their failure to discharge their obligations under cl 11 was occasioned by those whom they engaged to handle the matter. They were therefore in breach of their obligation under cl 11; (2) the court did not have the equitable jurisdiction conferred by Lord Cairns' Act to award damages in lieu of specific performance in this case. This court, however, did have jurisdiction to award damages at law for breach of contract. However, due to the second part of cl 11, damages cannot be awarded at law. Therefore no damages can be awarded either at law or in equity; (3) the plaintiffs' claim was dismissed.

Shiffon Creations (Singapore) Pte Ltd v Tong Lee Co Pte Ltd [1987] SLR 563 High Court, Singapore (Thean J).

[Annotation: Affirmed on appeal. See [1990] SLR 141; [1991] 1 MLJ 65.]

The plaintiff (respondent) claimed damages against the defendant firm (the appellant) for breach of contract. The plaintiff had agreed to sell and the defendant firm to purchase 10 tons of Indian black cardamon at the price of $3.60 per picul. The contract provided for 'shipment during June/July 1966' and for 'delivery to buyer's store.' The plaintiff delivered 2[1/2] tons in circumstances which resulted in a dispute between the parties. Eventually, through their respective solicitors, the defendant firm agreed to accept delivery of the balance of 7[1/2] tons 'within three days of the arrival at Singapore of the vessel ss Manoloeverette.' The ship arrived on 8 November 1966 but the plaintiff did not attempt to deliver the balance to the defendant firm until 21 November 1966 when he brought the goods to the defendant firm's shop. The defendant firm refused to accept delivery, Subsequently, the plaintiff sued the defendant firm for breach of contract. The defence, inter alia, was that it was an essential term of the contract that delivery be made within three days of the arrival of the ship at Singapore, and in this respect time was of the essence of the contract. At the trial, the plaintiff called a witness to prove, inter alia, a mercantile or trade usage among Indian merchants in Singapore relating to delivery of goods imported by sea into Singapore 'that in any contract for the sale of goods where there is a term in the contract requiring delivery within a specified time, that does not make time the essence of the contract in the absence of specific term that the time for delivery stated in the contract shall be of the essence of the contract. All that that term means is that delivery must be made within a reasonable time'. The learned trial judge found: (1) time of delivery was not of the essence of the contract; (2) even if time was of the essence of the contract, 'the conduct of the parties É and particularly that of the defendant had waived his rights regarding this stipulation of time'; (3) accepting there was a mercantile or trade usage of some kind binding on the parties, that 'if the defendant wanted to repudiate this contract for non-delivery then he should have given the plaintiff at least 24 hours notice of his intention to do so, so that the plaintiff could have had an opportunity to fulfil the contract'. The defendant firm appealed.

Held, allowing the appeal: (1) in most mercantile transactions, as regards stipulations other than those relating to time of payment, time is of the essence of the contract. The contract sued on in this case was an ordinary commercial contract for the sale of goods. On the evidence, the plaintiff had failed to prove that as regards the 7[1/2] tons of cardamons the stipulated time of delivery 'within three days after the arrival of the ship' was not of the essence of the contract; (2) as regards the question of mercantile or trade usage, there was no evidence that the stipulation as to time for delivery was the normal stipulation in this kind of trade; (3) there was no evidence to support the finding of the learned trial judge that the subsequent conduct of the defendant amounted to a waiver.

Himatsing & Co v PR Joitaram [1970] 2 MLJ 246 Court of Appeal, Singapore (Wee Chong Jin CJ, Tan Ah Tah and Chua JJ).

In a lump sum building contract it does not necessarily mean that the entire performance is a condition precedent to payment. It is not every breach of the promise to complete the work which absolves the employer from his promise to pay the price but only a breach which goes to the root of the contract, such as an abandonment of the work when it is only half done. If it is not one which goes to the root of the matter, the employer must pay the price and bring a cross-claim for defects and omissions or alternatively set them up in diminution of the price.

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

The plaintiffs in this case were the owners of the 'Metro' group department stores. The defendants who were suppliers of security alarm systems also undertook to instal, maintain and man these alarm systems for the detection of any unauthorized breaking into or out of the premises to minimize thefts or other damage to goods. By an 'installation and service agreement' of 26 June 1974 made between Metro Holdings Ltd for and on behalf of the plaintiffs (the customer) the defendants (the company) agreed to instal in the plaintiffs' premises at Beach Road, a security alarm system and to maintain and man the same for an initial period of 12 months for $7,086 installation charges and $175 per month, service fee. Clause 4(ii) of the said agreement states that 'where no keys to the customer's premises are held by the company the customer or such person as the customer has nominated for this purpose will be notified as quickly as possible and if the customer wishes the police will be notified of the customer's anticipated time of arrival at the premises'. None of the keys were held by the defendants. The plaintiffs by a letter dated 4 November 1974, had nominated five persons to be notified (as required by cl 4(ii)) in case of any emergency. The security alarm system was duly installed on the said premises by November 1974 and thereafter the parties had started operating the alarm system. On 2 February 1975 at 10 pm, the management carried out the usual procedure to see that all the doors were locked and secured and all the merchandise in the store were either locked or kept away. Normal procedures were observed to ensure that all the customers had left the store. The alarm was initiated before closing the premises. The next morning, when the management entered the store ready for the commencement of business, they discovered that the store had been broken into. A large quantity of valuable merchandise were missing. The parties agreed that the value of goods lost be fixed at $108,756.67. At the outset of the hearing the defendants admitted that on the night of 2 February 1975 towards the early hours of the morning of 3 February 1975 the defendants upon receiving the alarm signals concerning the said premises in their control room had failed to notify the plaintiffs or the police about them. The defendants agreed that they were in breach of cl (ii) of the agreement. The plaintiffs however had not elected to repudiate or rescind the agreement and admitted that inspite of the said breach the agreement subsists. The defendants resisted the plaintiffs' claim for damages for loss suffered arising from the said breach. The defendants relied on cl 6 of the agreement which provided that 'the company shall not be liable for...any loss or damage suffered by the customer howsoever caused and without limiting the generality of the foregoing whether caused or arising by reason of or on account of any failure defect or malfunctioning of the equipment, the control unit or any other equipment or circuit or by reason of or on account of any act or omission whether negligent or otherwise on the part of the company or its servants or agents whether in respect of the equipment or the control unit or any other equipment or circuit or the design or operation thereof or in any other respect whatsoever or alarm or on account of the non-receipt of any alarm'.

Held, dismissing the plaintiffs' claim: (1) the wording of cl 6 is clear and unambiguous and is in very wide terms and covers the present claim; (2) the parties are of equal bargaining powers and there is no evidence that the parties did not freely agree to the terms of the clause; (3) by allowing this claim for the breach of contract to be fully covered by the exemption clause, it would not in any way be tantamount to depriving the plaintiffs' stipulations of any contractual force and in effect reducing the contract to a mere declaration of intent only; there is therefore no reason why effect should not be given to it.

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

A granted a bridging loan to D1, inter alia, to finance D1's housing development. D2-D4 were the guarantors for the bridging loan. At the same time, A granted an end-finance facility to D1 in respect of D1's housing development. The end-finance facility, inter alia, provided for D1 to repay the bridging loan from the end-finance facility. In an earlier case, A claimed against D1-D4 for sums due to A under the bridging loan. A applied for summary judgment which was dismissed by the senior assistant registrar, inter alia, on the ground that there was a triable issue as to the question of repayment of the bridging loan from the end-financing which was not provided by A to D1 due to A's internal problems. The High Court allowed A's appeal and ruled that the question of repayment from the end-financing was a matter which D1 may sue separately. Hence D1-D4 instituted this action against A. D1 claimed that A breached the end-finance agreement by suspending the end-finance facility and therefore not providing D1 with the end-financing to repay the bridging loan. A, however, claimed that the end-finance facility had expired and A was not obliged to offer the end-financing. The High Court allowed D1's claim and ordered damages to be assessed by the senior assistant registrar. A appealed to the Supreme Court.

Held, dismissing the appeal, Mohamed Azmi SCJ dissenting: (1) the learned judge was right in holding that A had suspended the end-finance facility and had breached the end-finance agreement; (2) there was no evidence as to the extent of loss due to A's breach. The case, would therefore be remitted to the learned judge and not the senior assistant registrar, to ascertain the loss due to A's breach.

Perwira Habib Bank Malaysia Bhd v Hong Huat Holdings Sdn Bhd & Ors [1991] 2 MLJ 29 Supreme Court, Malaysia (Abdul Hamid Omar LP, Mohamed Azmi and Ajaib Singh SCJJ).

The respondents in this case shipped from England to Singapore on the SS Glengarry bicycle parts of the value of about £3,000 under a bill of lading requiring the goods to be delivered 'unto order of his or their assigns', and which by cl 2, provided that '(c) É the responsibility of the carrier É shall be deemed É to cease absolutely after they are discharged' from the ship. After the goods had been discharged in Singapore, the carrier's authorised agent, in accordance with what was alleged to be the common practice in Singapore, released them to the consignee against a written indemnity by the latter's bank, the appellants, in favour of the carrier, but without production of the bill of lading. The consignee never paid for the goods, and on a claim by the respondents against the carrier for damages for breach of contract or for conversion the latter brought in the consignee and the appellant bank as third parties, claiming to be entitled to be indemnified by them. The appellants admitted liability to indemnify the carrier if the latter were held liable. The trial court gave judgment for the cycle company and also made a declaration that the carrier was entitled to be indemnified by the third parties, and this decision was affirmed by the court of appeal, to whom only the bank had appealed. On further appeal to the Privy Council.

Held: (1) it must be limited and modified to the extent necessary to enable effect to be given to the main object and intent of the contract and at least so as not to permit the carrier deliberately to disregard its obligation as to delivery Ð to deliver against production of the bill of lading; (2) a shipowner who delivered without production of the bill of lading did so at his peril. In delivering the goods, without production of the bill of lading, to a person who, to its knowledge, was other than one entitled under the bill of lading to receive them, the carrier was liable for breach of contract and conversion, and was not protected by the exemption cl 2(c). The extreme width of that clause must be cut down by an implied limitation;a fundamental breach of obligations of a contract cannot be allowed to pass unnoticed under the cloak of a general exception clause. Appeal dismissed.

Sze Hai Thong Bank Ltd v Rambler Cycle Co Ltd [1959] MLJ 200 Privy Council Appeal from Singapore (Lord Denning, Lord Jenkins and Rt Hon LMD de Silva).

[Annotation: See also Peninsular & Oriental Navigation Co Ltd & Ors v Rambler Cycle Co Ltd [1964] MLJ 443.]

In this case, tenders were called for the construction and completion of four major road works across the island of Singapore. On 10 July the respondent contractor submitted a tender which was later revised for $3,919,788 to complete the works within 24 months 'commencing from the date of possession of the site or within such extended time as by the conditions of contract provided'. On 28 October 1970 the said tender was accepted by the Director of Public Works and subsequently a formal contract dated 15 February 1971 was signed, stating that the date for possession was 11 February 1971 and 31 January 1973 as the date of completion. Clause 32(b) of the conditions of contract provided 'if the contractor shall be...delayed from the execution or completion of the work by reason...of any such acts or omission of the government...such...delay shall not vitiate the contract....'. In such cases, compensation or allowance would be paid to the contractor as determined by the government. Subsequently, the contract sum was reduced to $3,614,028.82 because part of the work was withdrawn. On 31 January 1973, by mutual agreement, the date for completion was extended by 11 months to 31 December 1973 because of delay due to land acquisition of burial grounds, squatter clearance and exhumation of affected graves. On 5 June 1973, the respondent rescinded the contract on the ground that the government was in fundamental breach thereof and stopped all work under the contract. The dispute was referred to arbitration. The arbitrator held that the respondent had made out a case for fundamental breach based on the principle of the Suisse Atlantique case. The appellant appealed to the High Court by way of motion to set aside the award on the grounds, inter alia, that the award was bad on its face or wrong in law. The High Court dismissed the motion ([1979] 1 MLJ 59) and the appellants appealed.

Held, allowing the appeal: (1) the arbitrator erred in his understanding of the decision in the Suisse Atlantique: the question before the House of Lords in that case was not whether there had been a fundamental breach but whether, assuming there was a fundamental breach, a clause excluding or exempting liability was applicable; (2) the failure of the arbitrator to construe the contract, in particular cl 32(b) of the conditions of contract, and to consider all the facts and circumstances of the case, in particular the fact that the original completion date had been extended and it was within the contemplation of the parties that the time for completion was not of the essence of the contract amounted to an error of law apparent on the face of the award.

Attorney General of Singapore v Wong Wai Cheng 1978 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Rajah JJ).

In October 1991, the respondent Ð an owner of a certain piece of property ('the property') Ð entered into an agreement with the appellant for the sale and purchase of the property at a purchase price of RM4,990,000 ('the first agreement'). Clause 5 of the first agreement required the respondent to deliver up duly executed memorandum of transfer to the appellant's solicitors to be held by them pending the conclusion of the sale. The appellant paid the respondent a sum of RM250,000 as a deposit and entered a private caveat against the property. In December 1991, the parties entered into a second agreement which stipulated for an increase in the purchase price of RM3m. In October 1992, the appellant sent a cheque in the sum of RM4,740,000 in purported payment of the balance of the purchase price. However, the cheque was dishonoured because the payment on the cheque was stopped by the appellant on the ground that the respondent had failed to comply with cl 5 of the first agreement. In July 1993, the appellant commenced proceedings against the respondent for specific performance. The respondent applied to strike out the action under O 18 r 19 of the Rules of the High Court 1980. The judicial commissioner granted the respondent's application and ordered the appellant's action to be struck out. The appellant appealed. Counsel for the appellant submitted that the judicial commissioner had erred in holding that the appellant was without a cause of action. He argued that the respondent had breached its obligation to deliver the memorandum of transfer in accordance with the provisions of cl 5 of the first agreement and that the appellant was therefore entitled to withhold the payment of the balance of the purchase price.

