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

See CONTRACT, Vol 3, para 1732.

In anticipation of a rights issue of shares by Roxy Electrical Industries (M) Bhd ('Roxy'), the plaintiff and defendant entered into two memorandums of understanding, whereby the defendant agreed to buy five million fully paid-up shares ('the said shares') in Roxy for RM5m, on condition that the defendant would resell the said shares at the same price to the plaintiff, if the proposed rights issue by Roxy was aborted. Upon the rights issue being aborted, the defendant wrote to the plaintiff, offering to sell the said shares, and when he received no response within the seven-day period stated therein, the defendant sold the said shares to third parties. One year later, the plaintiff asked for the return of the shares. The defendant failed to do so and the plaintiff applied for an order that the defendant was to deliver the said shares to the plaintiff within seven days of the order, damages for the changes and variations to and breach of the agreement, interest and costs. The plaintiff averred that it was entitled to ask for the return of the said shares on payment of RM5m, and that time was not of the essence. The plaintiff's application for summary judgment was granted by the senior assistant registrar and the defendant appealed. The appeal against the decision was allowed and the matter was set down for trial. During submissions, the plaintiff applied to amend the statement of claim to delete all references to the defendant acting as agent or stakeholder for an unidentified principal.

Held, dismissing the plaintiff's claim: (1) on the central issue of the construction of the two memorandums of understanding, in view of the exchange of correspondence and sequence of events, the court could only hold that on the balance of probabilities, the defendant's version was more probable. It was imperative to regard the two memorandums of understanding as interrelated as they involved the same parties, the same subject matter and practically the same terms and conditions; (2) as far as the defendant was concerned, this was a straightforward sale of shares with an obligation to repurchase. The defendant had acted as required by the two memorandums of understanding, and as the offer by the defendant had not been taken up by the plaintiff, it should be held to have been revoked after the seven-day period. Although the plaintiff was 'entitled to demand' and the defendant was to 'forthwith return on demand' and 'forthwith to deliver', the parties could not just be expected to sit back and wait. Four months had elapsed since the failure of the rights issue, RM5m was at stake and shares were and are a volatile commodity. If no time for performance was specified, according to s 47 of the Contracts Act 1950, the engagement must be performed within a reasonable time; (3) and (v) the contra proferentum rule; (4) since no evidence was led on the part of the pleadings to be amended or deleted, they were therefore of no consequence to the court. Although parties are bound by their pleadings and the court ought to decide only on issues pleaded, the amendments sought concerned the defendant's capacity in the transactions and formed only part of the plaintiff's case. Therefore, they were not construed as a departure from the pleadings and were allowed with no order as to costs; (5) specific performance of the memorandum of understanding could not be granted as: (i) the shares were freely available in the open market; (ii) the plaintiff ignored the defendant's letter for one year which amounted to inordinate delay; (iii) damages would be an adequate remedy; (iv) the shares had been sold before the plaintiff's decision to demand;forthwith means without delay and as soon as practicable or as soon as is reasonably possible.

HA Securities Sdn Bhd v Ng Kong Yeam [1993] 3 MLJ 489 High Court, Kuala Lumpur (Abdul Malek J).

The expression 'subject to contract' is so well known and has acquired so definite a meaning in relation to sale of land that unless the facts and circumstances are so very strong and exceptional its effect in law is that there is no binding contract of sale but a mere conditional contract of sale, the condition under the expression being that the parties agree to enter into another contract.

Tai Tong Realty Co (Pte) Ltd v Galstaun & Anor 1972 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Tan Ah Tah JJ).

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

See CONTRACT, Vol 3, para 1733.

A entered into a contract to buy sugar from R. The terms of the contract provided in cl 4(1) that the seller shall have the sugar ready to be delivered to the buyer at any time within the contract period. A gave notice to R for their vessel to load the sugar at Dunkirk on 29/31 May 1986. Despite repeated calls by A, no sugar was forthcoming on 29 May. On 3 June A purchased a replacement cargo and terminated the contract with R. A sued R for damages. R contended that the termination was wrongful and that they had until the end of the delivery period (May/June 1986) to deliver the cargo. The arbitrators found in A's favour. This was reversed by the High Court, whose decision was affirmed on appeal. A appealed to the House of Lords.

Held, allowing the appeal: (1) on a proper interpretation of the contract, cl 14(1) imposed on R (the sellers) an obligation to have the sugar available to begin loading immediately on the arrival after proper notice of the buyers' ship. R was in breach of this obligation; (2) if there is no other more specific guide as to the parties' intention, the court will have to make a value judgment as to the significance of the term in question; (3) this was a mercantile contract and cl 14(1) was a time clause. It was inferred that the intention of the parties was that time would be of the essence; (4) A was therefore entitled to treat the contract as terminated by breach of condition. The appeal was allowed and the arbitrators' award restored.

CIE Commerciale Sucres et Denress v C Czarinkow Ltd; The 'Naxos' [1990] 3 All ER 641 House of Lords, England (Lords Bridge, Brandon, Ackner, Oliver and Jauncey).

The plaintiff company ('the branch company') is the registered branch in Singapore of an American company incorporated in the state of Nevada but with headquarters in California ('the main company'). The branch company was engaged in selling and servicing in South-east Asia and elsewhere the machinery and equipment manufactured by its parent company in the United States. The main company is a subsidiary of Clemco International Incorporated, an American company incorporated in the state of Delaware. The first defendant ('Rosemark') is a Hong Kong company. The second defendant ('Hawkins') was recruited in Singapore into the service of the main company under an employment agreement dated 15 December 1975, for a period of one year. His employment was not terminated prior to its expiration on 15 January 1978, and his employment continued on a month to month basis on an agreed monthly salary, with bonus to be approved or determined by the board of the main company. On 1 January 1979, Rosemark entered into a management agreement whereby the main company engaged Rosemark as an independent contractor to provide, on payment of agreed sums, management and administrative services for the branch company. Dispute arose between the parties when on or about 14 February 1980 Hawkins caused the sum of $42,000 to be transferred from the plaintiffs' current account in Singapore to Rosemark's account with the Bank of America in Hong Kong. The plaintiffs say that this was done without knowledge, authority or consent and that Rosemark was not entitled to the said sum of $42,000. They claim against Rosemark and/or Hawkins for the return of the $42,000 and interest thereon. Both defendants denied the claim and made counterclaims against the plaintiffs.

Held: (1) the defences of both the defendants are rejected and the plaintiffs' claim is allowed; (2) the first defendant's claim is allowed to the extent of $7,470.47; (3) the second defendant's claim is allowed in the sums of $28,583.31 and $2,990; (4) in the result, judgment is entered against the first defendant in the sum of $34,529.53 and against the second defendant $10,426.69, with no order as to costs.

Clemco International Sales Co v Rosemark Ltd & Anor [1986] SLR 222 High Court, Singapore (Rajah J).

In April 1931, the Public Works Department of the State of Selangor invited tenders for cartage and general transport. The plaintiff/appellant's tender was accepted and he entered into a contract with the defendant/respondents. The contract contained, inter alia, the following two clauses: '3. In consideration whereof the government doth hereby agree, on or before the tenth of every month during the period of this contract, to pay to the contractor such amount, calculated according to schedule B, as shall have become due to the contract during the preceding month for services performed under this contract. The amount of this contract is limited by the value of the indents issued, but under no circumstances shall the total exceed dollars twenty-four thousand five hundred and thirty-six ($24,536) only. 5. The government reserves to itself the right to transport for its own or any use the materials herein mentioned by any other means.' During the first seven months of the year covered by this contract, indents were issued by the Public Works Department to the plaintiff/appellant and executed by him to the value of $5,414.47 but during the remaining five months, all cartage work, for financial reasons, was carried out by the Public Works Department themselves, except for a small amount of work costing $123.83 for which other contractors were employed. The plaintiff/appellant instituted a suit claiming a sum of $19,121.53, which represents the difference between the amount which he was paid in respect of the indents issued to him and the maximum amount of $24,536 mentioned in the contract or, alternatively, a claim to be paid for such cartage work as had been diverted from him and executed by the Public Works Department or other contractors.

Held: (1) there was no obligation on the defendant/respondents, either from the terms of the contract itself or from surrounding circumstances, to provide the plaintiff/appellant with work to the value of $24,536 or any work; (2) by virtue of the provisions of cl 5 of the contract, the defendant/respondents were at liberty to do any part of the work themselves and/or through other contractors.

Kanagasabai v State of Selangor [1935] MLJ 57 High Court, Federated Malay States (Huggard CJ, Burton and Mudie JJ).

The respondents entered into a sub-contract for the construction of a road. The head contractor supplied the materials, the respondents the tools. The contract was for the making of a considerable stretch of road at so much a square yard, for which the respondents seem to have employed at times more than 50 men each. There were disputes relating to the conditions or period of employment, to advances of goods or money, to wages or to keeping accounts. The respondents claimed money due under the sub-contract and considerable sums for 'extras'. The learned Assistant Commissioner for Labour decided that the dispute fell within his jurisdiction under s 45 of the Labour Ordinance (Cap 69) and found for the respondents as claimed. It was admitted on appeal that if the Controller had jurisdiction what was claimed must be brought within the category of 'wages'.

Held: (1) the fact that sub-employment by the 'labourer' was contemplated in every case did not prevent his remuneration from being in the category of 'wages'; (2) in the circumstances of the case to describe the claim as one for 'wages' would be to give that word a quite unnatural meaning, and therefore the Controller lacked jurisdiction.

Lian Wah Contractors v V Gopal & Anor [1955] MLJ 32 High Court, Singapore (Murray-Aynsley CJ).

A contract was to be performed upon the happening of a contingency. The contingency happened more than three years prior to the date of institution of the suit. There was no notice of refusal of performance.

Held: the word 'date' in art 92 of the Schedule to the Limitation Enactment (Cap 18) does not include the happening of a contingency and as there was in this case no notice of refusal of performance, the claim was not barred by limitation.

Tasir bin Itam Dris v Jamila & Ors [1939] MLJ 247 High Court, Federated Malay States (Murray-Aynsley J).

The plaintiffs as landowners entered into a joint venture agreement dated 14 November 1981 ('the agreement') with the defendant as developer, to develop nine pieces of land ('the land') into a housing estate. The plaintiffs contributed the land and the defendant agreed to be liable for all costs of the actual development of the housing project. The defendant also undertook to obtain the necessary approvals from the appropriate authorities for the sub-division, conversion and the layout plan ('the approvals') and to bear all expenses incurred thereby, within three years, ie by 14 November 1984, with an extension of a further six months. It was also agreed that if for any reason the approvals were not obtained within the stipulated period, then the plaintiffs were entitled to terminate the agreement and neither party would have any claim against the other in particular for moneys expended. It was also provided that time was to be of the essence. The defendant failed to get the approvals within the agreed time and the plaintiffs filed an originating summons seeking, inter alia, a declaration that upon a true and proper construction of the agreement, it had expired through effluxion of time. In its statement of defence, the defendant filed a counterclaim for damages alleging that the plaintiffs had breached the terms of the agreement. The judge ordered that the plaintiff's question be tried as a preliminary point and, after the trial, answered it in the affirmative, thereby granting the plaintiffs the declaration applied for. The defendants have appealed against both orders.

Held, dismissing the appeal: (1) the plaintiffs' application fell within the contemplation of O 33 r 2 of the Rules of the High Court 1980 ('the RHC') because if the question whether the agreement had expired through effluxion of time were answered in the affirmative, it was likely to be decisive of the litigation. It could well have the effect of granting the declaration sought at that preliminary stage and would result in the saving of considerable time and expense; (2) it was clear that under the terms of the agreement, once the approvals were not obtained within the period stipulated or extension thereof, both parties were relieved from their obligations which remained unperformed. It was also clear that time was not merely the essence of the contract, but that the fulfilment of the defendant's promise to obtain the approvals on or before 14 November was a condition precedent of the whole agreement. The approvals were not obtained by the deadline and so, upon a true construction of the agreement, it had become void; (3) however, the expiration of the agreement due to effluxion of time did not preclude the defendant from pursuing his counterclaim against the plaintiffs for breach of contract which would anyway only entitle the defendant to damages in the event it succeeded. The effect of an affirmative answer to the question indirectly affirmed that the defendant had no proprietary or equitable right to the land.

Kumarasamy a/l Sengainy & Ors v Revathy Development (M) Sdn Bhd [1995] 2 MLJ 586 High Court, Johor Bahru (Mohd Ghazali JC).