Held, dismissing the appeal: (1) in every contract, be it for the sale of land or any other commodity, there are some terms that are of fundamental importance and others of less or minor importance. Where the term that has been flouted is fundamental to the contract, the innocent party is entitled to treat himself as being discharged from further obligations under it. But where the obligation that has been breached is only subsidiary or minor in nature, the innocent party may not treat himself as being free of his obligations under the contract, although he may sue and recover damages for the non-performance of the subsidiary term; (2) a party who terminates a contract or treats it as having come to an end in reliance upon the breach of a non-fundamental term is himself guilty of a breach of a contract; (3) whether a particular term is fundamental to the contract or merely a term of subsidiary importance depends on the way in which the particular contract is constructed. Nevertheless, in the absence of any special considerations in a contract for the sale of land, the obligation to pay the purchase price is a fundamental term. So too is a term that the vendor has good title to the property that is the subject matter of the sale. If the parties desire to make some other obligation fundamental in nature, they must make it dependent upon one or other of these terms; (4) another approach is to look at the consequences of the breach of the term in question. If the breach is of such a nature that it goes to the root of the contract, then the term broken is fundamental in nature. On the other hand, if the consequences of the breach are not serious in the sense that they do not go to the root of the contract, then the term in question is a subsidiary one entitling the innocent party to recover damages, but not to treat the contract as being at an end; (5) applying either of the tests to the facts of the present appeal Ð having regard to the terms of the first agreement as a whole Ð it was clear that the stipulation as to the payment of the purchase price was a fundamental term. It was also clear that the obligation to deliver the executed memorandum of transfer was merely a subsidiary term, the non-performance of which did not relieve the appellant from his obligations under the contract. Therefore, the appellant's failure to pay the purchase price was fatal to its case.

Ching Yik Development Sdn Bhd v Setapak Heights Development Sdn Bhd [1996] 3 MLJ 675 Court of Appeal, Kuala Lumpur (Gopal Sri Ram, NH Chan and Ahmad Fairuz JJCA).

This was a a claim for RM168,575.43 by the plaintiffs against the defendant being the balance and interest due on a housing loan of RM300,000 which was secured by a charge on the property that was later sold by private treaty for RM220,000 after the defendant had failed to repay the loan instalments. The plaintiffs executed the satisfaction of charge after receiving the proceeds of sale wherein the plaintiffs inserted a proviso: 'without prejudice to our rights to claim the balance of the chargor's outstanding account due to us'. The defendant averred that the private treaty sale resulted in the redemption of the charge and the purchase price of RM220,000 was duly paid in full and final settlement of the redemption sum. It is submitted that the plaintiffs' claim is based on a memorandum of charge annexed with the loan agreement and since the memorandum of charge was satisfied, it was argued that the plaintiffs' claim disclosed no cause of action. The issues before the court were, inter alia: (i) whether the plaintiffs' cause of action was based on the memorandum of charge; (ii) whether the satisfaction of charge issued by the plaintiffs had the effect of fully satisfying the loan agreement; (iii) whether as a matter of law, the payment of a redemption sum discharged the whole debt; and (iv) whether as a matter of fact, there was an agreement that the payment of the redemption sum discharged the whole debt.

Held, allowing the plaintiffs' claim: (1) the statement of claim referred in unequivocal terms to a housing loan being granted and to a balance due thereunder. Though mention was made of the memorandum of charge and the loan agreement, it was made more for the purpose of explaining how the property was sold which thus gave the balance owing under the housing loan than anything else. The action is simply one for a debt owing by the defendant to the plaintiffs under a housing loan; (2) learned counsel had not mentioned the proviso that was inserted in the satisfaction of charge. This omission fatally flawed his argument as his argument proceeded on the assumption that there was an unqualified satisfaction of the charge when in fact it was not so. Therefore, on that document alone, that is the satisfaction of charge, it could not be said that the debt or the loan agreement was fully discharged since there was an express proviso that the outstanding amount was still due. That alone should be sufficient to dispose of the argument that the statement of claim disclosed no cause of action; (3) there is no statutory provision to regulate what happens when the proceeds of sale are insufficient to pay the debt owing though r 14(17) of the Sabah Land Rules 1930 provides for surplus to be given back to the chargor. Therefore, nothing turns on the statutory provisions and there is no statute to say that the payment of a redemption sum discharges whatever is owing; (4) to determine whether the parties have, by the use of the words 'redemption sum', agreed that the payment of such a redemption sum discharged whatever amount was owing by the defendant to the plaintiffs, the court would have to take into account the circumstances and the matrix of facts leading to the use of the words 'redemption sum'. It was not argued that there was an agreement between the parties that the payment of the 'redemption sum' was a full discharge of the debt and the use of the words 'redemption sum' was the result of such agreement. Consequently, there was no evidence to establish that agreement; (5) a charge and the debt for which the charge was executed are two separate things. The satisfaction of a charge does not necessarily mean the satisfaction of the whole debt whereas the converse is the case; (6) it was only if the evidence was challenged as to its admissibility that it was necessary to produce a certificate under s 90A(2) of the Evidence Act 1950, that the documents were produced by a computer in the course of its ordinary use. Since the documents were unchallenged, such a certificate was unnecessary; (7) the defendant had failed to argue that the amount claimed by the plaintiffs was incorrect prior to his testimony in court and then in court, he contradicted himself and produced no document as support. The evidence from the plaintiffs would be taken as the amount owed by the defendant.

Standard Chartered Bank v Mukah Singh [1996] 3 MLJ 240 High Court, Kota Kinabalu (Ian HC Chin J).

The appellants were the owners of a ship called the 'Master Stelios'. The appellants' agents in London sent a telex to the respondents, the owners of a drydock in Singapore reading 'Please advise us whether you have a drydock available for our MV Master Stelios 12,900 tons dw for ordinary drydocking and screwshaft survey'. The respondents replied by telex 'Re your enquiry 3/10 we can offer dock space around October 16/17. Please confirm if acceptable'. The telex sent by the agents to the respondents was 'MV Stelios. Regarding our previous messages, please arrange stem drydock for 16/17 instant. We shall advise you vessel's eta later. Meantime please quote following items:.....'. The vessel MV Master Stelios arrived in Singapore on 15 October 1973 and on 16 October she proceeded to the respondents' shipyard and was in drydock. The appellants' marine superintendent however was delayed and did not reach Singapore until late in the evening on 17 October. The surveyor discovered that the rudder of the ship needed repairs and the appellants carried out the repairs. No screwshaft survey was however done, despite the request of the master of the ship, and on 19 October in spite of protests by the master and the marine superintendent, the respondents insisted on undocking the ship without the screwshaft survey having been carried out, because the time allotted by the respondents for the ship to occupy the drydock was exhausted and the dock was required for another vessel for which it had been booked. The appellants claimed that as a result of the exchanges of telex messages there was a concluded contract between the parties by which the respondents were to provide drydock space in their yard for and execute general repair work on the Master Stelios. They further averred that it was a term of the contract either expressly or by implication that the respondents would provide the facilities for a screwshaft survey and by their failure were thus in breach. The respondents denied that any contract at all was made by the telexes and claimed that, if they were wrong about that, their obligation under the contract was only to provide drydock accommodation and in any event they were not obliged to withdraw the shaft for survey. Chua J in the High Court decided in favour of the appellants and held that the effect of the three telexes was that a concluded contract came into existence by which the respondents undertook to provide a drydock for the specific purpose of a tailshaft survey and for such other drydocking work as the owners might subsequently require to be carried out. He also held that the respondents had undertaken an obligation to withdraw the screwshaft for survey and that they had failed to implement this obligation. The Court of Appeal allowed the respondents' appeal from the judgment and held that no contract had been concluded. Alternatively they held that, even assuming there was a concluded contract to provide drydock spaces, there were no grounds for implying a term that the yard would do the work involved in a screwshaft survey ([1980] 2 MLJ 169). The appellants appealed. There were two questions in the appeal. The first was whether there was a completed contract between the appellants and the respondents relating to the drydocking of the Master Stelios in October 1973. If so, the second question relates to the obligations of the yard under the contract.

Held: (1) there was as a result of the telex messages a concluded contract between the parties; (2) the true position was that there was a contract by which the respondents were obliged to provide drydock space for a period long enough to allow a screwshaft survey to be carried out, along with such other ordinary drydock work as could be done simultaneously with the screwshaft survey. The respondents were not obliged to do any work at all on the ship, unless and until the appellants through their marine superintendent or other representative ordered work to be done; (3) the respondents were not in breach of contract merely by failing to do the work required to enable a screwshaft survey to be carried out. Moreover on the trial judge's finding that the time allocated by the respondents for the screwshaft survey was not long enough to permit them also to do the rudder repair which were required by the surveyor and authorized by the appellants' agents, it was impossible also to do the screwshaft survey work.

The 'Master Stelios' Monvia Motorship Corp v Keppel Shipyard (Pte) Ltd 1982 Privy Council Appeal from Singapore (Lord Fraser of Tulleybelton, Lord Scarman, Lord Bridge of Harwich, Lord Brandon of Oakbrook and Lord Templeman).

This was an application to set aside the writ of summons and all subsequent proceedings on the ground in effect that the courts in Malaysia have no jurisdiction to deal with the matter. In this case the contract was made outside the jurisdiction, the defendant was resident outside Malaysia and had no place of business within the jurisdiction and the breach of contract also occurred outside the jurisdiction.

Held: the court had no jurisdiction to deal with the matter and therefore the application must be allowed.

Lam Kok Trading Co (Pte) Ltd & Anor v Yorkshire Switchgear & Engineering Co Ltd [1976] 1 MLJ 239 High Court, Kuala Lumpur (Abdul Hamid J).

The defendants subscribed in London to a contract of insurance insuring the plaintiffs as owners of a motor vessel which sank near Kuala Belait and was lost. The defendants repudiated liability. The plaintiffs issued a writ of summons and obtained ex parte an order for service out of the jurisdiction. Service was duly effected, a conditional appearance entered and the defendants applied to set aside the writ and service.

Held: the contract was entered into in England and, in the absence of any provision to the contrary in the contract, it must be presumed that the parties intended that performance would be in England, where the alleged breach must therefore be deemed to have occurred. Consequently, the High Court in Brunei had no jurisdiction to hear the claim or to order service out of the jurisdiction.

Brunei Shipping Co v Atlas Assurance Co Ltd & Ors 1960 Supreme Court, Sarawak, North Borneo and Brunei

The limitation to an action for goods sold and delivered, where there is no writing other than a receipt for the goods, is three years under sub-s 9, cl 1 of Act XIV of 1859, as the non-payment of the price is merely a breach of contract.

Tungku Muda Malim v Khoo Tean Tek [1878] 1 Ky 453 High Court, Straits Settlements (Wood J).

It is a sufficient reason for breaking off a promise of marriage, even after a large sum of money has, in accordance with Chinese custom, been spent in consequence of the engagement, that the plaintiff is inflicted with an infectious disease, even itch.

Tan Kee v Hong Keat [1842] 1 Ky 63 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Norris R).

The plaintiffs are the owners of a building. The defendants are independent contractors who, by a maintenance tenancy agreement between themselves and the plaintiffs, agreed to carry out maintenance works on the building. It is a term of the agreement that the defendants should exercise all reasonable care and diligence in carrying out their duties under the agreement. On 23 September 1986, one of the plaintiffs' tenants reported that one of the ceiling boards of the unit was water-stained. Two of the defendants' employees inspected the unit. One of the employees was negligent which resulted in a high-pressure jet of water gushing out, thereby causing damage to the tenant's property. The plaintiffs' insurers paid S$27,718.39 to the tenant and signed a subrogation agreement and an assignment, inter alia, subrogating all the tenant's rights in the matter to the insurers. The insurers then commenced action against the defendants in the plaintiffs' name, seeking by way of subrogation to recover the said sum. The district judge dismissed the claim. The plaintiffs appealed.

Held, dismissing the appeal: (1) the doctrine of subrogation allows the insurer 'the advantage of every right of the assured', however it arises, 'by the exercise or acquiring of which right or condition the loss against which the assured is insured can be, or has been, diminished'. It is important to identify 'the assured' in this case, and the rights of action of that assured, to which the insurers may be subrogated. It was the tenant who directly suffered the damage. But under the contract of insurance between the plaintiffs and the insurers, to which the tenant was not party, the plaintiffs were the assured; (2) the rights which the plaintiffs had against the defendants that the insurers could be subrogated to have to be rights by the exercise of which the loss suffered by the plaintiffs can be diminished. The loss suffered by the plaintiffs must be determined. In this regard, it is relevant to observe that the tenant assigned his rights, not to the plaintiffs, but to the insurers; (3) the insurers paid the tenant on behalf of the plaintiffs for two broadly discernible reasons. Firstly, they relied upon the determination of the loss adjustors, and secondly, they had sound commercial or practical reasons for paying up promptly. The chain of causation between the defendants' breach of contract and the resultant loss to the plaintiffs was broken: despite the defendants' breach of duty, neither the plaintiffs nor the insurers should have had to pay the tenants at all, according to the terms of the lease.

Wisma Development Pte Ltd v 2M Property Consultants Pte Ltd 1992 High Court, Singapore (Yong Pung How CJ).

The plaintiff applied under O 14 for judgment to be entered against the defendants for, inter alia: (a) the sum of RM348,545.98, or alternatively, the sum of RM304,151 thereof; (b) further or in the alternative, for the sum of RM87,573.50. At the end of the hearing on 12 August 1987, judgment was entered against the defendants for the sum of RM87,573.50, with interest and with unconditional leave to defend as regards the balance sum. The plaintiff appealed against the decision that there was a triable issue in respect of prayer (a). The plaintiff and the defendants made an agreement ('the agreement') dated 2 October 1990 to engage the plaintiff as a contractor to carry out certain works at the defendants' sawmill site. When the work was completed, the plaintiff claimed that the defendants' representatives had avoided payments which were validly due to him. It was the defendants' case that because the plaintiffs had wilfully defaulted in complying with certain special conditions in the letter of credit ('THM-4') for payment out of the sum of RM304,151, payment could not be effected to him. The relevant conditions were that the invoices had to be countersigned by the defendants' representatives and that the plaintiff was to provide a surveyor's report certifying that the land had been levelled to 2ft above high tide level. The defendants also argued that they were not liable to the plaintiff for the sum of RM348,545.98 because the plaintiff had breached the agreement. The plaintiff contended that the defendants had dispensed with or waived the alleged breaches in the light of a letter dated 10 July 1991 ('THM-12') and THM-4. THM-12 purported to terminate the operations due to numerous stoppages resulting in delay in the implementation of the defendants' project of about three months. He also alleged that the defendants' representatives had refused to sign the relevant invoices although the conditions had been satisfied. The defendants also counterclaimed by alleging failure on the plaintiff's part to construct and complete the reinforced concrete wharf and jetty. A preliminary issue before the court was whether the plaintiff could use the affidavit of one Wong Ting Yew made after the hearing and whether certain paragraphs in the defence and counterclaim should be struck out. For this preliminary application, the plaintiff affirmed that it was only after the hearing that he was able to persuade the said Wong Ting Yew to make the affidavit.

Held: (1) no reason had been adduced as to why the plaintiff was unable to persuade Wong Ting Yew to make the affidavit, neither was there any indication that the deponent was unavailable at all material times such as, for example, that he was overseas or otherwise indisposed. There were also no indications that the deponent was ever approached prior to the hearing. There was therefore no basis upon which the court could grant leave to the plaintiff to produce Wong's affidavit. The application to strike out certain paragraphs in the defence and counterclaim therefore had no merit as it was based on Wong's affidavit which could not be adduced in evidence; (2) there was no mention in THM-12 that the defendants were unhappy because of the alleged breaches whereas there was mention of the breaches in two earlier letters dated 6 June 1991 and 28 January 1991. It was therefore reasonable to assume that these matters had by then been fully and satisfactorily rectified for if they were not, they would conceivably have been raised again or be specifically referred to in THM-12, but they were not. The defendants had therefore allowed the plaintiff to proceed with the operations by actively and consciously conducting themselves in a manner which could only be construed as sanctioning the delay and thus in effect with waiving the requirement of time limit under the agreement. THM-12 and THM-4 therefore constituted a clear indication that the defendants had waived the breaches alleged to have been committed by the plaintiff; (3) having waived the time limit stipulated in the agreement, the defendants would be at liberty to fix a reasonable time for the completion of the sandfilling works. However, nothing to this effect could be deduced from the defendants' conduct. A letter dated 10 October 1991 seemed to indicate the contrary; (4) in the circumstances, it could not be said, with any certainty, that the defendants, by THM-12 had terminated or intended to terminate the agreement; (5) the conditions for payment out had been satisfied as, on a balance of probabilities, the plaintiff did in fact present the relevant invoice to the defendant representatives but the latter had refused to sign it. There was also instructions from the defendants' representative that no relevelling work was required. As there were no specific denials of these allegations by the defendants, they must reasonably be regarded as credible. The plaintiff was therefore entitled to the sum of RM304,151; (6) unlike the plaintiff's claim which the defendants had not been able to satisfy the court that there was an issue or question in dispute which ought to be tried or that there was an arguable case, the allegations of the counterclaim were not without plausibility and therefore ought to be more fully ventilated at the trial.

Tiong Hung Ming v Kalimantan Hardwood Sdn Bhd Suit No 58 of 1991 High Court, Sibu (Steve Shim J).

By an agreement in writing dated 6 April 1983 between the applicants and the respondent, the applicants had allowed the respondent, on payment of the sum of $20,000 to them, to develop a piece of land owned by the applicants. By cl (1)(b) of art 2 of the agreement, it was agreed that if the respondent failed to obtain the necessary approvals for conversion of the category of land use within 30 months from the date of the agreement, the agreement was to be deemed to have been terminated and a sum of $10,000 was to be refunded by the applicants to the respondent. The 30-month period expired on 30 October 1985. The applicants contended that the respondent had failed to obtain the necessary approvals when the period expired. They deposited the sum of $10,000 with their solicitors for payment to the respondent. The respondent had lodged a private caveat against the land and refused to withdraw it when requested by the applicants' solicitors, who had written to say that the sum of $10,000 had been deposited with them. The respondent denied that they had failed to obtain the necessary approvals within the time stipulated. They alleged that they had submitted plans to the authorities which were amended and submitted afresh within time following guidelines issued by the authorities. The respondent also alleged that the plans were amended to provide for re-siting of a surau on the demands of the applicants' agent. The respondent said that they had informed the agent that such demands would delay the development of the land and asked for a 15-month extension, to which the agent had agreed on a number of occasions. Consequently, the respondent submitted fresh plans to the authorities and these were accepted by them on 3 July 1985. The respondent also said that they requested the applicants to put the extension of time in writing but the applicants refused and insisted on the forfeiture of the sum of $20,000 as agreed liquidated damages, and also insisted on other damages for the extension period. The applicants denied all the respondent's allegations except as regards the re-siting of the surau. The applicants brought proceedings for orders for, inter alia, a declaration that the agreement was null and void and that the caveat be removed and sought judgment under ord 81 of the Rules of the High Court 1980.

Held, allowing the application: (1) the agreement was quite clear and unambiguous as regards the time period for obtaining the approvals. Apart from the fact that the 30-month period was already a reasonable period of time for that purpose, there was also no provision for extension of time in the agreement; (2) in view of the breach of cl (1)(b) of art 2 of the agreement, the contract was deemed to be terminated and the applicants were liable to pay the $10,000 as refund to the respondent. Further, by virtue of s 92 of the Evidence Act 1950 (Act 56), the court would have to exclude the evidence of any oral agreement between the respondent and the purported agent of the applicants as regards the extension of time granted by the latter; (3) the respondent had no defence on the merits and consequently there were no triable issues. The order sought was to be granted save that the agreement was declared to be terminated instead of null and void.

Chan Kin & Anor v Chareen Realty Development Sdn Bhd [1989] 1 MLJ 62 High Court, Ipoh (Abdul Malek J).

Mokhtar Haji Jamaludin v Pustaka Sistem Pelajaran [1986] 2 MLJ 376 High Court, Kuala Lumpur (Gunn Chit Tuan J).

See COPYRIGHT, Vol 3, para 3217.

The plaintiffs claimed against the defendants monies due and owing in respect of breach of contracts entered into with the defendants concerning the purchase of palm olefin. The defendants denied the claim, contending that: (1) there were no signed contracts between the plaintiffs and the defendants; (2) the contracts were not registered with the Palm Oil Refineries Association of Malaysia (PORAM); (3) the contracts were subject to the defendants de facto receiving the PORAM FOB terms and notice of default as per the PORAM FOB terms being given; (4) the option to buy in new drums rendered the contracts, where that was stipulated, as uncertain and there was no contract until the option was exercised; and (5) the PORAM contract required a dispute to go to arbitration and the court had no jurisdiction to hear the proceedings.

Held, allowing the plaintiffs' claim: (1) the defendant's defence on the non-existence of signed contracts was completely untenable. The various contracts were concluded on the telephone and the telexes in each contract evidenced that fact. These telexes confirming the purchases made were never questioned or denied by the defendants when they were received by the defendants; (2) the validity of the oral contracts between the plaintiffs and defendants confirmed by telexes did not render them unlawful because the plaintiffs failed to prove that they had registered the contracts with PORAM as required. The registration was a requirement for administrative purpose and for statistical information. It added nothing to the relationship between the parties. The lack of registration with PORAM did not render the contract unenforceable; (3) PORAM terms were substantially understood and applicable to the contracts concluded by the plaintiffs and defendants. The terms were common and the defendants were acquainted with them; (4) the option was only a subsidiary term of the contract giving the defendants a choice in the method of shipment they wanted to employ and nothing else. The contract as set out in the telexes provided for a fixed price adjustment and there was no uncertainty; (5) the defendants had already taken numerous 'steps' in defending the proceedings and s 6 of the Arbitration Act 1952 (Rev 1972) [Mal] would not apply.

Nalin Industries Sdn Bhd v Hong Seng Co (Pte) Ltd Suit No 2837 of 1987 High Court, Singapore (Amarjeet JC).

By a partnership agreement dated 22 March 1982, P and D agreed to become partners in the business of running a petrol station. P purchased 30% of the equity share in the partnership. Prior to the partnership agreement, the petrol station was run solely by D. D had earlier borrowed B$20,000 from P to be given as security for the petrol purchased from Brunei Shell Petroleum Co Sdn Bhd. Not long after, the parties sought to end the partnership. It was agreed that D would purchase the 30% equity share of P in the partnership for B$105,000. D paid B$50,000 to P and promised to pay the balance sum later. When D failed to do so, P instituted the present action claiming, inter alia, an account of all the profits derived from the running of the petrol station from 1 September 1982 to 30 April 1985 and the payment of the sums of B$55,000 and B$20,000 owing by D.

Held: (1) having regard to the evidence, P had not received any payment for the B$55,000 and B$20,000 which D owed him. P was, accordingly, entitled to succeed on that part of his claim; (2) in the instant case, P was not entitled to an order for an account of the profits derived from the running of the petrol station as these were included in an account already rendered to P and were reflected in the share of profits that he received for that period; (3) as the partnership was brought to an end on 30 April 1985, being the date up to which P received a share of the profits, the court refused to grant P any order for the preparation of accounts of the service station after that date.

Hj Bungsu bin Kadir v Hj Abdullah bin Hj Mangol Civil Suit No 184 of 1987 High Court, Brunei (Roberts CJ).

The plaintiffs were suppliers of ready mixed concrete and the defendants were building contractors. In or about July 1990, the defendants were awarded a contract by the Port of Singapore Authority to build the Service Complex at the Brani Terminal, Pulau Brani. The defendants entered into a contract with the plaintiffs for the supply of ready mixed concrete required for the project. Several amendments to the contract were then agreed to. The material amendment was to cl 13 which stated that the contractor was required to provide a casting schedule for the whole project and 24 hours advance notice must be given prior to each supply required. In the event that the supplier failed to supply due notice having being given, the contractor shall have the right to source its concrete requirements from an alternative supplier and any cost difference is recoverable from the supplier. The supply from the plaintiffs appeared to be unsatisfactory from the initial stages of the contract. There were short and irregular supplies and even non-delivery at times. On 18 April 1991, the defen-dants entered into an agreement with Rite-mix for the supply of the remaining quantity of concrete. Rite-mix was a company in which the main shareholders of the defendants had the majority interest. The two companies also had common directors. The defendants' complaints about the unsatisfactory supply from the plaintiffs culminated in their letter to the plaintiffs of 7 May 1991. Relying on cl 13 the defendants sought an alternative supplier, which was Rite-mix. On 9 May 1991 the plaintiffs replied refuting the defendants' allegations and rejecting the applicability of cl 13. From 11 May 1991 onwards no orders were placed by the defendants for the supply of concrete which clearly evinced an intention on the part of the defendants to put an end to their contract with the plaintiffs. Notwithstanding that, however, the plaintiffs did not accept this repudiation. By letter dated 30 May 1991 the plaintiffs requested a proper casting schedule and payment of the outstanding invoices be made within three days. On 7 June 1991 the plaintiffs followed up with another letter stating that the defendants' failure to give them a proper casting schedule and failure to make payment of the outstanding invoices amounted to a repudiation of the contract and this repudiation was accepted by them. The plaintiffs commenced these proceedings for recovery of the total sum of $278,969 due to them and damages by way of loss of profits. The defendants counterclaimed for $253,598.08 being the additional cost incurred in procuring supplies from Rite-mix. On an appeal by the plaintiffs against the order of the assistant registrar granting the defendants leave to defend, the court gave judgment to the plaintiffs in the sum of $253,424 with leave to the defendants to defend in respect of the sum of $25,545 for which the credit period of 45 days had not expired at the date of commencement of the proceedings. The hearing proceeded on the plaintiffs' claim for $92,648.26 by way of loss of profits in respect of the additional concrete purchased by the defendants from Rite-mix. The defendants counterclaimed for $253,598.08 being additional costs incurred by their procuring supplies from Rite-mix. The plaintiffs' claim was based on breaches of contract on the part of the defendants in failing to make payments of the amounts due and failure to furnish the casting schedule.