3 [2011] CONTRACT Contingent contract – Enforcement of contract contingent on event happening – Contingent event stipulated impossible to perform – Whether contract void – Contracts Act 1950, s 33 – National Coal Board v Neil & Son (St Helens) Ltd [1984] 1 All ER 555 (apprvd) Central Bank of India v Hartford Fire Insurance Co Ltd AIR 1965 SC 1288 (apprvd) National Land Finance Co-operative Society Ltd v Sharidal Sdn Bhd [1983] 2 MLJ 211 (apprvd) Scanlon's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169 (apprvd)

P had earlier entered into an agreement with D by which P leased a portion of their land to D for a term of 30 years. The lease was registered in accordance with requirements of the Land Code (FMS Cap 138), which was then in force. Under the Land Code (FMS Cap 138), the maximum duration of any lease in respect of land was for a period of 30 years only. A second agreement was also entered into between the parties which made reference to the registered lease above. Clause 2 of the second agreement was to the effect that if the Land Code was amended to permit P to grant to D a lease of 99 years in respect of the portion already leased to D, then P would be obliged to grant D a lease of 99 years' duration. On 1 January 1966, the National Land Code 1965 replaced the Land Code (FMS Cap 138). Under the present National Land Code 1965, a lease can be for a maximum duration of 99 years if it relates to the whole land. However, a lease of part of land can only be for a maximum duration of 30 years. When P's offer to renew D's existing lease for another three years with an extension of a further three years upon payment of rentals was rejected by D, P instituted the present action seeking a declaration that upon a proper construction of the two agreements in question, D's existing lease should be for a term of 30 years which expired on 30 April 1979. P also sought another declaration that D was trespassing the portion of the land in question and that P was entitled to vacant possession of the same. It was D's contention that since the 1965 Code allows P to lease out the whole of its land for 99 years, P should apply to the Land Office to subdivide the land in such a way as to enable a separate title to be issued for the portion already leased to D thereby enabling D to have a 99-year lease over it.

Held, allowing P's application: (1) in the instant case, the land law had not been changed to enable P to grant a 99-year lease over the portion in question which was leased to D. The contingent event agreed to by the parties in cl 2 of the second agreement had become impossible to perform. Having regard to s 33(b) of the Contracts Act 1950, the second agreement therefore became void; (2) in the instant case, there was no express or implied provisions in cl 2 of the second agreement that P should take steps to sub-divide their land in order to enable D to take a 99-year lease in respect of the portion in question. In the circumstances, it was not the duty of the court to recouch the wording of the clause by importing such provisions. In the result, the court gave judgment in favour of P.

Royal Selangor Golf Club v Anglo-Oriental (Malaya) Sdn Bhd [1990] 2 MLJ 163 High Court, Kuala Lumpur (Lim Beng Choon J).

The defendants were in possession of a town hall, the lower portion of which, for many years, had been fitted up as a theatre. It was considered advisable to replace the old scenery with new ones, and with that view they, through their secretary, wrote a letter to a gentleman in England ordering such new scenery. To meet the cost of such scenery, they had passed a vote of $1,000 from the municipal funds, on their budget for the current year, which had been duly sanctioned by the Governor in accordance with Ordinance IX of 1887; by a subsequent vote, they proposed to apply a further $260 being transferred from another vote for a different matter, which had also been sanctioned. The defendants were about to pay this $1,260 to meet the said costs, when the suit was begun at the relation of a rate payer, seeking to restrain the defendants from applying the said funds towards paying for the cost of such new scenery.

Held: the contract for the purchase being over $200 in value, but not being being under the seal of the defendant-corporation, an injunction should be granted.

Attorney General v Municipal Commissioners [1889] 4 Ky 484 Court of Appeal, Straits Settlements (Wood Ag CJ, Pellereau and Goldney JJ).

P claimed for a sum due on account of goods sold and delivered to D. The writ of summons was served on 18 August 1990 and P obtained judgment in default on 5 September 1990. P's judgment was obtained in Singapore currency. D applied to set aside the default judgment firstly on the ground that the time given for entering appearance was seven days instead of eight days. D further argued that the statement of claim did not provide particulars of the goods and did not state the dates of their delivery. It was also argued by D that P's judgment was in a foreign currency and was therefore irregular. Lastly D argued that there was a defence on the merits.

Held, dismissing the application: (1) D did not apply to set aside the writ and its service. D allowed P to obtain the default judgment and then applied to set aside the judgment. P's mistake in giving seven days for appearance is an irregularity which does not nullify the judgment because O 2 r 1 of the Rules of High Court 1980 applies; (2) P's mistake does not in any way prejudice D because the default judgment was obtained ten days after the expiry of the eight days for entering appearance; (3) the particulars given in the statement of claim are sufficient. Order 18 r 12(2) of the 1980 Rules only applies 'where it is necessary to give particulars'. If D wants more particulars, it can always ask for them; (4) the transactions between P and D were always done in Singapore currency. The currency of the contract is the Singapore dollar. The judgment obtained in Singapore dollars is therefore regular; (5) D's defence is a bare denial without any merits.

Sinbor Co Pte Ltd v Golden Tiling Sdn Bhd Guaman Sivil No 22-356-89 High Court, Penang (Abdul Hamid JC).

The appellant used the services of a firm RM AT M to invest her money. The agent lent the money to the firm of SP S who issued a thavanai letter which was sent to the appellant who retained it at all material times. The material part of the letter read: 'We shall pay at Ipoh to your order the principal and interest according to ÒthavanaiÓ and take back this letter'. In 1944 one Kuppan, who had been agent of RM AT M made a demand on SP S for repayment of the sum which was repaid to him. A receipt was given acknowledging responsibility for the amount. An attempt was made to establish a custom among Chettiars contradicting express terms of contract.

Held: (1) the mere fact that a person is given authority to make a loan on behalf of another does not give his authority to demand and to receive repayment; (2) the retention of the document by the appellant waives the question of implied authority; (3) the term payable to 'order' means payable to someone expressly authorized by the lender; (4) a custom to contradict the express terms of contract could not be used.

Meenatchi Achi v Firm of SPS [1953] 2 MC 212 Court of Appeal, Ipoh (Mathew CJ, Murray-Aynsley CJ (S).

In the circumstances, the plaintiff was not entitled to terminate his agreement to buy fish from the defendants and as a result the defendant and his fellow-fishermen were entitled to claim the fish trap.

Yeo Ah Kee v Kun bin Sait [1954] SCR 34 Supreme Court, Sarawak, North Borneo and Brunei

In this case, the respondent claimed workman's compensation on the death of her husband who was employed as a member of the crew of a junk which was wrecked. The principal question at issue was whether the deceased was a workman or whether he and the other members of the crew of the junk were partners with the taikong in a joint venture. The arbitrator held that the deceased was a workman, but in so deciding relied on the unsworn statements of three members of the crew made to a labour officer.

Held: (1) the onus of proof of establishing that her husband was a workman and therefore entitled to compensation under the Workmen's Compensation Ordinance was upon the respondent; (2) the fact that the arbitrator had acted upon and treated as evidence unsworn statements made in the absence of the parties and without an opportunity to cross-examine on such statements was a mistake of law and, therefore, the appeal must be allowed and a new inquiry ordered before another arbitrator.

Tan Kooi Neoh v Chuah Tye Imm [1958] MLJ 123 High Court, Penang (Rigby J).

There is a general usage in the tin mining industry among Chinese that daily paid coolies in a tin mine may leave, or be dismissed from, their employment without notice.

Chu Chik Sang v Chhi Tiam & Ors [1939] MLJ 241 High Court, Federated Malay States (Raja Musa Ag J).

The existence of local custom may be proved by authoritative decision or by evidence.

Abdul Rahman v Esah [1941] MLJ 199 High Court, Federated Malay States (Horne J).

Shoon Ngee ordered goods from the plaintiff's firm, took delivery and made certain payments towards the costs. A bill was made out by the plaintiff to the defendant who applied his 'chop' to the bill which was returned to the plaintiff.

Held: evidence was admissible of a local Chinese usage according to which the application of one's 'chop' to a bill for goods supplied to another guarantees payment for those goods.

Chin Yuk Kon v Chop Koong Onn [1949] SCR 19 Supreme Court, Sarawak, North Borneo and Brunei

The plaintiff sued as indorsee of an instrument which is described in the writ as a 'letter of acknowledgment'. It was alleged by the plaintiff that the instrument was negotiable by indorsement. It was found that the note was negotiable by custom of Nattukottai Chettiars and called 'Tavanais letter'.

Held: (1) a Tavanai letter in the form commonly used among the Chettiar community, which does not contain an express or implied promise to pay or to pay to a specified person or bearers, is not a promissory note within the meaning of s 3 of the Bills of Exchange Act 1882, notwithstanding that it is negotiable by the custom of the Chettiars; (2) before a document can, by custom and usage of trade, be recognized by the courts as a negotiable instrument, the document must be in a form which renders it capable of being sued upon by a holder of it pro tempore in his own name and it must be indicated by the terms of the instrument that it was intended to be transferred although no particular form is required. A Tavanai letter of acknowledgment did not possess any such attributes.

Letchumanan Chettiar v Alagappa Chettiar [1934] MLJ 50 Court of Appeal, Straits Settlements (Huggard CJ, Thomas CJ (FMS).

[Annotation: See also Meenatchi Achi v Firm of SPS (1935) 2 MC 212, CA.]

P and D had, on March 1971, entered into two separate but almost identically worded agreements in writing whereby P were appointed the sole agents of D for the purpose of effecting sales of their newspapers in the states of Kedah, Perlis and Perak for a period of three years. In September 1971, the above two agreements were, by mutual consent, cancelled and replaced by two almost identically worded agreements in pari materia with their predecessors except that they were each for an unspecified period and there was no provision for termination by notice. Subsequently, D wrote a letter to P referring to the March agreements and asserting that the sole agency contract was at an end having expired by effluxion of time. However, D offered to continue the sole agency on a year to year basis. P declined the offer and issued a writ claiming an injunction to restrain D from discontinuing the supply of the newspapers to them under the September agreements, for damages for breach of contract and interest thereon.

Held, finding in favour of P: (1) in the instant case, a year to year contract offered by D to P would have been substantially inconsistent with the obligations incurred under the September agreements as it would have deprived P of virtually the whole benefit of the contract. In particular, in reliance upon the expectation encouraged by D that the sole agency agreement was to be for an unlimited period, P had, from inception, ploughed much capital and effort, especially during the early years, to establish an efficient distribution network and a viable market for newspapers which were entirely new to the reading public in the regions concerned; (2) in the circumstances, a reasonable period for the sole agency agreement was at least five years and a reasonable period of notice of termination for the September agreements would be six months; (3) it is clear law that the normal measure of damages in actions such as the present one will be the amount that the agent might reasonably have earned under the contract had he not been prevented from continuing to act. Having regard to the findings that the reasonable period for the sole agency agreement was five years (of which the unexpired term was only one year) and that a reasonable period of notice of termination of the same was six months, the court awarded M$105,176.40 (M$105,176.40 ´ 1 1/2 less 1/3, to take into account contingencies) as damages to P. The judgment sum would attract interest at the rate of 8% pa from the date of accrual of the cause of action to the date of judgment pursuant to s 11 of the Civil Law Act 1956 and thereafter at the rate of 8% pa to the date of realization pursuant to O 42 r 12 of the Rules of the High Court 1980.

Syarikat Jaya v Star Publications (M) Bhd [1990] 1 MLJ 31 High Court, Penang (Edgar Joseph Jr J).

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 was operating a business at Province Wellesley at the time when he entered into the tenancy agreement with the defendants. The defendants failed to hand over vacant possession of property to the plaintiff after executing a tenancy agreement. The tenancy agreement dated 1 October 1991 was for the period of three years with effect from 1 October 1991 to 31 October 1994. This was the defendants' appeal against the decision of the senior assistant registrar on 15 October 1994 awarding the plaintiff a total sum of RM114,400 as loss and damages for breach of contract by the defendants. The assessment of damages arose out of an order of court dated 15 September 1993 which ordered that the tenancy agreement between the plaintiff and the defendants be rescinded and that the defendants pay damages to the plaintiff with interest to be assessed.

Held, dismissing the defendants' appeal against the award on general damages and allowing the appeal in respect of the award on special damages: (1) the ascertainment of damages was an exercise to establish a question of fact, that is what loss and damages had been suffered by the plaintiff in the particular case before the court, and to award him damages ascertained according to these principles; (2) the senior assistant registrar had correctly relied on the second limb of s 74 of the Contracts Act in the assessment as there was enough evidence that the defendant was aware that the plaintiff would incur damages if the contract for the three-year tenancy of the premises was rescinded; (3) concerning the plaintiff's duty to mitigate losses, the senior assistant registrar could not be faulted for assessing damages for the full three years as the defendants never categorically informed the plaintiff orally or in writing that the tenancy of the said premises could not be given to him; (4) the senior assistant registrar's assessment of loss of profits at RM97,200 was confirmed. The three years' income tax returns could be taken as evidence of the net income of the plaintiff's existing business. Further, the senior assistant registrar was right to impose a 20% top up on the three years' average income as the plaintiff had given adverse evidence on this score;furthermore, as there was uncontested evidence before the senior assistant registrar that the plaintiff had been forced to sell the furniture in April 1992, which had been parked in the workshop of the carpenter, this event should not be taken to shift responsibility onto the plaintiff to also then look for an alternative business outlet in mitigation or reduction of the full length of the tenancy period that the plaintiff was entitled to claim under the said contract.

Ban Chuan Trading Co Sdn Bhd & Ors v Ng Bak Guan [1995] 4 MLJ 115 High Court, Penang (Vincent Ng J).

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, Vol 3, para 1668.

By a hiring agreement, the plaintiffs hired a car to the defendant for a period of time at a certain rate of payment. The defendant while driving the car met with an accident. The car had skidded and collided into a boulder. The plaintiffs claimed against the defendant damages for breach of contract and for negligence. The defendant resisted the claim of the plaintiffs, contended that he was not negligent and that by virtue of cl 5(b) of the agreement his liability for damages was limited to $1,000.

Held: (1) the defendant must have been driving the car so fast in the circumstances and failed to manage and control the car so as to avoid the collision. He had not discharged the burden of proving that the accident happened without his fault; (2) cl 5(b) of the agreement did not apply to relieve the defendant from liability for the damage to the vehicle in excess of $1,000; (3) since the quantum of damages was disputed, interlocutory judgment should be granted to the plaintiffs.

City Car Rentals & Tours Pte Ltd v Sim Jwee Kiat [1988] SLR 262 High Court, Singapore (Thean J).

P had earlier obtained judgment against D for specific performance of a contract entered into between the parties and for damages for breach of contract. Under the contract in question, D, in consideration of P agreeing to sell them certain shares of a company, agreed and undertook to arrange for P's title deed charged to a bank to be released by the bank by payment of the sum in question. P had complied with his part of the agreement but D had refused to redeem the title charged to the bank without offering any explanation for the refusal. In the judgment which P obtained against D, the learned judge had ordered D to pay P damages, if any, to be assessed for breach of contract. On appeal by D, the Federal Court affirmed the decision of the learned judge. On the application of P, the senior assistant registrar assessed damages amounting to M$181,500 in favour of P and directed that final judgment be entered for P for the sum in question. D appealed against the decision of the senior assistant registrar with regard to the amount of damages assessed in favour of P and for which judgment was entered against D. In the instant case, P had claimed damages for, inter alia, loss of a sum of M$100,000 being loss suffered as a result of the forced sale of P's matrimonial house as a result of the non-performance of the contract in discharging the title deed of the land in question. P had also claimed for the loss of M$44,000 being rental payments in respect of a flat which P was compelled to rent by reason of the forced sale of the matrimonial house and for loss of income from rental from the land in respect of which the title deed was to be discharged amounting to M$37,500.

Held, dismissing the appeal: (1) in the instant case, all the above losses suffered by P arose naturally in the usual course of things from the breach of contract itself. In order to make a particular loss recoverable, it is not necessary for the plaintiff to prove that the defendant could, as a reasonable man, foresee that a breach must necessarily result in that particular loss; (2) as the amount of damages had been assessed by the senior assistant registrar after hearing the evidence of witnesses and after considering the documentary evidence available and as there was nothing to suggest that the senior assistant registrar had acted wrongly in assessing the damages, the learned judge accordingly affirmed the senior assistant registrar's assessment of the damages. D was also ordered to pay interest on the sum assessed for which final judgment was entered at the rate of 8% pa from the date of final judgment to date of realization.

Datuk Eric Taylor v Lim Foo Yong & Sons Realty Sdn Bhd [1989] 2 MLJ 436 High Court, Kuala Lumpur (Zakaria Yatim J).

The respondent was the developer of a housing project while the appellant was a purchaser who had agreed to purchase a double storey link house in the housing project ('the said property') by virtue of a sale and purchase agreement ('the said agreement') made between them dated 4 October 1984. The agreement provided, inter alia, that the respondent would complete the construction of the said property and deliver vacant possession thereof to the appellant within 24 calendar months of the date of the said agreement, ie on or before 3 October 1986. The agreement also provided that should the respondent fail to deliver vacant possession of the said property within the said period, liquidated damages at the rate of 10%pa on the purchase price would be payable by the respondent to the appellant, calculated from day to day from the date of the said period until the date of actual delivery. The appellant alleged that the respondent effected delivery of vacant possession of the said property only on 3 September 1987 and claimed for the delay of 336 days. At the trial, the following facts were agreed upon by the parties, inter alia, (a) that the respondents had written a letter to the appellant informing the appellant to take vacant possession of the said property within 14 days from the date of the letter (20 January 1987); (b) electricity was connected to the housing project on 18 February 1987; and (c) water and electricity was supplied to the appellant on 3 September 1987. The trial judge had to determine the length of delay for which the respon-dent was liable to the appellant under the said agreement and held that the appellant was only entitled to such damages for the period from 3 October 1986 to 18 February 1987, the date water and electricity were connected to the housing project. The appellant appealed, contending that the date of delivery of vacant possession of the property was the date of connection of water and electricity to each individual house, in his case, 3 September 1987.

Held, dismissing the appeal: the letter informing the appellant to take delivery of vacant possession within 14 days from the date of the letter was issued pursuant to cl 19 of the agreement which provided to the effect that the purchaser was deemed to have taken vacant possession of the said property (whether or not the appellant had actually entered into possession or occupation of the said property) on the expiry of the 14 days. Clause 15(1) of the agreement provided to the effect that the respondent would at its own cost and expense cause to be laid and connected all necessary water, electricity and sewerage mains to serve the property and to apply for the connection of these amenities to the mains of the appropriate authority. The defendants had carried out these obligations and electricity was connected to the sub-station of the housing project on 18 February 1987. The respondent had done all it could do under cl 15(1) of the agreement. What was left to be done to effect connection of electricity to the individual houses was the installation of meters, something the respondent could not do as it was prohibited by the Electricity Act 1949 from doing so. Only the LLN could do this and this was not contemplated in cl 15(1) of the said agreement. Connection of electricity to the said property under the agreement must necessarily mean only connection of electricity to the sub-station, this being done on 18 February 1987.

Tay Ket @ Chan Kong Seong v Bumibakti Development Sdn Bhd Civil Appeal No R2-12-146-91 High Court, Kuala Lumpur (Wan Adnan J).

The damages claimed under head 1 of the claim, ie a sum of $39,146.40 incurred by the respondent in supplying and keeping available labour and equipment for loading 2,500/2,600 tons of firewood, flowed directly from the breach of contract and fell within the first rule in Hadley v Baxendale (1854) 9 Exch 341, namely, that the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, ie according to the usual course of things, from such breach of contract itself, or 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. The proper measure of damages in respect of 1,793.5 tons of firewood short-loaded was the cost of replacing that amount of firewood at the port destination, ie Hong Kong, at the time when the firewood ought to have arrived there, less the value at the port of shipment and the amount of freight and insurance thereon.

Wheelock Marden Co Ltd v Tio Chee Hing [1954] SCR 106 Supreme Court, Sarawak, North Borneo and Brunei

The plaintiff and the defendant entered into a contract for the sale and purchase of a flat belonging to the defendant. The purchase price under the contract was $460,000. Prior to exercising the option, the plaintiff learnt that there was an existing bankruptcy action against the defendant; there were in fact two bankruptcy notices against the defendant at the time. The defendant was unable to settle one of the bankruptcy notices and so informed the plaintiff a few days before 1 July 1989, the contractual date for completion of the sale. The plaintiff was unwilling to complete the sale in such circumstances but had no objection to purchasing the flat from the defendant's mortgagees under a mortgagees' sale which, in the event, did not materialize. The defendant being unable to complete the sale, his solicitors on 11 July 1989 gave notice to the plaintiff that the sale must be deemed abortive and tendered the refund of the deposit paid to the plaintiff. The defendant's mortgagees took possession of the flat and subsequently on 7 September 1990 sold it by private treaty to a third party for the sum of $525,000. Notwithstanding the action taken by the defendant's mortgagees, the plaintiff still insisted that the defendant complete the sale and on 1 October 1990, the plaintiff's former solicitors purported to give the defendant 21 days' notice to complete under condition 29 of the Law Society's Conditions of Sale 1981 which notice expired on 23 October 1990. These proceedings were instituted by the plaintiff on 2 November 1990 seeking damages for breach of contract. The defendant conceded liability and both parties agreed that the measure of damages should be the difference between the contract price and the market value of the flat at the date of the breach. A dispute arose as to the date of breach but the plaintiff subsequently conceded that the breach occurred on 1 July 1989, the contractual date of completion. However, the plaintiff submitted that the court had the power to assess damages by reference to the value of the property at a date other than at the date of breach if it would be more just to do so and that consequently, the court should take the value of the flat as at 23 October 1990 (being the expiry date of the 21 days' notice under condition 29) for computing damages. A dispute also arose between the parties as to the market value of the flat at the material time. The defendant's valuers assessed the flat to be worth $470,000 as at 1 July 1989 whilst the plaintiff's valuers assessed a value of $550,000 as at 26 September 1989.

Held, allowing the claim: (1) although the court has the power to assess damages by reference to some date other than the date of completion set under the contract where it is just to do so, in view of the developments and the stand taken by the parties as early as July 1989, it would not be just or reasonable so to do. As such, the plaintiff was only entitled to damages amounting to the difference between the purchase price under the contract and the market price of the property at the date of the breach; (2) the valuation of the flat made by the plaintiff's valuers could not be accepted as it purported to give the market value of the flat as at 26 September 1989 and was done without any internal inspection. The defendant's valuers' valuation of the property as at 1 July 1989 was, on the other hand, supported by statistics and as such was more objective. Based on the said valuation, the plaintiff was entitled to $10,000 in damages plus interest at 8% from 1 July 1989 to date of judgment. Obiter: the normal measure of damages for breach of contract on the sale and purchase of property is the market value of the property at the contractual time of completion less the contract price.

Lie Kie Siang v Han Ngum Juan Marcus [1992] 1 SLR 476 High Court, Singapore (Rubin JC).

Eikobina (M) Sdn Bhd v Mensa Mercantile (Far East) Pte Ltd [1994] 1 MLJ 553 Supreme Court, Malaysia (Harun Hashim, Peh Swee Chin and Wan Yahya SCJJ).

See CONTRACT, Vol 3, para 2030.

In 1979, the defendants acquired a site on which they intended to build a hotel. In 1982 the defendants entered into an agreement with the plaintiffs under which the plaintiffs agreed to assit the defendants in the planning, designing and construction of the hotel. In early May 1986 the plaintiffs decided that the hotel was not up to standard and communicated their intention to withdraw from the agreement. On 8 May 1986 the parties entered into an exit agreement to end their relationship and resolve all disputes between them. While the exit agreement was being negotiated the defendants requested the plaintiffs to allow two of their employees to stay on at the hotel for an interim period of three months. The plaintiffs agreed but after about three weeks the defendants informed the plaintiffs that they no longer required the services of the two employees. The plaintiffs claimed under the exit agreement for reimbursement of those portions of the salaries and other perquisites of the two men for the period 8 May 1986 to 7 August 1986 which had not been met by the defendants. The plaintiffs also claimed a sum of Norwegian Kroner (Nkr) 803,588.39 as the balance of a sum of Nkr 1,024,754.86 which was payable under the exit agreement. The plaintiffs claimed that by the agreement, the defendants were to have paid Nkr 1,024,754, but if the defendants paid Nkr 400,000 by 31 October 1986 this would be accepted as full settlement. The defendants failed to pay Nkr 400,000 by 31 October 1986, and at the time of the suit, Nkr 803,588.39 was outstanding. The defendants claimed that the sum payable was a penalty. The defendants counterclaimed for S$70,765.56, which they alleged were due to them from the plaintiffs.

Held, allowing the claim and the counterclaim: (1) on a true consideration of the exit agreement, the services provided by the plaintiffs' employees were to be for a fixed period of three months which could not be unilaterally shortened by either party. Accordingly the defendants' purported termination of the plaintiffs' employees' services was wrongful; (2) a distinction has been drawn by the courts between payment which by the terms of the contract a party undertakes to make on a specified event and payments which it undertakes to make on breach of a contract. The former type of payment does not fall within the penalty area. The ordinary rule which the courts apply was that contracts should be enforced, pacta sunt servanda, unless they can be brought within that limited category of cases in which, for reasons of public policy, the court refused to give effect to the agreement of the parties. In the instant case the two parties with equal bargaining power dealing at arms length had a disagreement over the amount which one owed the other. As it was imperative due to the business conditions existing at the time of negotiation that a settlement be arrived at, the parties agreed on the compromise set out in the exit agreement. The total liability was admitted at the amount claimed but if a specified smaller sum was paid within a period of approximately six months, the balance of the larger sum would be forsworn by the claimant. It was impossible to see how there could be any room for the invocation of the law relating to penalty clauses; (3) the sum of S$23,500.44 was recoverable by the defendants under the exit agreement.