Held, dismissing the plaintiffs' claim and the defendants' counterclaim: (1) unless a different intention appears from the terms of the contract, stipulations as to time of payment are not of the essence of a contract of sale according to s 10(1) of the Sale of Goods Act 1979; (2) the plaintiffs were not discharged from further performance of their contract and their letters of 30 May and 6 June 1991 constituted wrongful repudiation of the agreement on their part. If the defendants' failure to pay within the stipulated time amounted to a repudiation of the contract, the plaintiffs had refused to accept the repudiation. They instead gave the defendants three days notice to rectify the breach. This notice was not a reasonable one in that it coincided with the weekend. Failure to comply with that notice therefore did not entitle the plaintiffs to treat the agreement as having been terminated by the defendants' breaches. The defendants' failure to give the plaintiffs a casting schedule was not a breach which amounted to repudiation of the contract, as the plaintiffs had been able to supply according to the defendants' orders without the casting schedule and they never alleged that their inability was in any way due to lack of the casting schedule. In any case, if there was repudiation, the plaintiffs had not accepted it; (3) the defen-dants' counterclaim for wrongful repudiation of the contract by the plaintiff arising out of the letters of 30 May and 7 June 1991 failed because the defendants had entered into the agreement with Rite-mix on 18 April 1991 under which the defendants had agreed to take the supply for their remaining requirements from Rite-mix at additional costs. Therefore their loss by way of such additional costs was not due to the subsequent repudiation by the plaintiffs of their contract with the defendants. It was incurred pursuant to their agreement with Rite-mix; (4) the evidence on the quantum of the defendants' alleged loss was rejected as doubts were cast on the bona fides of the counterclaim and the terms of the agreement with Rite-mix.

Brani Readymixed Pte Ltd v Yee Hong Pte Ltd [1994] 2 SLR 552 High Court, Singapore (Goh Joon Seng J).

[Annotation: Plaintiffs' appeal allowed and defendants' appeal dismissed. See [1995] 1 SLR 205.]

The plaintiff and five defendants at the material time were co-owners of a piece of land (`the land'). On 2 July 1992, the defendants had signed an agreement whereby if the land were sold the plaintiff was to be given a price for ten acres, even though the plaintiff only possessed a 1/8 share, ie, approximately 4.628 acres. The land was not sold. In 1994, the Johor state authorities instituted an action to acquire the whole of the land under the Land Acquisition Act 1960 (`the Act') and the land administrator made a compensatory award based on the respective holdings of the plaintiff and five defendants. The plaintiff had filed a writ of summons and claimed, inter alia, specific performance of the terms of the agreement in connection with the payment of the price for ten acres of the land and damages in addition to or in lieu of specific performance of the agreement. The first, second, fourth and fifth defendants applied to strike out the writ of summons and statement of claim under O 18 r 19(1) of the Rules of the High Court 1980 (`the RHC').

Held, allowing the application with costs: (1) the discretionary power to dismiss an action summarily under O 18 r 19(1) of the RHC and under the inherent jurisdiction of the court was a drastic power which should only be used in a plain and obvious case; (2) it was clear that when alienated land became the subject of an acquisition action by the state authorities, it could not be interpreted as the owner having sold his land to the state authorities. In this case, the agreement was made on 2 July 1992 and the land had never been sold between that date until the state authorities instituted the land acquisition action in 1994. Based on this, pursuant to s 57(2) of the Contracts Act 1950, the agreement had become invalid and void by itself when the land acquisition action was instituted by the state authorities. On the whole, the conditions had changed and these changes had frustrated the contract; (3) besides, according to s 66 of the Act upon the making of a memorial under the Act in respect of the land acquired, the land should vest in the state authority as State land free from incumbrances. In this case, it was clear that when the land administrator had perfected the acquisition, the ownership of the plaintiff and the defendants in the land had terminated and therefore the agreement could not be executed or enforced through a specific performance order as prayed by the plaintiff. Therefore, it was plain and obvious that the plaintiff's claim for specific performance would not succeed and this would mean the claim was frivolous and vexatious as provided for under O 18 r 19(1)(b) of the RHC.

Yeo Siew Kiow v Nyo Chu Alang & Ors [1997] 5 MLJ 313 High Court, Johor Bahru (Mohd Ghazali J).

The respondents, Resource Development Corp Pte Ltd ('RDC') were granted a lease of a quarry site in Pulau Ubin by the government. The respondents had also bought a new crusher plant to turn the granite blocks into granite products. Syarikat Teknikal dan Kejuruteraan Sdn Bhd ('STDK'), a company incorporated in Malaysia, were the successful tenderers and were awarded the contract for the development of the quarry site. The appellants, Teknikal dan Kejuruteraan Pte Ltd ('TDK'), were incorporated in Singapore for the purpose of carrying out the contract. By a novation agreement dated 31 July 1981, TDK were substituted as the contractors. The site, of about 35 acres, was a hill covered with trees and thick undergrowth, a cover which is known as the 'overburden'. The granite to be quarried lay under the overburden and before development was possible, the overburden had to be removed. The contract provided that RDC should remove the overburden in the initial area of 10 acres to a depth of one metre above the underlying rock surface. TDK would then develop the quarry face, quarry and transport the granite to the crusher plant to be turned into the products required by the contract. The date for possession of the site was expressed to be 1 June 1981 and the duration was stated to be a three-year term from 1 June 1981 to 31 May 1984. The contract also stated that the plant was expected to be commissioned by August 1981 and it further provided for a schedule of minimum output that TDK would have to fulfil, after the commissioning of the plant. In March 1981, RDC awarded the contract for the removal of the overburden to Chuan Joo Pte Ltd, which Chuan Joo had to complete in August 1981. However, the removal of the overburden was not completed by that date, and Chuan Joo was still on the site in September. TDK alleged that as a result, they were not able to develop the granite quarry as contemplated by the contract. TDK were warned by RDC of the imposition of liquidated damages and termination of the contract if the production figures did not improve. On 6 May 1982, RDC wrote to TDK referring to their consistent low production and formally gave notice pursuant to cl 35 of the contract, that if TDK continued to be in default, RDC would exercise their right to terminate the agreement. In reply to the letters sent by RDC, TDK pointed out that RDC had failed to clear the overburden in the initial area as they had contracted to do. TDK stated that this failure by RDC to hand over the initial area in accordance with the contract was a breach that went to the root of the contract and gave notice that if possession was not given to them within 30 days, they would rescind the contract. By a letter dated 28 May 1982, RDC gave notice of termination with immediate effect and required TDK to vacate the site. On 11 August 1982, TDK commenced action in the High Court, claiming damages for RDC's breach of contract. The learned judicial commissioner found that TDK had failed to show that RDC had not cleared the initial area to the required depth and dismissed the claim on this and other grounds. The case pleaded by RDC was that due to TDK's failure to produce the contractual quantities, they were entitled to rely on cl 35 of the contract, which provided for termination in such circumstances. After hearing the parties but before delivery of the judgment, the learned judicial commissioner invited RDC to apply to amend their pleadings to raise an alternative ground, ie that TDK had repudiated the contract by abandoning the work and that RDC had accepted this repudiation by their letter of 28 May 1982. This application was opposed by TDK but was allowed by the learned judicial commissioner, who then held in favour of RDC on this alternative ground. TDK appealed, inter alia, on the ground that on the evidence, RDC had not fulfilled their obligation in relation to the removal of the overburden. TDK also contended that the application for amendments to plead the alternative ground should not have been invited or allowed.

Held, allowing both appeals: (1) where the evaluation of the evidence involves testing the evidence against inherent probabilities or against uncontroverted facts, including the conduct of the parties, the appellate court is in as good a position as the court of first instance, although due allowance should be given to the fact that the trial court had the advantage of seeing the witnesses; (2) on testing the oral evidence of the witnesses against the indisputable facts and contemporary documentary evidence, the irresistible conclusion is that RDC left such a large amount of overburden in the initial area as to make it impossible for TDK to do any meaningful quarry development work; (3) there is a general obligation on the part of the employer not to prevent the performance of the contract by the contractor. The obligation to give possession of the site at the time provided by the contract is part of this general obligation. Conversely, the contractor has the right to carry out his work in the order he chooses. A failure to give possession of the site in accordance with the contract may amount to an interference with this right; (4) TDK is entitled to damages resulting from RDC's breach of their contractual obligation to remove the overburden in the initial area; (5) RDC had clearly purported to terminate the contract under cl 35 in their letters of 6, 14 and 28 May 1982 and they had not purported to exercise their common law right to terminate by acceptance of TDK's alleged repudiation of the contract when TDK abandoned the work; (6) RDC were in no position to rely on the low production of TDK or on TDK's abandoning work as repudiation of the contract on TDK's part, as these had resulted substantially from RDC's own breach of contract due to their failure to remove the overburden. To allow the amendments would in effect be allowing RDC to plead a case that was on the facts not open to them, and the application for the amendments to the pleadings should not have been invited or allowed.

Teknikal dan Kejuruteraan Pte Ltd v Resources Development Corp (Pte) Ltd [1994] 3 SLR 743 Court of Appeal, Singapore (LP Thean JA, Rajendran and Warren LH Khoo JJ).

If the promisor disables himself from performing the contract on his part, he thereby waives or excuses the performance of future conditions precedent to his liability.

Held: the principle applied to the case of a Chitty mortgagee who having convenanted to deliver (whenever required by the mortgagor) a concession or lease to any banker in Singapore (whom the mortgagor might appoint) on the banker undertaking to pay the mortgage debt, had absented himself from the Colony for a period of more than ten years without leaving his address or the said document with an agent in Singapore.

Annamallay Chitty v Nash [1901] 6 SSLR 85 High Court, Straits Settlements (Leach J).

Teknikal dan Kejuruteraan Pte Ltd v Resources Development Corp (Pte) Ltd [1996] 3 SLR 145 Court of Appeal, Singapore (LP Thean JA, Rajendran and Warren LH Khoo JJ).

See CONTRACT, Vol 3, para 1563.

Lock Wee Chan & Anor v Khiew Wah Ying & Anor Suit No 1294 of 1994 High Court, Singapore (Warren LH Khoo J).

See CONTRACT, Vol 3, para 2170.

Yap Kok Heng (t/a Ehsan Enterprise) v International Auto Enterprise Sdn Bhd Civil Appeal No R2-12-105-92 High Court, Kuala Lumpur (Wan Adnan J).

See CONTRACT, Vol 3, para 3031.

By a contract dated 21 October 1992, the plaintiff agreed to purchase a quantity of steel reinforcing bars from the defendants. By another contract of the same date, the defendants agreed to purchase the same quantity of steel reinforcing bars from the third party (the agreement). At the time, the third party only knew that the defendants were purchasing the bars for a Chinese buyer and did not know the terms of the sale. Under the agreement, the defendants were to open a letter of credit favouring the third party by 31 October 1992. The defendants did not do so until 2 November 1992. The third party subsequently failed to deliver any steel reinforcing bars and the defendants consequently failed to deliver bars under their contract with the plaintiff. The plaintiff sued the defendants in respect of the non-delivery and the defendants in turn joined the third party. Prior to the trial, the defendants paid the plaintiff the sum of US$150,000 in settlement of their claim. The plaintiff did not appear at the trial. The defendants claimed against the third party the sums of (i) US$55,000 being loss of profits; (ii) an amount for currency loss on the loss of profits; and (iii) S$235,715 being the Singapore dollar equivalent of the US$150,000 paid to the plaintiff. The third party contended that the letter of credit was opened late and that it did not conform with the terms of the agreement. The defendants had thereby repudiated their contract with the third party, which the third party had accepted. The latter defence was only raised on the first day of the trial of the action. The defendants sought to adduce evidence, including affidavit evidence by the third party's former employee AC (who was, at the material time, in prison in the United States of America), that the third party had never treated the contract as repudiated.

Held, allowing the defendants' claim in part: (1) the affidavit evidence-in-chief of AC was not admissible as he had not been made available for cross-examination at the trial. His affidavit could not be admitted under s 32(c) of the Evidence Act (Cap 97, 1990 Ed) as the statements therein were not against his pecuniary or proprietary interest, did not reveal any wrong-doing, negligent or reckless conduct on his part, or expose him to any dire consequences from anyone; (2) the evidence showed that the third party had granted the defendants an extension of time beyond 31 October 1992 to open the letter of credit and the third party could not rely on the fact that it was opened on 2 November 1992 to avoid liability; (3) a buyer had the duty of furnishing the seller with the type of credit that had been agreed upon in the contract of sale. The credit must not only conform in form but also in substance to the type specified in the contract of sale; (4) the letter of credit procured by the defendants was materially different from that agreed upon in the agreement. The insertion of an unagreed provision in the letter of credit appeared to undermine its very structure. In the circumstances, the defendants were indeed in breach of their obligation to open a letter of credit in conformity with the contract; (5) however, the third party after receiving the letter of credit conducted itself as though the contract was afoot and had tried to secure the goods to be supplied under the contract despite having full cognizance of the terms of the letter of credit. This conduct amounted to a representation to the defendants that it was endeavouring to fulfil its obligations under the agreement and was a patent act of waiver of the discrepancies in the letter of credit; (6) the claim for loss of profits in the sum of US$55,000 was based on the difference between the price in the agreement and the price in the contract between the plaintiff and the defendants. It was allowed as the third party knew that the steel reinforcing bars were intended for sale by the defendants and there was no evidence to show that the amount of profit was unreasonable or exaggerated; (7) the claim for exchange currency loss on the loss of profits was not allowed as the defendants had claimed interest on the loss of profits. The award of such interest, calculated from the date on which payment under its contract with the plaintiff was to be made, would adequately compensate the defendants for any loss in the value of the US dollar against the Singapore dollar between that date and the date of judgment; (8) the claim for S$235,715 failed because the plaintiff's claim against the defendants had not been tested in court and the third party could not in fairness be bound by the settlement reached between the plaintiff and the defendants. Furthermore, since the third party was not aware of the identity of the plaintiffs (qua sub-purchasers) at the time of the agreement, or of the terms of the contract between the plaintiff and the defendants, it could not be made liable for the amount paid by the defendants to the plaintiff as a result of the defendants' failure to deliver. Moreover, the amount paid by the defendants to the plaintiff was excessive and extravagant.