SAS International Hotels A/S v Amara Hotel Properties Pte Ltd Suit No 1325 of 1987 High Court, Singapore (Judith Prakash JC).

In this case, the learned trial judge had found the first and second defendants liable for breach of contract, undue influence, breach of trust and fraud. The third defendant was found to be liable for fraud only in conjunction with the first and second defendants Ð see [1983] 2 MLJ 127. The learned trial judge dealt with the question of damages in a separate judgment. An appeal from this judgment was dismissed by the Federal Court Ð see [1983] 2 MLJ 196.

Held: (1) there could be no restitution of the land to the plaintiff as the said land was no longer in the hands of the defendants and therefore only damages could be awarded instead; (2) in contract, the measure of damages is in the market value of the benefit which the plaintiff had been deprived through the breach. In fraud, the measure of damages is an award which serves to put the plaintiff in the position he would have been if the representation had not been made to him; (3) in this case, it is sufficient for the purpose of awarding the damages to consider them only on the basis of fraud because the award could be the highest attainable and would necessarily cover the claims for breach of contract and breach of trust as well; (4) taking into account the value of the land in July 1975 and allowing for the increase in the price of the land from July 1975 to July 1982, the date of the judgment and the value of the house, the damages would be awarded in the sum of $972,624; (5) in the circumstances, the plaintiff's claim for exemplary damages would be disallowed; (6) as the moneys paid as consideration for the purchase of the said land were paid pursuant to and arising out of fraud they are not recoverable and credit could not be given for them; (7) the second defendant had never disclosed that he was acting for the first defendant, his principal, and under s 183 of the Contracts Act 1950 (Act 136), he is in the event presumed to be personally liable on the contract; (8) the first defendant was present when the second defendant acted as his agent to commit fraud on the plaintiff which thus makes him liable jointly with the second defendant; (9) the first, second and third defendants were jointly and severally liable for the tort of deceit, but the first and second defendants were jointly and severally liable for breach of contract. Judgment would therefore be given for the sum of $973,000 as general damages to the plaintiff, with costs and interest.

Tara Rajaratnam v Datuk Jagindar Singh & Ors [1984] 1 MLJ 175 High Court, Johore Bahru (Abdul Razak J).

D entered into a contract with P whereby D agreed to sell certain shares to P for a stated consideration. Under the contract, P agreed and undertook to secure the release of D's title deed pledged or charged to a bank. D had performed all his obligations under the contract. P, however, failed or neglected to obtain the release of the charge on D's land. T, the administratrix of the estate of D, claimed from P the following damages alleged to have been suffered by D as a result of the non-performance of the said contract by P in discharging the title to D's land: (a) loss of M$100,000 suffered as a result of the forced sale of D's matrimonial house; (b) loss of M$44,000 being rental payments for a flat; and (c) loss of income from rental of the land charged to the bank. The senior assistant registrar assessed and certified that the damages to which D was entitled amounted to M$181,500. P's appeal against the decision of the senior assistant registrar was dismissed by the High Court. Being dissatisfied with the decision of the High Court, P appealed to the Supreme Court.

Held, allowing the appeal: (1) under s 74(1) of the Contracts Act 1950, only a party to the contract or his estate is entitled to compensation for loss or damage caused by a breach of the contract. The word 'party' in s 74(1) can only mean a party who was a signatory to the contract or his estate. In the instant case, T who was the administratrix of the estate of her deceased husband (D) could prove and obtain compensation for any loss suffered by D or his estate but not for any loss suffered by T in her personal capacity; (2) the loss of the sum of M$100,000 suffered as a result of the forced sale of the matrimonial home, which was registered in T's name, was a loss to T in her personal capacity and was not a loss caused to D or his estate as a result of the breach of the said contract by P; (3) D was not entitled to the loss of income from rental of the land charged to the bank as no damage or loss in this respect had been proved. As regards the loss of M$44,000 being rental payments for a flat, it was not a loss of D's estate. As such, D's estate was not entitled to the award of M$44,000; (4) as the award of damages as assessed by the senior assistant registrar and confirmed by the High Court did not come within the purview of s 74(1) of the Contracts Act 1950, their Lordships allowed the appeal by P.

Lim Foo Yong & Sons Realty Sdn Bhd v Datuk Eric Taylor [1990] 1 MLJ 31 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

3 [2034] CONTRACT Damages – Breach – Whether time of essence – Remoteness of damage – Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 (consd) Panchaud Freres SA v Establishments General Grain Co [1970] 1 Lloyd's LR 53 (consd) De Bussche v Alt (1877) 8 Ch D 286 (consd)

D sued P for damages for breach of contract in respect of each of the periods in question. The contract entered into between the parties provided for, inter alia, quarrying works to be undertaken by D. P was the owner of a quarry as well as a cement manufacturing factory and D was a contractor for quarrying works. P denied the claims of D and pleaded two general defences. P contended that if it was in breach of contract, such breach had been waived by D. It was also contended that D's termination of the contract was not justified and amounted to a wrongful repudiation as there was no stipulation in the agreement that time was to be of the essence. The High Court found in favour of D and P appealed to the Supreme Court. In the appeal before the Supreme Court, P further contended that the damages awarded to D were not reasonable as they were too remote.

Held, dismissing the appeal: (1) having regard to the intention of the parties as gathered from the agreement itself together with the surrounding circumstances, time was of the essence of the contract. D was entitled to terminate the contract because of P's persistent delays in making payments to D in accordance with the contract. There was, therefore, no wrongful repudiation of the contract on the part of D; (2) in the instant case, the alleged loss claimed by D in respect of termination and retrenchment payment and benefits paid to the employees and the payments made to the leasing company for repossession of the machines were too remote and had no nexus to the termination of the contract in question. The special damages awarded were accordingly reduced by the sums in question; (3) in regard to the award of general damages of M$6m, the Supreme Court was of the opinion that the award was wrong as D was not the owner of the machines and was merely the lessee. D could not, accordingly, claim for the loss of the value of those goods in respect of which it had no title. This award was, therefore, set aside by the Supreme Court; (4) as there was no evidence adduced by either party as to the liability of D to pay tax or the amount of its tax liability, the Supreme Court declined to make any further deductions for tax; (5) on the issue of waiver, the Supreme Court found that there was no evidence to show that D intended to abandon its claims under the contract. The defence of waiver, accordingly, did not apply.

Associated Pan Malaysia Cement Sdn Bhd v Syarikat Teknikal & Kejuruteraan Sdn Bhd [1990] 3 MLJ 287 Supreme Court, Malaysia (Abdul Hamid LP, Mohamed Yusoff and Gunn Chit Tuan SCJJ).

Compensation cannot be given for any remote and indirect loss or damage sustained by reason of breach of agreement.

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.

Plenitude Holdings Sdn Bhd v Tan Sri Khoo Teck Puat & Anor [1992] 2 MLJ 68 High Court, Johore Bahru (PS Gill J).

See CONTRACT, Vol 3, para 2914.

Ku Yu Sang v Tay Joo Sing & Anor [1993] 3 SLR 938 High Court, Singapore (Warren LH Khoo J).

See CONTRACT, Vol 3, para 2895.

In 1981, the plaintiffs entered into an agreement with the defendant property developers for the purchase of a flat. The agreement stated the estimated floor area of the flat as 871.5 sq m. The defendants undertook in the agreement to construct the flat and the building project in a good and workmanlike manner. On being informed at the defendants' office that the defendants had a sister company which could finance the purchase at a better rate than a bank, the plaintiffs financed their purchase with a mortgage loan from this sister company. In March 1982 the subsidiary strata certificate of title was issued showing the floor area of the flat as 152 sq m. The plaintiffs were unaware of this shortfall. Completion took place in April 1982. In February 1987, the Development and Building Control Division of the Public Works Department served a notice that the building in which the plaintiffs' flat was contained was dangerous. Remedial works were completed in August 1991. In the meantime, the plaintiffs had defaulted on their mortgage repayments and the flat was sold by mortgagee's auction in August 1987. Proceedings were commenced in September 1987 for breach of contract on two grounds: first, the defendants' failure to construct the flat in a good and workmanlike manner and second, the shortfall in the floor area. Liability on the second ground was conceded by the defendants in July 1993 and at trial, the defendants argued that interest on the agreed damages should run only from the date on which the shortfall was discovered because their liability was ascertained only after the delivery of the judgment in Yeo Brothers Co (Pte) Ltd v Atlas Properties (Pte) Ltd [1988] 1 MLJ 151 in September 1987. As to the first ground, the plaintiffs argued that damages should be assessed at the time of the purchase of the flat by taking the difference between the value of the flat in its assumed good condition and its value in its actual bad condition.

Held, allowing the plaintiffs' claims: (1) on the facts, the defendants had breached their obligation to construct the flat and the building in which it was contained in a good and workmanlike manner; (2) when a party suffers damage because a developer or builder fails to build or complete a structurally sound and defect free building, the general rule is that damages should be assessed on the basis of the cost of rectifying or completing the work; (3) nevertheless, the fact that a mortgagee's sale had been effected before the repairs were carried out did not affect the plaintiffs' right to claim compensation for the diminution in value of the flat, if any, which arose by reason of the defendants' breach; (4) the principle governing the award of damages is to put the plaintiff in the position in which he would have been had the breach not occurred. In determining the date at which damages should be assessed, the prima facie rule is to assess damages at the date of the breach of contract unless there is good reason to postpone assessment to a later date. This prima facie rule could be displaced if the plaintiff was unable to discover the breach at the time of delivery. The relevant time then becomes when the cause of action was discovered; (5) the prima facie rule was displaced in this case because the plaintiffs did not and could not have discovered the breach at the time or shortly after they purchased the flat. Invoking the prima facie rule would allow the defendants to escape from having to compensate the plaintiffs for loss arising naturally from their breach of contract. Damages were thus to be assessed at the date when the plaintiffs became aware of the defects in February 1987. However, as the defects at that date were not publicly known, the plaintiffs suffered no actual damage as a result of the breach of contract and could only recover nominal damages; (6) where money to which a party is not entitled has been paid, interest should run from the date of payment. That the legal basis of the defendants' liability on the shortfall in floor area was only ascertained at a later date is not a consideration; (7) on the facts, taking into account the delay in proceeding to trial and the reasons therefor, interest would be awarded on the amounts overpaid from the respective payment dates until six months prior to the plaintiffs' change of solicitors, and from the date of the notice of intention to proceed up to the date of judgment; (8) as to the rate of interest, since the defendants were aware from the outset that the plaintiffs would be borrowing to finance the purchase of the flat and in fact took the opportunity to send the business in the direction of a sister company, and since the court awards interest as compensation for monetary loss, interest on the overpayments could be recovered at the mortgage rate from the dates of payment until the date of default in mortgage payments; (9) the plaintiffs could not be regarded as successful as they recovered only nominal damages. Nevertheless, the circumstances of the present case were such that it would be wrong to apply the full rigour of the rule that costs follow the event to the plaintiffs. The plaintiffs should have their full costs up to the time the trial started as it was not until then that the defendants conceded liability on the shortfall and dropped the issue of the plaintiffs' title to sue. Only half the costs of the trial should be awarded to the defendants as it was unduly prolonged by their defence to the plaintiffs' second allegation, which being merely academic had little chance of success.

Mahtani & Ors v Kiaw Aik Hang Land Pte Ltd [1995] 1 SLR 168 High Court, Singapore (Judith Prakash JC).

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

See CONTRACT, Vol 3, para 2535.

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

See CONTRACT, Vol 3, para 1785.

P claimed damages from D for damage to his motor vehicle arising from a collision with a vehicle driven by D. Judgment was entered for P and damages were assessed. D appealed against the assessment relating to hire charges and storage charges.

Held, dismissing D's appeal: (1) the period of two months for hiring a replacement vehicle was reasonable. D had failed to prove his contention that the period was too long. P had written to D's insurers that the former's surveyors found his vehicle a total loss. Since D's insurers had not replied, they could not complain if P took steps to hire a vehicle and charged it to D; (2) as for the storage charges, an appeal court should be very reluctant to interfere with the trial judge's finding as to damages unless he acted upon a wrong principle or his assessment was an entirely erroneous estimate of the damage suffered. This was not the case here. The appeal was dismissed.

Ng Soo Ngoh v Yong Chong Sing Bill of Costs No 379 of 1988 in District Court Suit No 6091 District Court, Singapore (Tan Seck Sam, District Judge).

P had insured their motor vehicle with D, wherein on consideration of premiums paid, D undertook to indemnify P against loss of damage to the vehicle through, inter alia, theft in the sum of M$100,000. Subsequently, P reported the vehicle stolen and demanded payment of the M$100,000 being the sum insured from D. D did not deny liability but disputed that as the policy was an unvalued policy, the quantum of actual loss to P should be the market value of the vehicle at the date it was stolen which D placed between M$68,000 to M$73,000. P succeeded in their O 14 application for summary judgment for M$100,000 and D appealed against that order. At the hearing of the appeal, D applied for fresh evidence to be adduced, the effect of which was to provide D with an alternative defence of abatement which was never pleaded before. The fresh evidence sought to be adduced was the positive identification of the vehicle after summary judgment had been entered against D. D had employed the services of a forensic expert to investigate and determine whether the vehicle recovered was the same as the one stolen only after P and the police had failed to make a positive identification of the vehicle recovered. Although P did not dispute the report of the forensic expert regarding the positive identification of the vehicle, they nonetheless disputed the introduction of such evidence on the ground that the defence of abatement which D sought to plead consequent upon the introduction of such fresh evidence made no difference to the outcome of P's claim as D had already admitted liability.

Held, allowing the appeal to the extent indicated below: (1) (b) the fresh evidence will have an important bearing on the outcome of the case and (c) the fresh evidence is credible; (2) the learned judge was satisfied that all the conditions had been satisfied by D in the instant case. In the circumstances of the case, D could not be faulted for not seeking the services of the forensic expert any earlier before summary judgment was obtained as both P and the police had to be given every opportunity to make a positive identification of the vehicle recovered. D's application for leave to adduce fresh evidence was accordingly allowed by the learned judge; (3) in the instant case, the figure of M$100,000 was stated in the proposal form to be P's estimate of the value of the vehicle at the time the contract was entered into and apart from this, there was no evidence that an expert had valued the vehicle at M$100,000 or that the sum had also been agreed to by D. That being the case, the policy was an unvalued policy and at most the amount of indemnity D had agreed to be bound should not exceed M$100,000 which was also clearly stated in cl 2 of the policy; (4) in any application for leave to adduce fresh evidence, the court has an absolute discretion, having regard to the facts of each case, whether or not to grant such leave. In the instant case, in order that leave be granted, the following conditions must be fulfilled: (a) that the evidence sought to be adduced could not, with reasonable diligence, be obtained at the O 14 application;P's cause of action had not been abated by the recovery and identification of the vehicle a year after it was stolen as the risk for which the vehicle had been insured had happened. D was still liable to P for damages. However, the measure of such damages could no longer be the value of the vehicle at the time of its loss as there was no total loss in instant case. Having regard to the policy, D was only liable to meet all necessary costs to bring the vehicle into good repair and in the same condition as it was at the time of theft.

Thag Services Inc (M) Sdn Bhd v Capital Insurance Bhd Civil Suit No D2-23-3576-87 High Court, Kuala Lumpur (Siti Norma Yaakob J).

The plaintiff was a member of the Singapore Island Country Club ('SICC'). In anticipation of his membership being converted to transferable membership, the plaintiff, on 19 September 1991, entered into an agreement ('the agreement') to sell his membership to the first defendant at a price of S$240,000. The agreement required the first defendant to pay a deposit of S$12,000 to the second defendants as stakeholder. This deposit would be forfeited to the plaintiff 'should the first defendant be in breach of any of the terms' of the agreement. The plaintiff was also required to submit an application to transfer the membership within 14 days of the date of notice of transferability. Pursuant to the agreement the first defendant paid the deposit to the second defendants. On 23 December 1991 the plaintiff received a letter from SICC informing him that his membership was transferable; however, the application forms for transfer were only available on 1 January 1992. As soon as the forms were available, the plaintiff obtained and filled out the forms. The first defendant was also required to fill out some of the forms and the plaintiff forwarded them to the first defendant on 13 Janaury 1992. The first defendant failed to return the forms duly completed. The plaintiff, through his solicitors, demanded that the first defendant complete the forms and go ahead with the transfer. No reply was received. The plaintiff then demanded that the S$12,000 deposit be released to him. This was refused. The plaintiff then commenced the present action, seeking, inter alia, an order of specific performance, a declaration that the plaintiff was entitled to damages of S$240,000, and a declaration that the plaintiff was entitled to forfeit the deposit without prejudice to his claim for damages of S$240,000. When the matter came up for hearing, it was common ground that the first defendant had since purchased another golf membership of SICC from a third party. The first defendant argued that the plaintiff was in breach of the agreement because he had not applied for the transfer within 14 days of being informed that he could transfer the membership.

Held, ordering that the deposit of S$12,000 be paid to the plaintiff: (1) as the first defendant had already bought another golf membership, specific performance could not be ordered; (2) although the plaintiff had notice of the announcement on transferability of his membership on 23 December 1991, the transfer could not be effected without the forms. The forms were not available until after 1 January 1992. The plaintiff had despatched the forms on 13 January 1992, within the 14-day period. The first defendant was therefore in breach of the agreement and the plaintiff was entitled to forfeit the deposit of S$12,000; (3) on the plaintiff's claim for damages in addition to the forfeiture, this depended on whether the forfeiture was a penalty, in which case it would be void, or whether it represented a genuine pre-estimate of loss in the event of any breach of the agreement by the first defendant, in which case it would be valid. The agreement did not reserve any right to the plaintiff to any claim over and above forfeiture of the deposit. Further, in September 1991 when the agreement was entered into, no one could tell if the price of an ordinary golfing membership of SICC, when it became transferable, would go above S$240,000 or below and, if below, by how much. The clause for forfeiture of the deposit represented a genuine pre-estimate of damage in the event of a breach by the first defendant of any of the terms of the agreement. Thus, the plaintiff was to receive the deposit from the second defendants as agreed liquidated damages. The plaintiff was, however, not entitled to a further claim for additional loss, if any. Where the stipulated sum was liquidated damages, the plaintiff may recover this sum irrespective of his actual loss or the loss which he was able to prove. He was not, however, entitled to disregard this sum and prove that he had suffered greater damage and neither was the first defendant entitled to prove that the plaintiff had suffered less damage. Where the stipulated sum was a penalty, the plaintiff may only recover damages in respect of such damage as he can prove, but the amount recoverable may be greater or less than the sum stipulated. There was no evidence of actual loss as the plaintiff still retained his membership and had not resold the same at a loss.

Tan Michael v Loo Choon Yong & Anor Originating Summons No 247 of 1992 High Court, Singapore (Goh Joon Seng J).

The Perak state government leased land to D2, a statutory body, so as to enable D2 to develop the land into a housing scheme. D2 then entered into an agreement with D1 whereby, inter alia, D1 was to develop the land and D2 was to obtain 50% of the profit (the 'first agreement'). P1-P36 then entered into agreements with D1 whereby D1 agreed to build houses and sell them to P1-P36 within a stipulated time (the 'sale and purchase agreements'). D1 however did not even start construction within the stipulated time. In an earlier action X who was one of the house purchasers obtained summary judgment against D1-D2 in the High Court (the 'first action'). D2 lodged an appeal against the High Court's decision in the 'first action' but subsequently withdrew it after reaching a settlement with X. According to the settlement, D2 offered to build the houses with a 50% increase of the purchase price or alternatively to pay each purchaser a certain sum of money as an ex-gratia payment without admission of liability. X and other house purchasers accepted the settlement. P1-P36 however rejected the settlement and claimed from D1-D2 for, inter alia, specific performance of the 'sale and purchase agreements' and liquidated damages for late delivery of the houses. D2 subsequently built the houses by employing new and more expensive specifications. D1 was not present during the hearing of the claims. P1-P36 argued that D1-D2 were partners in the business of developing a housing estate for P1-P36 by virtue of the 'first agreement'. P1-P36 then alleged that the brochure distributed to potential house purchasers and the sign board at the work site, stated that the housing estate was a joint venture between D2 as the land owner and D1 as the developer. D2 denied liability under the 'sale and purchase agreements' firstly on the ground that it was not a partner with D1 and secondly D2 was not a party to the 'sale and purchase agreements'. D2 alleged that it took over the construction of the houses solely because of its social or moral duty to help the house purchasers. D2 further denied that the 'first agreement' created a joint venture between D2 and D1 because the object of the 'first agreement' was to help bumiputra developers such as D1. D2 also alleged that at the time of the signing of the 'sale and purchase agreements', the land belonged to the Perak state government and since the land owner was not a party to the 'sale and purchase agreements', the 'sale and purchase agreements' were illegal and unenforceable due to non-compliance with r 11(1) of the Housing Developers (Control and Licensing) Rules 1970.

Held, allowing the claim in part: (1) the 'sale and purchase agreements' were still enforceable by P1-P36 despite the breach of r 11(1) of the 1970 Rules; (2) to find if a partnership as defined in s 3(1) of the Partnership Act 1961 exists, the court must find the real intention of the parties which is not necessarily their expressed intention. The rules for determining the existence or non-existence of a partnership, as stated in s 4 of the 1961 Act, cannot be exhaustive. The relevant factors to be considered together are the relation between the parties including any written or verbal agreement, the conduct of the parties at all times and all the surrounding circumstances; (3) the provision of 50% of the profit for D2 in the 'first agreement', gave rise to a rebuttable presumption of the fact that a partnership existed; (4) at the conclusion of evidence, the court was satisfied on a balance of probabilities that the indicia of partnership outweighed the negative factors. There was accordingly a partnership between D1 and D2 in the business of housing development. As such the court could order specific performance of the 'sale and purchase agreements' against both D1 and D2; (5) since D2 had built the houses according to more expensive specifications and to prevent an unjust windfall to P1-P36, s 71 of the Contracts Act 1950 applied in this case. The court would therefore not order liquidated damages for late delivery of the houses against D2 because the benefit gained by P1-P36 from the more expensive specifications of their houses would be set off against their claims for the liquidated damages; (6) the court would however order liquidated damages against D1 so as to distinguish between D1 who was a defaulting trading partner and D2 who was a sleeping partner. This was because D2 had subsequently given more to P1-P36 than what P1-P36 were entitled to; (7) the doctrine of equitable estoppel also applied in this case where it would be unconscionable for P1-P36 to insist on strict performance of the obligation under the 'sale and purchase agreements' to pay liquidated damages, as against D2.

Aw Yong Wai Choo & Ors v Arief Trading Sdn Bhd & Anor [1992] 1 MLJ 166 High Court, Ipoh (Peh Swee Chin J).

The respondents were awarded a contract to carry out remedial works to the National Stadium. They engaged the appellants by way of a sub-contract to supply specified waterproofing materials (the Vibak materials) and apply protective coatings of such materials over the topside and the underside of the galleries of the stadium. After a third of the topside work had been completed, the respondents terminated the appellants' work on the topside on the ground that the materials supplied and used were not the materials contracted for. Following the termination of the topside work, the respondents removed the defective coating applied by the appellants, imported the Vibak materials directly from the manufacturers and hired labour to apply the materials on the entire topside area. The appellants started an action in which they claimed, inter alia, money owing to them by the respondents in respect of the work carried out on the underside of the galleries. The respondents counterclaimed damages for breach of the sub-contract in respect of the topside work. The trial judge, having found that liability for breach of the sub-contract had been established, quantified damages for the counterclaim as follows. She found that the costs of removing the defective coating applied by the appellants on the one-third area of the topside had been proved and awarded a sum of S$61,363.50. Next, she quantified the costs incurred in coating the entire topside area with the right materials and arrived at the sum of S$298,324.84. Under the sub-contract, the respondents would have had to pay to the appellants the sum of S$378,556.66 (the contract sum) for coating the entire area if the work had been carried out by them. The trial judge set off the costs incurred for coating the entire area against the contract sum but did not deduct the costs of removal of the defective coating. Instead, she held that the removal costs were recoverable as damages. In the event, judgment was given for the respondents on the counterclaim in the sum of S$35,808.14 with interest. The sum was arrived at by deducting the claim of the appellants in the sum of S$25,555.36 (which was allowed) from the full amount of counterclaim in the sum of S$61,363.50. As regards costs, she awarded only one set of costs and awarded 80% of the said costs to the respondents. On appeal, the sole contention of counsel for the appellants was that separate damages should not have been allowed for the removal costs, which should have been deducted from the contract sum.