Sintra Merchants Pte Ltd v Brown Noel Trading Pte Ltd (Donald & Mcarthy Pte Ltd, third party) [1996] 2 SLR 444 High Court, Singapore (Rubin J).

See contract, para I [22].

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).

A was employed by R to manage their steel department. While so employed, he formed another company S of which he was governing director and in which he held 40% of the shares. Steel was sold to that company by A at a substantial discount. When R discovered the sales to S, they closed the steel department in order to carry out a stock-take and audit. A was suspended and locked out of the department. He wrote to R claiming payment of bonus, outstanding management fees and refund of pension contributions. Further correspondence followed. On 15 January 1976 R's general manager wrote to A, informing him that the audit had been completed and instructing him to report for duty as manager of the steel department. A did not report for duty. His solicitors subsequently wrote to R alleging that they had repudiated his contract of employment by locking him out and purportedly accepted that repudiation. R wrote back, electing to treat A's failure to report for duty as a repudiation of his contract of employment. A sued R for damages for wrongful dismissal. The trial judge found in his favour. However, the Court of Appeal reversed this decision and held that A was in breach of his duty of fidelity when he traded with S and that R had accepted this repudiatory breach. A appealed to the Privy Council.

Held, dismissing the appeal: (1) the test to determine whether a breach is repudiatory is whether the acts and conduct of the party evince an intention no longer to be bound by the contract; (2) A was in breach of his duty of fidelity and R were entirely justified in conducting an audit after discovering his activities. When they suspended him during the audit, they were not evincing an intention no longer to be bound by the contract of service; (3) as this suspension did not amount to a repudiatory breach, A's claim was properly dismissed by the Court of Appeal. The appeal was therefore dismissed.

Mohammed Faisal Rahman v Industrial Gases Ltd Privy Council Appeal No 28 of 1990 Privy Council Appeal from Trinidad and Tobago (Lords Keith, Templeman, Ackner, Jauncey and Sir John May).

P agreed to sell 32 units of flats to D. Only 20 units were sold by D to sub-purchasers. D defaulted in its obligations under the sale and purchase agreement. P sued for the balance of the purchase price, interest on sums outstanding and service charges.

Held, granting P's claim: as D was in breach of its obligations, P's claims were granted. An order giving possession of the 12 unsold flats to P was also made. D was ordered to pay damages for wrongful continued possession of the flats with interest at 8%.

Sri Jaya (Sdn) Bhd v Chip Hua Contractors Pte Ltd [1990] SLR 912 High Court, Singapore (Rajah J).

The plaintiff/appellant was the occupier of a HDB flat and the defendants/respondents were a firm of general building contractors. By an agreement dated 11 October 1979 the defendants agreed to do various works to the plaintiff's flat, which entailed the supply of terrazzo tiles and the laying, polishing and waxing thereof to the floor of the flat at $6,490 for the whole job. The samples of the terrazzo tiles that were shown to the plaintiff by the defendants before the agreement had been reached were neatly cut and in good shape. In November 1979, the plaintiff paid to the defendants a sum of $3,000 towards the contract price. The plaintiff claimed that in breach of the said agreement, the defendants did not supply good and proper materials nor did they do the works to the said flat with all due care, skill or diligence. As a result the plaintiff commenced proceedings in the district court for breach of contract against the defendants for $7,285, being $3,000 paid to the defendants in advance and the balance of $4,285 being the sum the plaintiff would have to incur as a result of the defendants not carrying out the said agreement. The learned district judge dismissed the plaintiff's claim and entered judgment for the defendants in the full sum of their counterclaim. The plaintiff appealed.

Held, allowing the appeal: (1) on the question of defective terrazzo tiles the finding of the learned trial judge was against the weight of evidence. As the evidence fell, one would have thought that on the question of defective tiles, the best evidence to guide him would have been that of the managing partner of the defendants and not a contractor who had come on to the scene much later to complete the work. It is difficult, on evidence, to understand how the learned trial judge could have found that 'the claim of the plaintiff that the defendants had supplied defective tiles and was therefore in breach of the contract must necessarily fail'; (2) the appeal would therefore be allowed and the claim dismissed: the plaintiff was entitled to the sum of $5,315 with costs against being $3,000 the sum paid by the plaintiff to the defendants and the balance of $2,315 being part of the plaintiff's claim under the statement of claim.

Leo Teng Choy v Beetile Construction 1982 High Court, Singapore (Rajah J).

In this case, it was

Held: because of its damaged and unrepaired condition the barge 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.

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

The appellants were at one time the shareholders of a company called Natwest Development (Pte) Ltd ('Natwest') whose only assets were three parcels of land. One of the parcels ('the yellow parcel') of approximately 465.4 sq m was first purchased at $1,630,000 subject to adjustment after survey and on the terms and conditions of a letter dated 21 October 1980, from the Commissioner of Lands, Singapore. The terms included the payment of stamp fees for the issue of the lease. Originally, Natwest had obtained 'in principle' approval for the erection on the development properties of a 19-storey banking hall with a plot ratio of 5 instead of the expected 10. Because of the low plot ratio, Natwest considered the development not commercially viable. Consequently, Natwest submitted new plans to the competent authority for approval to develop a 20-storey banking hall/offices on the site. 'In principle' approval was given for the new proposal. The respondents were interested in taking over the development from the appellants and so on 19 February 1981, the appellants granted an option ('the option') to the respondents to purchase the appellants' entire shareholdings in Natwest at the price of $50 million subject to and upon the terms and conditions set forth therein. Under cl 7 of the option, the appellants warranted to the respondents, inter alia, that 'all development charges, architect fee, property tax, income tax, and all dues and debts of the company have been discharged or shall be discharged on completion'. Under cl 9, it was agreed that 'notwithstanding the completion of the sale and purchase of the said shares this agreement shall continue to succeed and have effect until all provisions hereof have been fully and effectually performed until full effect is given to each and every provision of this agreement'. The respondents exercised the option on 2 March 1981. The purchase was completed on 29 July 1981. On 27 May 1981, the Commissioner of Lands wrote to the solicitors of Natwest to inform them that the alienation of the yellow parcel was approved for the development of a 19-storey bank/hotel building and that since this project had been abandoned in favour of a 20-storey banking/office building, the earlier terms were no longer applicable. The offered price was thereupon increased to $12,506,000 subject to adjustment after survey and the annual rent was also increased substantially. Natwest accepted the revised terms and conditions of the alienation of state land. On 22 February 1984 the Commissioner of Lands confirmed that the area of the yellow parcel was 485.6m[2], an increase of 20.2m[2] and that the additional sums of $545,200 for premium and $16,364 for stamp duty were payable. On 4 September 1984, Natwest paid the said sums to the Commissioner of Lands in order to obtain title of the yellow parcel. On 30 October 1984, the respondents commenced an action against the appellants. The respondents relied on the warranties given by the appellants under cl 7 of the option. Chua J held that notwithstanding that the completion of the sale of the shares had taken place on or about 29 July 1983, the additional premium was an outstanding liability under cll 7(h), (j), (k), (p) and (t) of the option and that each of the said warranties was breached as soon as the additional premium became payable. Accordingly, he gave judgment in favour of the respondents ([1987] 1 MLJ 465). The appellants appealed.

Held, dismissing the appeal: (1) the amount of $12,566,000 was paid as a premium and not for change of use. Even if the revised premium was imposed for a change of use, it would have been in the nature of a development charge for which the appellants were also responsible under cl 5 of the option in that, the original project having been abandoned, there was rezoning of the development properties to commercial zone; (2) whether the claim was based on a breach of warranty or a breach of undertaking, the damages suffered by the respondents was the amount of the additional premium and the stamp duty which Natwest was compelled to pay to the government for the alienation of the yellow parcel free from encumbrances. The court would agree with Chua J that there was no basis for the appellants to resist the respondents' claim; (3) the interest payable on the S$545,200 and $16,364 should be varied to 9% per annum from the date of their disbursement up to the date of judgment.

Boey Kun Hong & Ors v Joo Hee Holdings Pte Ltd [1987] SLR 39 Court of Appeal, Singapore (Lai Kew Chai, Rajah JJ and Chan Sek Keong JC).

3 [1733] CONTRACT Breach – Shortfall in area of property sold – Area stated to be 'estimated' – Claim for abatement of price – Rudd v Lascelles [1990] 1 Ch 815 (cited) Cordingley v Cheeseborough (1862) 45 ER 1230 (cited) Rutherford v Acton-Adams [1915] AC 866 (cited) Re Elphick and Gaw [1930] SSLR 199 (cited) SN Aswani v CLR [1982] 2 MLJ 104 (cited)

D were developers of a block of flats. P were purchasers of a unit in the block. P had bought the unit from the original purchasers and D had entered into a fresh sale agreement with P. The flat was stated to be 2,100 sq ft in area; it transpired that it was only 1,753 sq ft, a shortfall of 16.47%. The sale agreement incorporated condition 11 of the Law Society's Conditions of Sale 1981, which provides that the discovery of any error or misstatement 'not of a serious or vital nature nor considerably affecting the value of the property' shall not annul the sale nor shall compensation be allowed to either party. The issue before the court was whether P could claim compensation for the shortfall. D alleged that by completing the sale P had waived their rights to compensation. D also argued that there was no breach of contract since the area of the flat was stated only approximately in the sale agreement.

Held, allowing the claim: (1) on the evidence, there was no waiver of P's rights to compensation. The fact of completion was not itself a waiver. P had reserved their rights to claim compensation when they completed the transaction; (2) the shortfall in area amounted to a breach of contract. On the evidence, the court found that D either knew or ought to have known that the floor area of the flats was not 2,100 sq ft. Either D did not make a genuine estimate or they deliberately did a fraudulent calculation of the area of the flat; (3) where a sale contract contains a compensation clause and the area is 'estimated', it is reasonable to construe the word 'estimated' to mean that the defendants have estimated the area but that if a mistake is made, the plaintiffs will not be entitled to annul the contract or to claim compensation unless the estimation results in a serious misdescription or affects the value of the flat. If there is a doubt as to the ambit of the defendants' warranty, it should be construed in favour of the purchaser. Thus, even if D had made a bona fide estimate of the floor area of the flat, P might be entitled to compensation; (4) the fact that P were not the original purchasers was irrelevant. They had entered into a fresh agreement with D, which amounted to a novation; (5) a shortfall of 16.47% in the floor area of a flat is a serious misdescription and affects the value of the property. P were therefore entitled to some compensation; (6) the court rejected D's submission that the compensation should be calculated according to the difference between the market value of a 2,100 sq ft flat and one of 1,753 sq ft and that the market value of the smaller flat was the same as that of the larger. P were given a rateable abatement of the purchase price on a per sq ft basis with interest at 6% pa from the date of completion. (Similar orders were made in the other consolidated suits.)

Chong Ah Kwee & Anor v Viva Realty Pte Ltd [1990] SLR 339 High Court, Singapore (Chan Sek Keong J).

The plaintiffs are the executors of the estate of Liew Yeong Choy, deceased, who entered into an agreement in writing dated 19 February 1972 with the managing director of the defendant company whereby the deceased agreed to buy and the defendant company agreed to sell a portion of its land to the extent of about 15 acres. Upon the execution of the agreement, the deceased paid the sum of $18,000. Clause 1 spells out the terms of the agreement for sale. Clause 2 states that the defendants shall from time to time keep the deceased informed about the Penang government's option. Correspondence passed between the defendants and the deceased. The defendants indicated to the deceased that he could buy the land at $7,000 per acre, not at the old price of $4,000. Eventually on 20 January 1980, the defendants' solicitors wrote to the plaintiffs' solicitors refunding the sum of $18,000 which purported to discharge the defendants from the said agreement, thus giving rise to the present proceedings by the plaintiffs for specific performance or damages for breach of contract.

Held: (1) in an action for specific performance of an agreement for sale of land, s 9(1) of the Limitation Act 1953 (Act 254) applies. In the present case, the alleged breach occurred on 20 January 1980. Therefore time began to run from that date. Even if the right of action accrued from the expiry of the 'option' on 10 July 1973, the plaintiffs were still within the 12-year period from 24 May 1980, when the plaintiffs filed their statement of claim; (2) the agreement for sale is not void ab initio for uncertainty but enforceable at law; (3) on the defence of laches and acquiescence as pleaded in para 10 of the defence, there is clear evidence from the correspondence and the defendant DW1 that the parties were at all times negotiating for specific performance of the said agreement. In fact, the defendants through their solicitors impliedly gave the deceased a false hope of furnishing a detailed agreement to be executed between the parties. This was followed by the negotiations about the price. The court is therefore satisfied that the defence of laches and acquiescence cannot succeed; (4) the court did not grant specific performance but awarded compensation for breach of the agreement. In the circumstances it is fair and reasonable to assess compensation on the basis of $4,000 per acre being the purchase price originally agreed between the parties. The defendants were ordered to pay the plaintiffs the sum of $60,000 as compensation. They must also refund the sum of $18,000 paid as deposit. Costs of the action to the plaintiffs.