Held, allowing the appeal: (1) damages in a contractual claim are compensatory and are intended to protect the innocent party's expectation interests. Damages are not meant to enrich the innocent party. As far as possible, the innocent party is to be put in as good a position as if the contract had been performed; (2) the respondents had to rectify the unfortunate situation occasioned by the appellants' breach of the sub-contract. Their pecuniary loss was represented by the costs of the rectification minus the contract sum avoided. On the facts, the costs of the entire rectification required to put the respondents in as good a position as if the contract had been performed included the costs of removing the defective coating applied by the appellants and the costs of coating the entire topside area with the Vibak materials. Therefore, the removal costs ought to have been added to the costs of coating the entire topside area to obtain the total costs of rectification and the total of these costs ought to have been deducted from the contract sum. On this basis, the respondents had not suffered any loss.

Gunac Enterprises (Pte) Ltd v Utraco Pte Ltd [1995] 1 SLR 11 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

Chuan Hup Marine Ltd v Sembawang Engineering Pte Ltd [1995] 2 SLR 629 High Court, Singapore (GP Selvam J).

See CONTRACT, Vol 3, para 2028.

P purchased property for £177,500 in reliance on a building surveyor's report made by D. P had required that the property be reasonably trouble free without any need for extensive repairs. The report indicated that the defects mentioned could be dealt with as part of ordinary maintenance. On entering possession, P discovered defects beyond those disclosed in D's report. P commenced an action for damages for negligence and/or breach of contract. They were awarded the cost of the repairs and general damages of £4,000 each for 'distress and inconvenience'. D appealed.

Held, allowing the appeal: (1) in the absence of any warranty that the condition of the property had been correctly described by D, there was no basis for awarding the cost of repairs; (2) the proper measure of damages was the contract measure. Accordingly, the loss to P was the difference between the value of the property as it was represented and its value in its true condition; (3) in the case of an ordinary surveyor's report, general damages were recoverable only for distress and inconvenience caused by physical consequences of the breach of contract and such damages should be a modest sum for the amount of physical discomfort endured. On the facts, £750 was an appropriate sum for each plaintiff.

Watts & Anor v Morrow [1991] 4 All ER 937 Court of Appeal, England (Sir Stephen Brown P, Ralph Gibson and Bingham LJJ).

By a contract evidenced by an invoice dated 22 June 1984, the plaintiffs in this case sold and delivered to the defendants a quantity of grout for $42,750 of which a balance of $27,799.60 was unpaid by the defendants. Thereafter, by another contract as evidenced by an invoice dated 20 July 1984 (the second contract), the plaintiffs agreed to supply to the defendants a further quantity of grout. Unfortunately, the wrong goods were delivered to the defendants for shipment to their sub-purchaser in Indonesia. Upon discovering this, the plaintiffs immediately requested the defendants to return those goods, agreed to reimburse all expenses incurred and offered to despatch the grout as contracted. The defendants, however, rejected that offer and cancelled the order for the grout. On 23 February 1985, the plaintiffs instituted the present action against the defendants claiming for the balance sum of $27,799.60 due under the first contract. The defendants counterclaimed for damages for breach of the second contract by the plaintiffs. Both applications for summary judgments were heard before the senior assistant registrar. Judgment for the defendants was assessed at $49,313.73. One of the items of loss which was asked for in the assessment of damages was the loss of further business with an Indonesian purchaser of the defendants. On this item, the assistant registrar awarded a sum of $30,000. The plaintiffs appealed against this assessment. The defendants claimed that the loss of this order by the defendants was one ordinarily and naturally within the contemplation of the parties as a consequence of the breach of the second contract by the plaintiffs: Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145.

Held, allowing the appeal: (1) the defendants had not discharged the burden of proving that the loss amounted to $30,000, and on that ground alone, the award could not be supported; (2) on the facts, the loss of the defendants could not have been within the contemplation of the parties at the time of contract.

Australian Master Builders Co Proprietary Ltd v Pal-Asian Services [1987] SLR 346 High Court, Singapore (Thean J).

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

See CONTRACT, Vol 3, para 1834.

The proper measure of damages recoverable by the indorsees of the bill of lading from the shipowners as a result of the conversion of the salt is the full market value of the goods at the time when and the place where possession of them should be given. The burden of proving the full market value lies with the indorsees.

The 'Jag Shakti'; Chabbra Corp Pte Ltd v MV 'Jag Shakti', Owners & Ors Interested [1986] 1 MLJ 197 Privy Council Appeal from Singapore (Lord Keith of Kinkel, Lord Fraser of Tullybelton, Lord Roskill, Lord Brandon of Oakbrook and Lord Mackay of Clashfern).

The plaintiffs bought 2,000 shares from Alex Goei, a stockbroker, sometime in 1962. The shares were to be delivered to him in May 1962 but they were never so delivered Ð in fact they were wrongfully sold at a lower price in June 1962. From the evidence it was clear that both Alex Goei and the plaintiff were to blame for the delay which resulted in the plaintiff discovering in 1964 that his shares were sold in 1962. Subsequently the defendants took over the business of Alex Goei and as a result of this taking over the defendants were not in a position to know how their business transactions stood vis-a-vis their clients. In an action for damages for breach of contract,

Held: in view of the inconclusive nature of the authorities and in the circumstances of the case, damages for breach should be arrived at a figure roughly about half way between the contract price and the highest peak before the action, ie at 60 cents per share.

Rodrigues v Robert Wee & Co 1965 High Court, Singapore (Winslow J).

3 [2052] CONTRACT Damages – Employment – Gunton's case

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

See CONTRACT, Vol 3, para 1906.

P was originally employed by the HDB under a letter of appointment which provided for one month's notice of termination of employment. He was subsequently placed on the permanent establishment of the HDB, subject to their rules and regulations. P was charged with corruption but was granted a discharge amounting to an acquittal. HDB, however, suspended him and he was told to resign. When he refused to do so, they sacked him with one month's pay in lieu of notice. P had been working for HDB for 17 years. He sued for wrongful dismissal.

Held, granting the claim: (1) to be emplaced on the permanent establishment (as distinct from being emplaced on a permanent and pensionable establishment) does not mean that the employee would have security of tenure for life ending on his retirement. His contract may be terminated in accordance with the relevant rules and regulations; (2) in the absence of a provision specifically covering the case in HDB's rules and regulations, it was held that P could be sacked provided that reasonable notice was given to him; (3) under the circumstances, three months' notice was reasonable. The original letter of appointment had been superseded when P was placed on the permanent establishment; (4) however, as this was a contract of service there could not be reinstatement. P was therefore awarded three months' salary by way of damages for wrongful termination of service.

Low Pu Tong v Housing and Development Board [1990] SLR 1019 High Court, Singapore (Sinnathuray J).

P had repossessed a car from D let out by P under a hire-purchase agreement entered into between the parties. D had defaulted in the payment of the instalments due under the agreement. P sold off the car and brought the present claim against D for the balance sum due. The magistrate, in allowing P's claim, disallowing the item for the cost of repairs. P appealed to the High Court against the decision of the magistrate.

Held, dismissing the appeal: in the instant case, it was for P to prove his damages. The claim for the cost of repairs had not been sufficiently proved by P. The magistrate, accordingly, acted correctly in disallowing the claim when it had not been satisfactorily proved.

Malayan United Finance Bhd v Kamal bin Man Civil Appeal No 11-9 of 1987 High Court, Johore Bahru (Abu Mansor J).

Watts & Anor v Morrow [1991] 4 All ER 937 Court of Appeal, England (Sir Stephen Brown P, Ralph Gibson and Bingham LJJ).

See CONTRACT, Vol 3, para 1981.

The plaintiffs and the defendants entered into an agreement whereby the first plaintiffs were to manage a hotel. The benefit of the said management agreement was subsequently assigned to the second plaintiffs, a wholly owned subsidiary of the first plaintiffs. The defendants were dissatisfied with the management of the hotel and sought to terminate the agreement. There were some exchanges of correspondence between the defendants and the first plaintiffs over the said management resulting in the defendants giving the first plaintiffs a 'grace period' of one month to wind up the first plaintiffs' operation. On expiry of the said period, the defendants took over the management and removed the first plaintiffs' signs. In a previous action brought by the plaintiffs, the court ordered an interim injunction restraining the defendant from interfering with the second plaintiffs in the performance of their duties under the management agreement. The plaintiffs applied for an order, inter alia, that the court allow the continuance of the said injunction against the defendants.

Held: (1) in an application for an interlocutory injunction the applicants must establish a probability or a strong prima facie case that they are entitled to the right whose violations they complain of and, subject to this being established, the governing consideration is the maintenance of the status quo pending the trial; (2) the management agreement in this case was not a contract of service nor was it a contract involving personal service. It was an agreement which the court could specifically enforce; (3) having regard to the nature and scope of the management agreement, damages would be an inadequate remedy and the balance of convenience was clearly in favour of the plaintiffs; (4) in the circumstances the balance of justice was in favour of restraining the defendants pending the trial preventing the plaintiffs from managing and operating the hotel under the management agreement.

Holiday Inns Inc & Anor v Hotel Enterprises Ltd 1975 High Court, Singapore (Chua J).

Mahtani & Ors v Kiaw Aik Hang Land Pte Ltd [1995] 1 SLR 168 High Court, Singapore (Judith Prakash JC).

See CONTRACT, Vol 3, para 1972.

The sole question for decision in this case is the measure of damages to be awarded to a purchaser arising out of a wilful breach of contract for the sale of land by a vendor, that is whether damages should be assessed based on the value of the land at the date of judgment or at the date on which the breach occurred. The plaintiff contracted in 1969 to purchase a piece of land from the defendant for $2,000. The plaintiff paid $500 on signing the agreement and a further $1,100 on 4 November 1970. These payments were made for a consideration which had wholly failed. On the date of the breach of contract, the land was worth only $1,450.

Held: (1) the market value of the land is to be assessed as on the date on which the breach of contract occurred, following the decision in Central Malaysia Development Co Ltd v Chin Pak Chin [1967] 2 MLJ 174. As the land was worth only $1,450 on the date of breach, the plaintiff did not suffer any damages by way of loss of bargain; (2) the defendant should pay the plaintiff the sum of $1,600; (3) the defendant should pay interest on $500 from 26 December 1969 to 4 November 1970 and on $1,600 from 4 November 1970 to 15 January 1985 (date of judgment) at 8% per annum and the plaintiff (following agreement on the 70% formula) should receive 70% of this amount in satisfaction of his prejudgment interest. From judgment till realization interest will run on $1,600 at 8% per annum; (4) $1,800 fixed by the court as costs in the exercise of its discretion to be paid by the defendant to the plaintiff.

Balasubramaniam v Venkitasan [1986] 2 MLJ 55 High Court, Johore Bahru (Shankar J).

By a sale and purchase agreement dated 17 February 1981, the respondents agreed to sell to the applicants certain office premises known as Lot 1205 (renumbered as 13Ð05) in a multi-storey shopping and residential building known as 'Orchard Tower' in Singapore. The sale and purchase was not completed by the date required because the applicants ('the purchasers') requested for an acknowledgement for production of prior title deeds which the respondents ('the vendors') were not in position to deliver at that time and there was a dispute between them relating to the claim of a sum of $376,874.63 by the purchasers as liquidated damages under cl 14(2) of the agreement, which reads as follows: '14(2). The said notice to complete shall be given by the vendor on or before 31 December 1981. If the vendor shall fail to give the said notice to complete on the date fixed for completion the vendor shall pay to the purchaser liquidated damages calculated from day to day commencing from the date when such notice to complete should have been given at the rate of nine (9) per cent per annum on a sum equal to eighty-five (85) per cent of the purchase price, such interest may be deducted from any instalment due and payable to the vendor.' The parties subsequently completed the sale and purchase on 9 January 1984. The only question for decision is the liquidated damages under cl 14(2).

Held: (1) the respondents as vendors have failed to discharge the burden of showing that the delay in completing the sale of the said unit was due to causes beyond their control; (2) the purchasers were entitled to liquidated damages under cl 14(2) from 31 December 1981 to 16 June 1983, amounting to $376,874.12; (3) there would be an order that this amount together with interest held by the solicitors for the vendor be paid to the applicants; (4) the respondents are to pay the costs of these proceedings.

Orchard Twelve Investments Pte Ltd v Golden Bay Realty Pte Ltd [1985] SLR 272 High Court, Singapore (Thean J).

[Annotation: Affirmed on appeal. See [1989] SLR 42; [1989] 2 MLJ 70.]

Both the appellant and respondent in this case are medical practitioners. The appellant entered into an agreement in writing ('the agreement') with the respondent whereby the respondent sold his clinic to the appellant for a total purchase price of RM120,000. Pursuant to the agreement, the appellant paid to the respondent RM12,000 on signing the agreement, and thereafter paid a further sum of RM48,000. The balance of RM60,000 was to be paid by 15 monthly instalments of RM4,000 each. However, at the stage when the appellant had paid up to a total sum of RM96,000 towards the total purchase price, he refused to go on paying the remaining six monthly instalments. The respondent sought to forfeit the RM96,000 by relying on a clause in the agreement which in effect, provided that if the appellant defaulted, all moneys paid to date of such breach would be forfeited absolutely to the respondent as agreed liquidated damages, and the agreement would be terminated. The respondent successfully obtained a declaration from the High Court that the clause was valid and enforceable. The appellant appealed.

Held, allowing the appeal in part by ordering the respondent to refund the sum of RM84,000 to the appellant: (1) in Malaysia, there is no distinction between liquidated damages and penalties as understood under English law, in view of s 75 of the Contracts Act 1950 which provides that in every case the court must determine what is the reasonable compensation, 'whether or not actual damage or loss is proved to have been caused thereby' ('the words in question'); (2) [1843Ð60] All ER Rep 461. Any failure to prove such damages will result in the refusal of the court to award such damages; (3) however, for cases where the court finds it difficult to assess damages for the actual damage as there is no known measure of damages employable, and yet the evidence clearly shows some real loss inherently which is not too remote, the words in question will apply. The court ought to award substantial damages as opposed to nominal damages which are reasonable and fair according to the court's good sense and fair play. In any event, the damages awarded must not exceed the sum so named in the contractual provision; (4) the instant case falls into the category of cases where damages could be proved by settled rules. The respondent could have proved the actual loss of, for example, use of the medical equipment in the clinic, but failed to do so. Therefore, the court could not quantify any award of damages to him; (5) however, the words in question must be given a restricted construction. Hence, despite the words in question, a plaintiff who is claiming for actual damages in an action for breach of contract must still prove the actual damages or the reasonable compensation in accordance with the settled principles in Hadley v Baxendale (1854) 9 Exch 341;in any event, apart from the real loss that had not been proved, the respondent was entitled to forfeit a reasonable amount of the deposit. The sum of RM12,000 was not too large to prevent it from being fully forfeitable. Accordingly, the respondent had to refund the sum of RM96,000 less the deposit to the appellant.

Selva Kumar a/l Murugiah Áv Thiagarajah a/l Retnasamy [1995] 1 MLJ 817 Mohamed Azmi, Peh Swee Chin and Wan Adnan FCJJ)

A sold a unit ('the unit') in a new building they had developed to R. R took possession of the unit. The agreement for the sale and purchase of the unit ('the agreement') required A to give R notice to complete the sale by 31 December 1981 and required actual completion to take place 14 days after the notice. Clause 14 of the agreement provided for liquidated damages payable for late notice by A. A failed to complete on time and R claimed liquidated damages. A contended, inter alia, that the liquidated damages clause was a penalty and therefore unenforceable. A also claimed that since R were let into possession and were enjoying the benefits of the unit before completion, no liquidated damages should be payable by A. The trial judge found for R. A appealed against this judgment.

Held, dismissing the appeal: (1) the agreement was in the standard form prescribed by the Sale of Commercial Properties Rules 1979 (as amended in 1980) ('the Rules'). These Rules were made by the Minister pursuant to the powers conferred on him by the Sale of Commercial Properties Act 1979 ('the Act'). The liquidated damages rate specified in the agreement of 9% pa over 85% of the purchase price could not be said to be an extravagant or unconscionable amount; (2) a purchaser of property purchases not just the physical possession of it but the legal title as well. Where the vendor of the property does not complete, the loss suffered by the purchaser may be difficult to quantify as it may vary. The liquidated damages clause was therefore not a penalty clause; (3) the fact that R had been enjoying possession of the unit did not in any way affect the obligation of A to pay liquidated damages; (4) the agreement followed the statutory form. The principles of liquidated damages have no application to a case where the parties are required by law to enter into a contract in the form prescribed. Unless it could be shown that the Rules are ultra vires the Act, they should be given effect to as the Act itself.

Golden Bay Realty Pte Ltd v Orchard Twelve Investments Pte Ltd [1989] SLR 42 Court of Appeal, Singapore (Sinnathuray and Chua JJ, Chao Hick Tin JC).

[Annotation: Affirmed on appeal. See [1991] SLR 18; [1991] 3 MLJ 65.]

X had, pursuant to an agreement entered into with D, paid a sum of M$72,000 to D as deposit and/or part payment towards the purchase price of two sub-lots of land. Under the agreement, D undertook to complete the construction of the roads and to obtain the document of titles in respect of the two sub-lots within the time period stipulated. The agreement provided for a refund of the M$72,000 and payment of liquidated damages in the event D failed to keep her side of the bargain. By a deed of assignment, X assigned to P all his rights, share, interest and liabilities in the written agreement made between himself and D. Upon D failing to keep her side of the bargain, P instituted the present suit claiming the refund of the M$72,000 paid to D and for damages. In due course, P applied for summary judgment under O 14 or, alternatively, under O 18 r 19(1) of the Rules of the High Court 1980. D opposed the application of P, contending that there was a delay of about six months in filing the application after defence had been filed and that the O 14 application should be dismissed.

Held, allowing P's application: (1) in the instant case, the onus was on P to explain the delay in filing the O 14 application. P may explain such delay orally though ideally such an explanation should be by way of affidavit evidence so that the other party may, if he so wishes, challenge the facts relied on by the plaintiff as being incorrect or unreasonable. In the instant case, P had satisfactorily explained the delay in filing the O 14 application and had, accordingly, discharged the onus placed on him; (2) in regard to the delay in filing the application to strike out the defence, the court noted that the action in the instant case had not been set down for trial as yet. As such, P should not be precluded from proceeding with the application. D's preliminary objection was, accordingly, dismissed by the court; (3) in the instant case, P was entitled to a refund of the M$72,000. The agreement had become void and it would be a case of unjust enrichment at the expense of P if D did not refund the M$72,000 to P from whom he received it; (4) the distinction between liquidated damages and penalty had ceased to be of great legal importance as the result in either case is that the court must determine whether the compensation claimed is reasonable. In the instant case, the sum of M$1,000 per month for six months agreed by the parties as liquidated damages was considered by the court to be reasonable compensation having regard to the circumstances of the case; (5) on the pleadings and the affidavit evidence, the court considered the instant case to be an obvious and clear case whereby the defence was scandalous, frivolous or vexatious and an abuse of the process of the court.

Hsu Seng v Chai Soi Fua [1990] 1 MLJ 300 High Court, Kuching (Haider J).

The defendants were the main contractors in the construction of a block of apartments called Fontana Heights. The plaintiffs were the nominated sub-contractors for the supply and installation of the entire air-conditioning system and equipment to the building. Under both the main and sub-contracts, the date of completion was 19 January 1984. The completion of the building was delayed and the date of practical completion was 29 May 1985. As a result of the delay, liquidated damages in the sum of S$540,000 were imposed and the amount deducted from the sums payable to the defendants under the main contract. The defendants alleged that the plaintiffs had contributed to the delay and withheld payment of a sum of S$126,693.14. The plaintiffs sued for this amount. The defendants counterclaimed for damages for breach of contract, namely, that (a) the plaintiffs had failed or refused to make good various defects in the works carried out and the materials supplied by them, and (b) there had been delay by the plaintiffs in completing their works and they thereby contributed to the delay in completing the building.

Held, allowing the plaintiffs' claim: (1) on the evidence there was no dispute that the amount of S$126,693.14 was due to the plaintiffs. The total amount had been certified by the mechanical and electrical engineering company in charge of the works; (2) there was ample evidence that the works carried out by the plaintiffs were unsatisfactory and had delayed the completion of the project; (3) there was clear evidence of outstanding defects as at the date of expiry of the defects liability period. The total amount incurred to make good the defects was S$142,414.20. No evidence was adduced to show how the amount could and should be properly apportioned in respect of the defects for which the plaintiffs were liable and the basis of such apportionment. On the evidence it was not possible for the court to assess and determine the actual costs or to make a proper estimate thereof for making good these defects. This was not a case where there was a technical liability and no loss. In the present case the problem was one of proof, one not of absence of loss but of absence of evidence of the amount of loss. The defendants were therefore only entitled to nominal damages of S$200 on their counterclaim; (4) there would be no interest on the damages awarded to the plaintiffs. The defendants had good grounds for withholding the sum or a substantial part of it. They had a good and substantive counterclaim against the plaintiffs. Unfortunately they had not adduced cogent evidence on the proper quantification of the amounts; (5) no order of costs was made on the counterclaim. It was not a case where the defendant had suffered no loss or damage and nominal damages were awarded on that basis. The plaintiffs were also extremely combative and disputed every point relating to the defects for which they were clearly liable. The stand they took was quite unreasonable, and this ought to be taken into account on the question of costs; (6) no order of costs were also made in respect of several items of getting up by the plaintiffs' counsel. This was a very simple claim which the defendants did not dispute and costs for only one day of hearing was allowed. The bundle of affidavits was totally irrelevant and their contents inadmissible. This was a blatant case of a party not giving sufficient care and attention to the preparation and compilation of relevant documents for trial. What the plaintiffs had done was to gather indiscriminately all documents which had some connection with the case and compiled them into bundles. There was no reason why the defendants should bear any part of these costs.

L & M Airconditioning & Refrigeration (Pte) Ltd v SA Shee & Co (Pte) Ltd [1993] 3 SLR 482 High Court, Singapore (LP Thean J).

In an action to recover a penalty on an agreement, for a breach of it, the plaintiff is entitled to recover the damages actually sustained, if the amount sued for is of the nature of a penalty and not of liquidated damages. The damages in such case will not exceed the penalty named in the agreement.

Oh Wee Kee v Kuppen Tamby [1861] SLR Leic 164 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Sir PB Maxwell R).

The respondents in this case entered into a contract to purchase a house. The contract provided that it should be completed before 30 June 1973. The contract also provided that if the appellants failed to complete they would pay the respondents liquidated damages from the appointed date to the date when notice to complete was actually given. The house was finally completed in November 1974. On 28 November 1974 the building authority issued a temporary occupation licence for the house to be occupied by the purchasers/respondents. The respondents refused to occupy the house until 17 April 1975. They claimed liquidated damages. The appellants admitted liability for damages up to the date of issuance of the TOL. The issue in the High Court was whether they were liable to liquidated damages for the period 28 November 1974 to 8 December 1975 when the appellants gave to the respondents the requisite notice to complete. The High Court dismissed the claim ([1976] 2 MLJ 47) but on appeal the Court of Appeal allowed the claim ([1979] 1 MLJ 156). The appellants appealed. It was argued on the appeal that (a) on the true construction of the sale agreement the provision for the payment of liquidated damages in the event of delay in serving notice to complete only applied so long as there was delay, not merely in serving that notice, but also in offering vacant possession, so that it was argued liquidated damages ceased to accrue at the rate of 9% per annum on the purchase price after the offer of vacant possession had been made although the notice to complete was still outstanding, (b) if on the true construction of the agreement the liability to pay at the rate of 9% on the purchase price continued to accrue notwithstanding that possession was offered, such compensation was not a genuine pre-estimate of the damage likely to be caused by delay in completion, but was penal in nature and void, (c) on the true construction of the sale agreement the assumption by the purchasers of possession caused liquidated damages to cease to accrue on the date the respondents went into possession.

Held: (1) the wording of cl 11 in the sale agreement is plain. Damages are to be 'calculated from day to day in respect of the period commencing from the appointed day up to the date when the said notice to complete shall have actually been given'. Nothing could be clearer and the vendor could not curtail the right of the purchasers to liquidated damages by making an offer of possession which the purchasers were not bound to accept; (2) the sale agreement in this case followed the statutory form. In any event the agreement for liquidated damages was not directed to different categories of breach of contract but to a single sort of breach, namely a delay in serving notice to complete. The offer in the present case of vacant possession before completion was never a part of the sale agreement, but was an event altogether outside the contract. It cannot therefore be taken into account in assessing the validity of the agreement for compensation for delay in serving a notice to complete; (3) the sale agreement did not contain either expressly or by necessary implication any term that the liquidated damages would cease to accrue once the purchaser entered into possession and in any case the argument was not advanced in the courts below.

Phoenix Heights Estate (Pte) Ltd v Lee Kay Guan & Anor 1982 Privy Council Appeal from Singapore (Lord Russell of Killowen, Lord Scarman, Lord Roskill, Lord Brightman and Sir Sebag Shaw).