Ho Ah Kim & Ors v Paya Trubong Estate Sdn Bhd [1987] 1 MLJ 143 High Court, Penang (Mohamed Dzaiddin J).

P had carried out certain works for D and had submitted claims for progress payments. D failed to make payments, complaining of shoddy works on the part of P. D then terminated the contract entered into with P. P instituted the present action claiming, inter alia, general damages for breach of contract and the sum in question, being the balance due for the work done. D alleged that it was P who had abandoned the contract and counterclaimed for damages for the losses suffered by them.

Held, giving judgment to P: (1) it was abundantly clear in the instant case that the breach of contract was committed by D. D had failed to make payments for the work carried out by P and had even refused P's written requests for certificates to be issued for progress payments. Further, it was D who had instructed P not to resume work; (2) in the result, the court allowed P's claims against D and dismissed D's counterclaim against P.

M Karuppanan v Syarikat Great Alonioners Trading Corp Bhd Suit No 137 of 1982 High Court, Seremban (Mustapha Hussain J).

The plaintiffs contracted to deliver 20,000 pieces of printed circuit boards in four equal instalments. The plaintiffs adhered to the first and second delivery dates. On the third delivery date they delivered 3,640 pieces instead of 5,000. The fourth instalment was not delivered at all. The defendants then cancelled the undelivered balance of 6,360 pieces. The plaintiffs claimed for the value of the work in progress for the balance of the purchase order and alternatively, for the loss of bargain. The defendants counterclaimed for damages for non-delivery. The plaintiffs applied for summary judgment and were successful save that execution of the said judgment was stayed pending the resolution of the defendants' counterclaim. Both parties appealed against the deputy registrar's decision. Initially, both appeals were dismissed. The defendants applied for further arguments to be heard which the court allowed. The issue was whether the defendants were entitled to determine the contract. The plaintiffs argued that this depended on whether the breach by them went to the root of the contract or not, which in turn depended on whether time was of the essence in the contract of sale. The defendants argued that this test was applicable only in cases where there were further obligations to be performed by them. [bbHeld, allowing the defendants' appeal and dismissing the plaintiffs' cross-appeal: (1) the defendants were entitled to rescind the contract as they had no unperformed obligations after the last delivery date; (2) there was no conduct by the defendants to lead the plaintiffs to believe that a new agreement could be implied allowing for an extended time for delivery. There was nothing on the facts to support the plaintiffs' contention that the defendants had acquiesced to the lateness in delivery; (3) section 31(2) of the Sale of Goods Act 1979 has no application in this case as the dispute relates not to defective deliveries but to non-delivery of the final instalment. Per curiam: when the court hears further arguments under s 34(2) of the Supreme Court of Judicature Act (Cap 322), it does so on the facts and evidence already adduced at the original hearing of the appeal.

Additive Circuits (S) Pte Ltd v Wearnes Automation Pte Ltd [1992] 2 SLR 23 High Court, Singapore (Lai Siu Chiu JC).

The respondents who were the sole selling agents of a company manufacturing bricks sold to the appellants who were a building and developing company 600,000 pieces of bricks under a written contract dated 18 June 1964. The deliveries were to be made in instalments over a period of six months and payments for the instalment deliveries were to be made by certain stipulated due dates. The said written contract was subject to the general conditions printed on the back thereof except where inconsistent with special conditions specified. These printed conditions whether they established that the sellers (respondents) were merely agents of the manufacturers and not themselves liable or whether they had the effect of making them contract as principals, was the source of dispute. Also whether any increase in the price of bricks by the manufacturers at any time could be passed on to the buyers so as to be the determining price under the relevant clause of the written contract. Correspondence between the solicitors did little to clarify the dispute which came to a head; the respondents, ceasing further, supplies resorted to the court for claiming the price of bricks delivered while the appellants counterclaimed for damages for failure to deliver, thereby compelling them to seek other sources of supply to carry on their building projects. The sole issue at the trial of the action and counterclaim was whether it was the appellants or the respondents who were in breach of contract. The trial judge gave judgment for the respondents on the claim and dismissed the counterclaim. On appeal by the defendants/appellants:

Held, the contract was one between a vendor and a purchaser and not one between an agent on behalf of a principal and purchaser; it therefore followed that the manufacturers' increase in price could not alter the price stipulated in the contract and be passed on to alter the contract price. Appeal allowed. On counterclaim order made for retrial.

Pearlson Enterprises Ltd v Hong Leong Co Ltd 1965 Federal Court, Singapore (Wee Chong Jin CJ, Tan Ah Tah FJ and Buttrose J).

The plaintiff, together with another company, PNB, entered into a public information exchange business agreement with the defendant on 21 October 1994. Under the arrangement, PNB was to provide infrastructure at its own expense and the plaintiff was to set up the entire software system and run the service at its own expense whilst the defendant, who was the information provider, was to sell the information line to the plaintiff. After the commencement of the arrangement, relations between the plaintiff and the defendant deteriorated. The plaintiff accused the defendant of cutting the information line on numerous occasions and at issue between the parties was the establishment of a billing system. The plaintiff contended that even after it had established a billing system as of 17 April 1995, the defendant requested an `audit' of the plaintiff's office. The plaintiff viewed this with suspicion and was concerned that the defendant wanted access to its list of subscribers so that it could entice away the plaintiff's customers. The plaintiff refused the audit and the defendant wrote a letter dated 3 November 1995 advising the plaintiff that it would allow ten days from the date of the letter to convene the audit meeting. The plaintiff agreed to the audit by letter dated 10 November 1995 and suggested having the meeting on 13 November 1995. The defendant terminated the information line on 13 November without any notice to the plaintiff. The plaintiff then obtained an ex parte interlocutory injunction against the defendant to reconnect the line and the injunction was extended until the determination of this action.

Held, allowing the plaintiff's claim to reconnect the information line and making no award as to damages for loss of reputation and dismissing the defendant's counterclaim: (1) the main dispute was that prior to the agreement, at which point in time did the parties intend the billing system to be operational? The plaintiff contended that neither before nor at the date of execution was there any time fixed for billing to commence. In the circumstances, the defendant had on many occasions unilaterally set its own time and coerced the plaintiff to comply with the defendant's time frame by cutting off the information line. The defendant contended that the plaintiff failed to carry out its obligations under the agreement and had made no steps to collect service charges due from the subscribers. Further, the defendant contended that the plaintiff had allowed subscribers to redistribute the stock information and had failed to consult the defendant in giving credit to subscribers. The defendant submitted the agreement was rightly terminated. As for the billing system, it was alleged by the defendant that it was impossible to establish from the documentary evidence that a system existed. On the evidence, it was obvious that even before the signing of the agreement the defendant had used `strong arm tactics' of calling off or terminating the information line even before making a demand on the plaintiff. The defendant was aware it had the ultimate bargaining chip - the information line. In spite of any other breaches the plaintiff agreed to the audit meeting well within the ten day limit set by the defendant and stated it was ready for the meeting on 13 November 1995; (2) the plaintiff contended that the defendant was estopped from terminating the agreement because of their letter of 3 November 1995 which was disputed by the defendant on the basis that estoppel had not been pleaded pursuant to O 18 r 8 of the Rules of the High Court 1980 (RHC). The defendant's submission that estoppel need not be specifically pleaded ignored the binding Federal Court decision of Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 in which `material facts giving rise to estoppel were sufficiently pleaded without actually using the term `estopped'. In this case, facts giving rise to the plea of estoppel were sufficiently pleaded by the plaintiff in the amended statement of claim. The defendant was therefore estopped from relying on any earlier breaches of the agreement or on the notice of termination dated 17 April 1995 to terminate the agreement; (3) there was a clear and explicit invitation by the plaintiff to the defendant to visit its premises and see the billing system which had been spelt out in the plaintiff's letter of 10 November 1995. Instead the defendant failed to attend and wrongly terminated the agreement as of 13 November 1995. Having given the plaintiff ten days to prepare for the audit meeting and thereafter failing to attend, it was unreasonable and inequitable for the defendants to suggest that the requisite documents were not ready without even attending. The documentary evidence of the plaintiff showed receipts for payment made by subscribers and these indicated that bills and invoices were in fact sent to subscribers and that only on receipt of the bills and invoices did the subscribers pay their dues; (4) the very survival and continuance of the service provided by the plaintiff depended entirely on the information line provided by the defendant. Both the defendant and the plaintiff were aimed at the same sector of the market - the corporate sector. There was no evidence that the defendant serviced the corporate sector and the plaintiff the retail sector. The refusal of the plaintiff to disclose its bills and invoices to the defendant during the audit of 24 October 1995 was based in the fear that the defendant would entice away the customers of the plaintiff. Evidence of one witness that he had terminated the service with the plaintiff due to the frequent cuts in the information feed and had subscribed to the service provided by the defendant was accepted; (5) as to the question of damages there was no evidence adduced by the plaintiff to substantiate its claims. The plaintiff had prayed for damages to be assessed after liability had been determined however the plaintiff was estopped from submitting that the case ought to be referred to the Registrar for assessment of damages as the plaintiff failed to prove his damages; (6) in respect of the plaintiff's claim for loss of reputation and credibility, Haron bin Mundir v Singapore Amateur Athletic Association [1992] 1 SLR 18 was upheld as good law which provided that general damages for emotional distress, mental anguish, humiliation and reputation were not normally awarded for breach of contract. A pure breach of contract could not be converted to a tort in order to recover damages otherwise not recoverable; (7) there was no submission by the defendant on the issue of payment of dues to the defendant by the plaintiff and the payment of RM18,996.95 made pursuant to the agreed formula was a final settlement of all sums due as at 16 May 1995; (8) on the issue of competition between the defendant and the plaintiff, the plaintiff's evidence was that it was catering for the corporate sector and on this admission the plaintiff submitted that the defendant was in direct competition with it. The plaintiff submitted that the real reason for the termination of the agreement by the defendant was because the defendant had entered into another agreement with Applied Information Management Services Sdn Bhd (AIMS). It was too much of a coincidence that the defendant, who having terminated the agreement with the plaintiff on 13 November 1995 entered into another agreement with AIMS on the same date. The defendant was or should have been aware that AIMS was a contributor of the plaintiff. In the circumstances, the defendant deliberately terminated the agreement with the plaintiff so that it could enter into a similar agreement with AIMS and clearly intended to compete with the plaintiff; (9) since the defendant was found to have terminated the agreement unlawfully there was no cause to set aside the earlier injunction and the plaintiff's claim to the extent that the information line be re-connected was allowed. As there was no proof of damages no award was made; (10) the counterclaim of the defendant did not plead any damages and therefore faces a similar fate. In addition, the finding that the defendant had terminated the agreement unlawfully removed any basis for the counterclaim which was therefore dismissed; (11) as both parties failed to adduce any evidence of damages each party was to bear their own costs.

BD Systems & Software Sdn Bhd v KLSE Chilong Systems Sdn Bhd Civil Suit No D5-22-700-1995—High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

The plaintiff and defendant entered into a five year contract for the distribution of the plaintiff's chicken essence in which there was no provision for its termination. The plaintiff terminated the contract before its expiry on the ground that the defendant was in breach of the 'amortization' agreement whereby the plaintiff was to replace stock which was alleged to be bad by the defendant, by selling instead of withdrawing this 'bad' stock. The defendant's servant had also fraudulently inflated the number of bad stock. The trial judge (see [1964] MLJ 190) held, inter alia, that the plaintiff was liable for damages for unlawfully repudiating the distributorship contract and the defendant had no right to be compensated under the amortization agreement for stock still in their hands as it had a duty to mitigate its losses. These are the two matters which went on appeal.

Held: (1) reversing the judgment of the trial judge, the defendant is not even entitled to nominal damages as the plaintiff had lawfully terminated the contract as fraud is an implied condition; (2) the decision of the trial judge was upheld in that there was a duty to mitigate on the part of the defendant and that it was unreasonable of the defendant to refuse to accept the plaintiff's offer to replace the bad stock still in the defendant's possession.

Pasuma Pharmacal Corp v McAlister & Co Ltd [1965] 1 MLJ 221 Federal Court, Singapore (Thomson LP, Wee Chong Jin CJ (Singapore).

In this case, the respondents had agreed to supply a substantial quantity of electrical equipment including four crystal chandeliers. Under the agreement, the date of delivery of the chandeliers was one month from the date of agreement which was on 2 December 1974. The appellants issued irrevocable letters of credit to the respondents and the shipment date was stated to be 20 January 1975. On 13 January 1975, the respondents wrote to the appellants that there would be a delay in the supply of the chandeliers. On 23 January 1975, the appellants purported to cancel the contract for the chandeliers on the ground that they were urgently required. On 27 January 1975, the respondents sent a telegram stating that the goods were ready for shipment and they were prepared to send it by air-freight. The appellants did not accept the offer and purported to cancel the contract. The respondents thereupon instituted proceedings claiming specific performance, alternatively damages. The learned trial judge held that on the facts, time was not of the essence of the contract and he gave judgment for the respondents. The claim for specific performance was abandoned at the trial and the learned judge awarded damages reflecting the full contract price of the chandeliers. The appellants appealed.

Held: (1) the learned trial judge in this case was wholly right in coming to the conclusion that time was in no way of the essence of the contract; (2) the respondents were under an obligation to mitigate their damages and as no evidence had been produced to show that efforts had been made by them in this respect, there must be a retrial on the issue of damages.

Pacific Electrical Co Ltd v Seng Hup Electrical Co (S) Pte Ltd [1978] 1 MLJ 162 Court of Appeal, Brunei (Rigby (President).

On 3 April 1991, a sale and purchase agreement ('the agreement') was entered into by the plaintiff and the defendant whereby the plaintiff agreed to sell and the defendant agreed to buy a piece of land situated in the Mukim of Ujong Pasir, Melaka ('the land'). The total price for the transaction was RM2.5m. Also on 3 April, the plaintiff appointed the defendant as his lawful attorney, to do all the acts as laid down in the specific power of attorney until the completion of the housing scheme, such as to change the condition of the use of land, to submit the relevant building plans and to sell all the units of the flats to be built. Pursuant to the agreement, the defendant entered a caveat as against the land on 9 March 1989 which later lapsed automatically. A second caveat was entered on 7 March 1995 ('the second caveat'). The agreement laid down pre-conditions, inter alia, that the defendant was to submit the building plans to the authorities within three months of the agreement. The defendant failed to do so. Also, apart from the payment of RM1,000 deposit, the defendant had failed to pay the balance of the purchase price. Clause 19 of the agreement provided that time was the essence in the agreement. Due to the defendant's inability to submit the building plans within three months from the date of agreement, the plaintiff terminated the agreement vide a letter dated 3 April 1995. The plaintiff applied to remove the second caveat ('the application'). The plaintiff alleged that the defendant had no caveatable interest as the agreement had been terminated on 3 April 1995. However, counsel for the defendant argued that the transaction was a joint venture cum sale and purchase of the land, and that the defendant had obtained contractual interest through that transaction as there would be an eventual transfer of interest from the plaintiff to the defendant.

Held, allowing the application and ordering that the caveat be removed: (1) and the existence of specific power of attorney; (2) if a scheme merely created a monetary interest without more, then no caveatable interest would have been created. In the current case, since this was not an outright sale and purchase agreement but a joint venture scheme with monetary gains at the end of the scheme, there was no caveatable interest; (3) since time wherever mentioned was the essence in the agreement as provided in cl 19, the inability of the defendant to fulfil part of his bargain thus entitled the plaintiff to treat the agreement as terminated. The plaintiff had not signified by words or conduct his acquiescence in its continuance (s 40 Contracts Act 1950) and there was absolutely no other evidence available to prove that he had agreed to disregard cl 19. With the determination of the contract the defendant had lost out as he was now without an interest which entitled him to lodge the caveat; (4) based on the facts of the case, the agreement was a joint venture agreement. The facts taken into consideration were, inter alia, the admission by the defendant in his affidavit that the transaction was a joint venture; the nomination of the defendant as the lawful attorney to do all the relevant acts until the date of completion of the whole housing scheme;in this case, the defendant had not filed any suit in the High Court, leaving nothing for the court to preserve let alone consider the concept of balance of convenience. The facts of the case did not disclose a serious question to be tried even if a suit were to be pending. No evidence appeared to conflict and thus this case could be disposed of primarily on affidavit evidence.

Omar bin Mat Ziki v Mokhtar bin Amin [1996] 2 MLJ 687 High Court, Melaka (Suriyadi Halim J).

Abdul Rahim bin Syed Mohd v Ramakrishnan Kandasamy (Wan Ahmad Azlan bin Wan Majid & Anor, Interveners) and another action [1996] 3 MLJ 385 High Court, Kuala Lumpur (Visu Sinnadurai J).

See CONTRACT, Vol 3, para 2182.

By a written agreement dated 20 July 1974, the plaintiff purchased from the defendant a double-storey house for $38,500. The defendant was to complete the house on or before 31 December 1975. Time was of the essence of the contract relating to payment of money. On 28 November 1975, the plaintiff received a letter from a firm of solicitors representing both parties asking him to take possession of the house and pay the final instalment of $3,850 within a given period. Between that date and 10 April 1976, the plaintiff inspected the house twice and found it not completed and letters were exchanged between the parties. On 10 April 1976, the defendant wrote to the plaintiff informing him that the uncompleted works had been fully remedied and requesting payment of the last instalment of $3,850 or otherwise it would terminate the said agreement. On 13 May the plaintiff sent a cheque for $3,850 to the solicitors paying under protest, and the said solicitors returned the cheque to the plaintiff without the defendant's instructions. On 18 May 1976, the plaintiff and the defendant's architect jointly inspected the house and the latter wrote to the defendant on 29 May 1976 requesting it to remedy the defects and uncompleted works. On 17 September 1976, the defendant wrote to the plaintiff to take over the house and pay the balance of $3,850 immediately. The plaintiff got the keys of the house on 22 September 1976. On 6 October 1976, the said solicitors instructed by the defendant requested the plaintiff to pay immediately the sum of $4,295.96 being last instalment plus interest. But on 13 October 1976, the defendant wrote to their solicitors again instructing them to terminate the said agreement. As instructed by the defendant, the solicitors wrote a letter on 16 October 1976 to the plaintiff to terminate the said agreement forthwith. The plaintiff was asked to deliver vacant possession of the house. On 20 October 1976, the solicitors sent to the plaintiff the defendant's cheque for $26,950 being refund of the moneys less sum forfeited. The plaintiff did not pay the cheque into his account and considered the agreement not terminated and still claimed that the defendant had failed to rectify the defects which he was compelled to rectify. He sent to the defendant a cheque for $1,556.85, being the balance less the estimated cost of repairs of $2,293.15. Eventually on 2 February 1977, the plaintiff sued the defendant for damages for breach of contract and for delivery of the relevant issue document of title. The defendant counterclaimed for mesne profit at $800 per month.

Held: (1) the payment of the last instalment of $3,850 by the plaintiff was a tender of the said sum under protest and was therefore a good and valid tender; (2) the defendant had waived and allowed time of payment of the last instalment to pass. If the defendant had wanted to make time again of the essence of the contract, it should have given the plaintiff a notice fixing a reasonable time within which he must pay the last instalment. In the solicitors' letter of 16 October 1976, no reasonable time was fixed within which the plaintiff was asked to pay the last instalment. The said agreement was therefore not validly terminated; (3) the plaintiff was entitled to specific performance of the agreement. The defendant should deliver the document of title and execute a valid and registrable transfer in his favour; (4) the plaintiff was not entitled to any damages for delay in completion of the house. Damages should be assessed on the basis on which it would cost the plaintiff to obtain performance of the contractual undertaking by a third party. Damages were assessed at $4,586.36 with interest at 8% from date of judgment to date of payment; (5) as the plaintiff was not a trespasser after he received the letter of 16 October 1976, the defendant's counterclaim for mesne profits was dismissed. The defendant was entitled to payment of the sum of $3,850 with interest thereon at 10% as provided for in s 4(7) of the Second Schedule to the said agreement with effect from September 1976 to date of payment. Costs to be paid by each party.

Quah Ban Poh v Dragon Garden Pte Ltd [1985] 2 MLJ 159 High Court, Johore Bahru (Gunn Chit Tuan J).

The plaintiffs in this case entered into an agreement for sale and purchase dated 12 September 1978 with Hotel Merlin Singapore Ltd to purchase two office units at Merlin Plaza (hereinafter referred to as the 'mortgaged properties'). On 10 September 1980 the defendants lent to the plaintiffs a sum of $200,000. The plaintiffs agreed to pay interest at the rate of 12[1/2]% per annum. The plaintiffs also agreed to pay the principal sum and interest by one hundred and eighty monthly instalments of $2,520 each. The first instalment was repayable on 10 October 1980. By way of security, the plaintiffs created in favour of the defendants an equitable mortgage over the mortgaged properties. A deed of assignment and a mortgage in escrow was executed by the plaintiffs in favour of the defendants. By cl 3 of the mortgage, the plaintiffs agreed to perform and observe all the covenants and conditions set forth in the memorandum filed by the defendants in the Registry of Titles. Sub-clause 2(j) of the memorandum provided that 'the mortgagor (the plaintiffs) shall only be entitled to redeem this security upon the expiry of one year from the date of these presents by giving to the mortgagee (the defendants) three months' notice of his intention to do so and upon payment of all moneys due to the company (the defendants) hereunder at the expiry of the notice including interest up to that date'. On 26 December 1980, the plaintiffs through their solicitors purportedly gave notice to the defendants to redeem the mortgaged properties and asked for the redemption statement. As a little over three months after the loan had elapsed, this notice was obviously in breach of sub-cl 2(j) of the memorandum. On 9 February 1981 the defendants sent to the plaintiffs the redemption statement and required the plaintiffs to pay the sum of $231,645.19. This meant that the defendants were asking for interest for the full period of one year and the period of three months' notice of redemption under sub-cl 2(j) of the memorandum. The plaintiffs expressed shock at the defendants' attempt to charge interest up to 31 December 1981. The plaintiffs referred to an earlier transaction regarding the redemption of the Sim Lim Tower Properties between the parties when in similar circumstances the defendants had waived their rights under a clause similar to sub-cl 2(j) of the memorandum and had not charged interest for the full period. The plaintiffs urged the defendants to adopt a similar course. The plaintiffs informed the defendants that they had sold the mortgaged properties and that completion under that sale was scheduled to take place on 18 February 1981. They therefore required the defendants to complete the redemption on that date. By a letter dated 13 February 1981, the plaintiffs stated that they would pay the defendants the sum of $231,645.19 on 18 February 1981 'strictly under protest and objection to redeem' the said properties. In their reply dated 18 February 1981, the defendants stated that they did not agree to the waiver of the interest for the full period of 15 months or to any reduction thereof. They insisted on their strict rights under sub-cl 2(j) of the memorandum. They also contended that their concession in not charging full interest in respect of the redemption of the Sim Lim Tower Properties was not meant to be a precedent. On the following day the plaintiffs paid the entire sum of $231,645.19 to the defendants and again expressing the payment to be 'strictly under protest and objection'. The mortgage was redeemed on 20 February 1981. The plaintiffs then commenced the present proceedings to seek, inter alia, a declaration that the defendants were not entitled to charge as interest the sum of $22,660.43 in addition to the repayment of the principal sum and interest due upon the redemption of the plaintiffs' mortgaged property. The plaintiffs made three contentions (i) that the defendants by allowing the premature redemption had waived their rights; (ii) that there was no variation; and (iii) that, even if there was a variation, the terms thereof were harsh and unconscionable and a clog on the equity of redemption.

Held, dismissing the plaintiffs' claims: (1) that there was no waiver as the defendants had not abandoned their strict rights under sub-cl 2(j) of the memorandum; (2) that there was a variation which was expressed or which was implied from the conduct of both parties if the interest for the full period which the defendants had insisted amounted to or must be deemed to be acceptance of the defendants' offer. It would be wrong to allow the plaintiffs to say that their protest and objection had successfully qualified their acceptance; (3) that the additional sum of $22,660.43 which was imposed in exchange for the defendants' agreement to waive their rights under sub-clause 2(j) was not harsh and unconscionable nor a clog on the equity of redemption.

Fiscal Consultants Pte Ltd v Asia Commercial Finance Ltd 1980 High Court, Singapore (Lai Kew Chai J).

The plaintiff in this case claimed against the defendant damages for breach of contract to purchase wood chips. By an agreement of 17 January 1974, entered between the plaintiff and the defendant, for five years from the date of the said agreement, the defendant agreed to purchase from the plaintiff all wood chips produced by the plaintiff on terms set out in the agreement with an option to renew for a further period of five years on the same terms and conditions by giving two months' notice to the other party. The plaintiff claimed that the price of wood chips was $18 per long ton ('LT') of 2,240 lbs and it was increased by mutual agreement. The plaintiff undertook to produce not less than 24,000 LT per year. In May 1974, the defendant requested the plaintiff to increase production to 2,800 tons per month and the plaintiff agreed. The plaintiff alleged that it bought machinery and took steps to increase production capacity to 3,000 tons per month from April 1975. In March 1975 the defendant countermanded the request to increase production and requested the plaintiff to produce only 500 tons per month from 1 April 1975. The plaintiff did not accept the said request. The plaintiff alleged that instead of taking delivery of 2,800 LT per month the defendant took delivery from April 1975 of a much lesser quantity. By a letter of 27 August 1975, the defendant sought to repudiate the agreement and took no delivery as from that date. The plaintiff claimed loss of profit from April to August 1975 and estimated loss from September 1975 to December 1983. The defendant did not dispute the agreement but contended that the plaintiff had misrepresented to the defendant all material particulars relating to cost factors as well as the gain factor. It was argued that subsequent to the said agreement, the parties did not adhere to the terms and thereby released each other from liability under the agreement. Although the plaintiff was to supply the defendant a minimum of 2,000 LT, the plaintiff in fact supplied a fluctuating quantity per month and less than the stipulated minimum of 2,000 LT per month and at various prices per LT not $18 per LT. The main issue of law was whether the terms of the agreement had been so altered, varied and waived by mutual consent and conduct of the parties that the defendant was no longer liable under the agreement.

Held: (1) partial rescission did not completely destroy the contractual relation between the parties. It merely modified that relationship by cutting out part of the rights and obligations involved therein with or without the substitution of new rights and obligations in their place; (2) in the present case, the parties had in so far as the price increases were concerned varied that part of the agreement and had mutually agreed to new terms. In regard to additional tonnage to be produced, new terms were added without varying that part of the agreement where the defendant, inter alia, agreed to purchase wood chips not less than 24,000 tons per annum; (3) the defendant's contention that a new contract had been substituted had no merit whatsoever. The defendant had committed a breach of the agreement and must therefore bear the damages arising from their failure to perform the agreement; (4) in cases of breach of contract the aggrieved party was only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach; (5) in order to determine whether or not the plaintiff was entitled to recover damages during the renewal period it was open to the court to consider first, the nature and effect of the plaintiff's right to renew, and secondly, the loss of profit, if any, recoverable by the plaintiff; (6) in the light of the agreement and in the absence of any subsequent agreement concerning the renewal as and when the variations were made to the agreement it was no longer possible for this court to conclude that it was within the contemplation of the parties that the right to renew on the same terms and conditions in the agreement must necessarily include the right to renew on terms and conditions different from those contained in the agreement; (7) the actual loss liable to result from the breach of the agreement by the defendant as was at the time of the contract reasonably foreseeable must strictly arise from the defendant's failure to perform the agreement then subsisting between the parties and not for loss anticipated to arise during the currency of some future agreement. Therefore the plaintiff was not entitled to recover damages for anticipated loss of profit during the renewal period.

Kepong Wood Products Co Sdn Bhd v Daishowa (M) Wood Products Sdn Bhd [1979] 1 MLJ 195 High Court, Kuala Lumpur (Abdul Hamid J).

The plaintiff entered into an agreement in the Tamil language with the defendant on 10 October 1949 whereby he sold the business of a mess at 40A Market Street, of which he was chief tenant, to the defendant, for the sum of $2,000 reserving an option to re-purchase it from the defendant on payment to him of $2,000 by 31 December 1951 after giving him two weeks notice of intention to exercise the option to re-purchase. The plaintiff also empowered the defendant by a power of attorney to deal with subtenants and to transfer the tenancy to his name or that of any other person. Subsequently on 25 September 1950, the plaintiff entered into a further agreement with the defendant whereby the original agreement was varied by providing that if the plaintiff failed to pay $2,000 on 31 December 1951, he would pay this sum on demand with interest at 9%. The defendant on 11 May 1951, transferred the tenancy of the premises to his own name, despite the fact that the power of attorney had been revoked.

Held: (1) the documents in this case fulfilled the requirement that they should be in writing notwithstanding that they were written in the Tamil language and there had been a valid variation of the contract; (2) the defendant was in breach of contract in transferring the tenancy of the premises to his own name and subsequently surrendering it to the landlord and was therefore liable in damages to the plaintiff.

Muthusamy v Subramaniam [1965] 2 MLJ 273 High Court, Singapore (Winslow J).

The plaintiffs, owners of three lots of land ('the land'), entered into an agreement with the defendant to develop the land into a housing estate. The defendant was required, inter alia, to submit plans and drawings for approval and construct eight units of semi-detached houses for the plaintiffs, at the defendant's expense, within 18 months from the date of approval. For each of these obligations, time was of the essence. In the event of breach of any term, the party not in default was entitled to sue the other for specific performance and/or damages. The memoranda of transfer were registered by the plaintiffs in accordance with the agreement but they did not get the eight units of houses. The plaintiffs sued for, inter alia, rescission of the agreement and reconveyance of the land. The defendant denied the breach and counterclaimed for the return of part of the consideration for the transfer, specific performance, damages and costs. The defendant pleaded: (i) breach on the part of the plaintiffs by requesting the defendant hold on with the development as the prices of houses had fallen and the first plaintiff wanted to stay on to rear pigs for sale. The defendant contended that it was for this reason that the defendant did not submit building plans for approval so that work could be undertaken but conceded that written notice to vacate pursuant to the agreement had not been given; and (ii) that the claim was barred by limitation as the breach occurred in 1985, when the plaintiffs failed to vacate the said land despite the defendant's verbal request. The plaintiffs applied for summary judgment for rescission or, alternatively, that the defence and counterclaim be struck out. The senior assistant registrar ('the SAR') entered summary judgment. The defendant has appealed.

Held, allowing the appeal and ordering that the suit proceed to trial: (1) by the statement and conduct of the plaintiffs, the terms of the agreement were modified in the sense that the plaintiffs did not want the project to carry on as yet and by implication would not want the defendant to proceed with the submission of building plans for approval. The issue to determine the reasons for the defendant not submitting the building plans could not be resolved by affidavit and could only be resolved at the trial of the action especially when the plaintiffs denied such an allegation; (2) if there was intention to modify the terms of the agreement, the question of the plaintiffs having to vacate the land became irrelevant. As the agreement was not one which by law was required to be in writing, the purported oral statement of the plaintiffs to the defendant to hold on with the project constituted an important issue to be tried; (3) whether rescission was statute-barred depended on when the cause of action began to run. As the issues were in dispute, they could only be resolved at the full trial of the action and not by affidavit.

Tan Yaw Soon & Anor v Teng Sian Loong Enterprise Sdn Bhd [1994] 1 MLJ 239 High Court, Kuching (Abdul Kadir Sulaiman J).

B agreed to purchase copra cake from S, the goods to be shipped from the Philippines to Hamburg. Bills of lading dated the last day of the contractual period for shipment were issued. The documents were presented in Hamburg and B paid 98% of the purchase price. Also presented was a survey report which was not required by the contract. Loading having been completed, the vessel did not sail due to the shipowners having become insolvent. B paid additional freight to ensure that the vessel sailed. After the vessel had arrived, B telexed S stating that the bills of lading were wrongly dated and purported to repudiate. The arbitrator held that it was apparent from the survey report that the bills of lading were incorrectly dated and that B had by taking up the documents precluded themselves from repudiating. The matter was taken to the GAFTA board of appeal, which held that while there was evidence that the bills of lading were incorrectly dated, the details in the survey report were not sufficient to cast doubts on their validity, so that there was no waiver by B. S was ordered to repay the money paid against the shipping documents. The board also found that S were liable to repay to B the extra freight that they had paid to ensure the shipment of the goods.

Held, allowing the appeal in part: (1) in order for S to succeed in a waiver/estoppel situation of this kind, it had to be shown that it would be unfair or inequitable for B to be allowed to take the point on the validity of the bill of lading, having regard to the fact that S had acted on the faith of B's previous conduct (ie their payment against the documents). No such findings had been made in the present award and S had not shown that it was inequitable. The board of appeal had found as a fact that the survey report was not sufficient to justify the conclusion that the bills of lading were wrong. The judge was not disposed to interfere with that finding. There was accordingly no waiver; (2) as to the award of extra freight, S had not gained an incontrovertible benefit from the payment of the freight by B. There was therefore no proper basis for the restitutionary award. This part of the award was therefore set aside.

Procter & Gamble Philippine Manufacturing Corp v Peter Cremer GmbH & Co, 'The Manila' [1988] 3 All ER 843 High Court, England (Hirst J).

The plaintiff had entered into an agreement ('the agreement') with the defendants to carry out construction work at the defendants' sawmill site. He claimed that the defendants' representatives had avoided payments which were due to him. The defendants argued that payment had not been made because the plaintiff had not complied with the conditions in the letter of credit ('THM-4') opened in his favour, which were that the plaintiff's invoices had to be counter-signed by the defendants' representatives and the plaintiff was to provide a surveyor's report certifying that the land had been levelled to a certain height. The defendants also argued that the plaintiff had breached the agreement by not using proper materials and by delaying completion of the works. The plaintiff contended that the defendants had waived the alleged breaches in the light of THM-4 and a letter dated 10 July 1991 ('THM-12') which purported to terminate the agreement due to numerous stoppages resulting in a three-month delay in the defendants' project. He also alleged that the defendants' representatives had refused to sign the relevant invoices although the conditions had been satisfied. The defendants counterclaimed by alleging failure on the plaintiff's part to complete all the construction work. The plaintiff applied for summary judgment under O 14 of the Rules of the High Court 1980 for, inter alia: (a) RM348,545.98, or alternatively, RM304,151; and (b) further or in the alternative, for RM87,573.50. The senior assistant registrar gave judgment against the defendants for RM87,573.50 with interest and unconditional leave to defend on the balance sum. The plaintiff appealed against the decision that there was a triable issue in respect of prayer (a). A preliminary issue before the court was whether the plaintiff could use the affidavit of one Wong Ting Yew made after the hearing and, therefore, have certain paragraphs in the defence and counterclaim struck out.

Held, allowing the appeal: (1) there was no basis for the court to grant leave to the plaintiff to produce Wong's affidavit as the plaintiff could not show why he was unable to persuade Wong to make the affidavit earlier or that Wong was unavailable at all material times. Likewise, the application to strike out certain parts of the defence and counterclaim had no merit as it was based on Wong's affidavit; (2) there was evidence to show that the defendants had, by their conduct, allowed the plaintiff to proceed and sanctioned the delay. They had waived the requirement in cl (5) of the agreement, that time was of the essence. THM-12 and THM-4 also constituted a clear indication that the defendants had waived the alleged breaches; (3) having waived the time limit stipulated in the agreement, the defendants were at liberty to fix a reasonable time for the completion of the work but this was not done. On the contrary, a letter dated 10 October 1991 seemed to indicate that in spite of the purported termination, the defendants continued to engage and deal with the plaintiff. In the circumstances, it could not be said with any certainty that the defendants, by THM-12, had terminated or intended to terminate the agreement; (4) the evidence showed that the conditions for payment under THM-4 had been satisfied as, on a balance of probabilities, the plaintiff had presented the relevant invoice to the defendants' representatives. In the correspondence between the parties, there was no denial of the allegation contained in the plaintiff's letter that the defendants' representative had confirmed that no rectification work was required. Therefore, it must reasonably be regarded as credible. The plaintiff was, therefore, entitled to summary judgment for RM304,151 payable under THM-4; (5) however, the allegations contained in the defendants' counterclaim were not without plausibility and, therefore, ought to be more fully ventilated at the trial.

Tiong Hung Ming v Kalimantan Hardwood Sdn Bhd [1994] 3 MLJ 656 High Court, Sibu (Steve Shim J).

Kok Wah Press Pte Ltd (KWP) was incorporated in 1969 with the first to seventh defendants as shareholders. KWP was primarily involved in printing which included stationery, business cards, books and magazines.The parent company of the plaintiffs were McPherson's Ltd, an Australian public company with diversified interests including printing. Between 1984 and 1988, McPherson's Ltd decided that printing was no longer competitive in Australia and decided to invest in Singapore. In November 1984, it was agreed between the second defendant and McPherson's that a joint-venture company be formed to acquire the business of KWP. This decision was later varied and it was decided that McPherson's Ltd would acquire 50% of the shares of KWP. Based on the audited accounts of KWP for 1983, the purchase price was worked out at S$2.15m. An agreement was finally signed on 29 March 1985 whereby the defendants warranted that the audited accounts were true and correct, that the defendants were desirous of transferring shares in KWP to the plaintiffs. In September 1985, McPherson's received 50% of the issued shares in KWP. McPherson's paid the sum of S$1m which was used to ease KWP's cash flow problems. At the same time, the first to seventh defendants transferred the remaining 50% of their shares to the eighth defendants. Sometime in 1985, it was agreed that the purchase price would be based on equity as shown in the audited accounts as at 28 February 1985, plus agreed goodwill plus McPherson's own valuation of the future income tax benefits. The figure arrived at was S$1,658,788. Then sometime in 1986, KWP's new financial controller informed the plaintiffs that she was unable to reconcile the stock with work-in-progress figures and there was a difference in excess of S$500,000. The plaintiffs sent in an auditor and the shortfall was confirmed at S$1,126,000. The plaintiffs then commissioned a firm of professional accountants to conduct an investigation. The investigation confirmed that there had been an overstatement of the purchase price, based on the February 1985 accounts updated to 31 March 1985. This was due in part to KWP's practice of pre-billing. The result was that instead of assets being a positive figure of S$426,500, it was a negative figure of S$197,043 as at 31 March 1986. KWP was technically insolvent. A board meeting was called to discuss the situation as KWP were in breach of its loan agreement with Citibank, as the same contained a condition that the net tangible assets of KWP should not fall below S$1.4m. A further investigation was conducted and KWP's new financial advisers confirmed that KWP was substantially insolvent both as a going concern and on a break-up basis. On 11 June 1986, KWP was placed under receivership. Citibank then called upon the plaintiffs to repay the sums owing on the facilities granted to KWP. In September 1986, the plaintiff commenced the current proceedings claiming, inter alia, the sum of S$1,658,788 paid for the shares. The plaintiffs alleged that the defendants were liable for breach of the warranty clause. The defendants alleged that their liability to the plaintiff was transferred to the eighth defendants by novation.

Held, allowing the claim: (1) the claim turned on the interpretation to be placed on the warranty clause. In determining which interpretation was correct, one must consider the meaning of the words used, not what one may guess to be the intention of the parties. However as no contract was made in a vacuum, in order to resolve an ambiguity as in the present case, the court may look at the factual background known to the parties at or before the date of the contract, including evidence of the 'genesis' and objectively the 'aim' of the transaction; (2) the warranty clause pertained to the state of KWP's accounts which ought to have been known to its individual shareholders, and not the eighth defendants which was not even in existence at the time of the agreement. The purpose of the warranty was to give comfort to the plaintiffs that its purchase of the shares was what it purported to be and the warranty coming from the defendants who were the sellers of those shares gave credit to the comfort the plaintiffs sought; (3) according to the contra proferentum rule any ambiguity in the warranty clause was to be construed against the maker, namely the defendants; (4) it would be incredibly naive on the part of the plaintiffs to invest more than S$1m in a company and be contented with a warranty from a limited company which would give little comfort in the event the accounts turned out to be inaccurate; (5) the eighth defendants could not have consented to the novation as it was not in existence at the time of the agreement. It would be too simplistic a view to accept the defendants' argument that the eighth defendants' consent was evidenced in the acceptance of the transfer of the shares. There must be some overt act on the part of the eighth defendants to evidence such consent.