The plaintiffs were purchasers and the defendants were the vendors of a property which was sold for S$1,000,000. The agreement for sale and purchase of the property was modelled on the form prescribed by rules made under the Housing Developers (Control and Licensing) Act. Under cl 3(1)(h) of the agreement, the defendants were required to serve a notice to take possession on the plaintiffs by 30 September 1993, failing which they were required to pay liquidated damages to the plaintiffs. Upon service of the notice, the plaintiffs were to pay the stipulated instalment of S$200,000 to the defendants within 14 days of receipt of the notice failing which late payment interest was payable to the defendants. The defendants served the notice on 10 December 1993, after the 30 September deadline. The plaintiffs however, did not make payment of the S$200,000 on time. They paid S$100,000 on 8 January 1994 and the final S$100,000 on 12 January 1994. The plaintiffs admitted that they were late in making these payments and as such were liable to pay interest to the defendants under the agreement which they calculated at S$931.50. However, they alleged that the defendants, in giving notice to take possession late, owed them liquidated damages of S$21,095.89. They therefore required that at completion of the purchase, the defendants should pay them the difference of S$20,164.39, after setting off the late payment interest owed to the defendants. The defendants did not agree as to the computation of the liquidated damages or the offsetting of that against the late payment interest. They insisted that the late payment interest should be set off against the 8% which the plaintiffs had to pay their solicitors as stakeholders at completion. After some correspondence, they informed the plaintiffs that they regarded the agreement as having been repudiated by the plaintiffs as they had defaulted in payment of the late payment interest.

Held, allowing the plaintiffs' claim for specific performance: (1) in the absence of express provision in the contract as to when liquidated damages were payable, it must be implied they were payable as soon as the amount was ascertainable. This would be when notice to take possession was given since the length of delay in the giving of notice would then have become known; (2) the plaintiffs had the right at any time after receipt of the notice to take possession to be paid the liquidated damages due or to require that they be set off against any sum then due to the defendants; (3) the defendants were in the wrong in refusing to allow the liquidated damages to be set off against the late instalment payment interest and in insisting on setting them off against the 8% payable at completion; they were not entitled to treat the plaintiffs as in repudiatory breach by reason of the plaintiffs' refusal to pay the whole of the late payment interest demanded.

Lam Seng Tiong & Anor v Pacific Rim Investments Pte Ltd [1995] 2 SLR 194 High Court, Singapore (Warren LH Khoo J).

The defendants failed to give notice of completion on 31 December 1976 which was the date appointed by the Controller of Housing on or before which the notice to complete should be given by the vendor under cl 12 of the sale agreements. The defendants gave notice to complete the sale and purchase on 11 March 1981. Pursuant to the said clause the plaintiffs claimed against the defendants the sum of $130,351.50 as liquidated damages. The defendants contended that the plaintiffs had expressly waived their right to liquidated damages in writing and by taking possession of the properties.

Held, allowing the plaintiffs' claim: there is no defence or no fairly arguable point to argue on behalf of the defendants.

Jusuf Kaliman & Anor v Outram Realty (Pte) Ltd 1984 High Court, Singapore (Wee Chong Jin CJ).

[Annotation: The defendants appealed against this judgment and were given leave to defend Ð Civil Appeal No 8 of 1984. No grounds of decision were given.]

Chuan Hup Marine Ltd v Sembawang Engineering Pte Ltd [1995] 2 SLR 629 High Court, Singapore (GP Selvam J).

See CONTRACT, Vol 3, para 2028.

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

See CONTRACT, Vol 3, para 1642.

The plaintiff claimed for a declaration that the defendant had wrongfully repudiated an agreement for sale of the land at lot 235-2 mk 17 by the defendant to the plaintiff. The plaintiff also claimed for the return of the deposit paid. The defendant counterclaimed a declaration that the deposit had been forfeited to him, damages and other reliefs. The defendant agreed to buy the property from Realworth Development Pte Ltd (Realworth) for S$11m and agreed to sell it to the plaintiff for S$11.6m. He received a deposit of S$1,160,000 (including S$116,000 paid for the option) from the plaintiff. He then paid Realworth a deposit of S$1,100,000 (including S$110,000 paid for the option) which Realworth forfeited, so that the defendant stood to gain S$60,000 if he in turn forfeited the deposit paid by the plaintiff. If the agreement for sale to the plaintiff had been completed, the defendant would have made a profit of S$600,000. He, therefore, claimed the loss of S$540,000. The agreement for sale was subject to The Singapore Law Society's Conditions of Sale 1981, condition 29(4)(b) of which provided that the vendor was entitled to forfeit and retain for his own benefit the deposit paid by the purchaser without prejudice to any other rights or remedies available to him at law or in equity if the purchaser failed to comply with the terms of an effective notice served by the vendor under the condition. The plaintiffs argued that the defendant had elected to forfeit the deposit and was, therefore, not entitled to any other sum by way of damages notwithstanding condition 29(4)(b) of the conditions of sale. The defendant, however, argued that the plaintiff knew of the expected profit to be made if the contract were completed since this was a back to back transaction. Therefore, the proper measure of damages should be the loss of profit.

Held, dismissing the plaintiff's claim and allowing the defendant's counterclaim: (1) a vendor could choose between various rights and remedies when a purchaser failed to comply with the terms of an effective notice served by the vendor under condition 29 of the conditions of sale. If he elected to exercise his rights under condition 29(4)(b), he would not be entitled to recover any loss of profit or any other loss or expense by way of damages other than that provided for in condition 29(4). The opening words in condition 29(4)(b) did not give to the vendor any right to damages for the same breach of contract. If the defendant had forfeited the deposit in exercise of his right under condition 29(4)(b) then he would not be entitled to claim loss of profit as well; (2) in this case, however, there was no evidence that the deposit was forfeited. The defendant's solicitors had merely claimed that the defendant was entitled to and would forfeit and retain for his own benefit the 10% deposit paid by the plaintiff. In the circumstances, the defendant had not elected to forfeit the deposit and was entitled to recover damages; (3) the parties must have contemplated that completion of both agreements would take place simultaneously and that the defendant's completion money would be provided by the plaintiff. The damages should be 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. As a result, the proper measure of damages was the loss of profit, which would be S$540,000 less the amount of legal fees payable by the defendant for the purchase of the property and subsequent transfer to the plaintiff.

Lee Hin Realty Pte Ltd v Lee Tah Wee David [1996] 2 SLR 172 High Court, Singapore (Lim Teong Qwee JC).

The PWD awarded a government project contract ('the PWD contract') for construction works to the defendants. The plaintiffs by an agreement evidenced by two letters undertook to supply the granite tiles to the defendants, which the defendants used for the purpose of the PWD contract. The plaintiffs admittedly failed to adhere strictly to the delivery schedule. The plaintiffs issued a writ claiming the amounts due on the tiles that the defendants failed to pay. The plaintiffs also claimed summary judgment and were awarded this but the defendants were given leave to defend for part of the sum claimed. The defendants filed a defence and a counterclaim. The plaintiffs appealed to the High Court from the judgment giving the defendants leave to defend. At the appeal, inter alia, the defendants claimed that the PWD imposed on them liquidated damages for the late performance of the PWD contract.

Held, allowing the appeal: (1) in the present day context, it is in summary judgment applications that the defendant raises the set-off defence. In order to take a robust approach, it is the duty of the court to closely examine points of set-off raised by a defendant and to ensure that the true purpose is not to cause delay to the plaintiff; (2) where a defendant objects to an application for summary judgment based on a cross-claim, the plaintiff's claim and the defendant's cross-claim must be taken separately. If there is no defence to a claim other than a plausible counterclaim then judgment must be entered on the claim and the cross-claim should proceed to trial with a stay of execution so that the defendant is not unjustly injured; (3) here the court perceived a distinct opposition in the defendants to distort facts to obtain leave to defend. This provided a sufficient reason to proceed with great circumspection; (4) in any event all the evidence pointed towards the PWD not making a claim based on delay or delivery of wrong quality of tiles; (5) the alleged expenses incurred as a result of the delay in the delivery of the tiles were grossly exaggerated and founded on self-serving and spurious evidence; (6) there can be no claim for general damages for loss of reputation arising out of a breach of contract; (7) the defendants' attempt to present a new case by adducing fresh evidence during the hearing of further arguments was an abuse of the process of court.

Hua Khian Ceramics Tiles Supplies Pte Ltd v Torie Construction Pte Ltd [1992] 1 SLR 884 High Court, Singapore (GP Selvam JC).

P entered into an equipment lease agreement with D by which certain items of equipment were leased to P. P defaulted in payment and D took possession of the equipment under the lease without giving any prior notice to P. D's right to do so was provided for in the agreement. P applied for an injunction to restrain D from repossessing the equipment. P also prayed for a declaration that the provision authorizing D to take possession of the equipment without prior notice was unenforceable on the ground that it was harsh and unconscionable and for which a court of equity will grant relief. D counterclaimed for the sum of M$185,013.90, being the 'agreed loss value' as provided for in the agreement together with interest on the amount till date of realization.

Held, dismissing P's application: (1) save for the general provisions of the Contracts Act 1950, there is no legislation controlling what may and may not be put in as contractual terms in leasing agreements of chattels. There is no legislative bar to an agreement providing for the lessor to have the right forthwith without giving any prior notice to take possession of the chattels under the agreement in the event the lessee fails to pay the rent; (2) in the instant case, equity would not prohibit what the parties had willingly agreed to abide by, the terms of which do not contravene any legislation or public policy. There was, accordingly, no merit in P's claim for the declaration that the provision in question was unenforceable; (3) in regard to the counterclaim, D must prove the damages they had suffered. Under s 75 of the Contracts Act 1950, there is no difference between liquidated damages and penalty. In the instant case, the amount of M$185,013.90 claimed by D was reasonable and was allowed by the court, having regard to the economic loss of all the equipment plus the loss of rentals and profits on the lease. However, the claim for interest was disallowed as no evidence was adduced by D to show that additional damages were suffered.

Wee Wood Industries Sdn Bhd v Guannex Leasing Sdn Bhd Civil Suit No 427/85 High Court, Alor Setar (KC Vohrah 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).

Eikobina (M) Sdn Bhd v Mensa Mercantile (Far East) Pte Ltd [1994] 1 MLJ 553 Supreme Court, Malaysia (Harun Hashim, Peh Swee Chin and Wan Yahya SCJJ).

See CONTRACT, Vol 3, para 2030.

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, Vol 3, para 1668.

The respondent ('the plaintiff') and the appellant ('the second defendant'), as agent for the first defendant, entered into a written agreement ('the agreement') whereby the plaintiff was to supply to the first defendant two million rubber gloves per month from November 1988 to October 1989 for a total price of US$1,848,000. In breach of the agreement, the first defendant failed to issue an irrevocable letter of credit in favour of the plaintiff 30 days before the date of the first shipment of the goods. The plaintiff brought an action against both defendants, claiming damages of RM6,155,159 for loss of profits, interest, marketing costs and losses incurred. The registrar granted summary judgment on the issue of liability only against the second defendant and this was affirmed by the Supreme Court. In assessing damages, the High Court awarded the plaintiff, inter alia: (i) RM3,102,926.95 for loss of profits based on the proposition that as there was no available market for the gloves, the measure of damages was the difference between the contract price and the price at which the gloves were eventually sold, and not the difference between the contract price and manufacture cost since the plaintiff was only obliged to supply the gloves and not manufacture them; and (ii) RM108,434 for costs incurred in marketing the goods which should have been supplied under the agreement. The second defendant appealed.

Held, allowing the appeal: (1) generally, the value of the goods should be determined at the time of breach but if there is no available market, the value is likely to be based upon the price at which the goods are eventually sold. However, the judge was wrong in determining the value of the gloves at the price at which they were eventually sold as there was no evidence that the gloves were unsaleable at any realistic price at the time of the breach or immediately thereafter; (2) in assessing the plaintiff's loss of profits, the judge had erred in holding that it was entitled to purchase the gloves instead of manufacture them since, upon construction of the agreement, the plaintiff was obliged to manufacture the gloves itself. This was important since the evidence showed that the manufacture costs would have exceeded the purchase costs; (3) the plaintiff was under a duty to take reasonable steps to mitigate its loss immediately upon the breach, ie buy or sell in the market, if there was an available market or, if there was none, act reasonably to mitigate its loss. The question of what is reasonable in every case is a question of fact and not law. From the evidence, the plaintiff had continued to manufacture the gloves even after the breach although it would have been reasonable for it to stop further production in view of the declining market; (4) in the circumstances, the proper measure of damages was the difference between the contract price and production costs. This should be calculated on the assumption that the plaintiff had stopped production at the date of the breach, ie by taking the contract sales value and deducting the forecasted production costs, giving a net forecasted profit of RM717,770. The plaintiff was also entitled to RM210,512 as the costs of stopping production and RM54,617 to restart production, being the consequential loss arising from the stoppage and restarting of production. As these were only forecasted figures provided by the second defendant, the total sum of RM1.2m was felt to be a fair and reasonable amount for loss of profits; (5) the sum of RM108,434.23 for marketing costs was reduced to RM29,063.47 as the plaintiff had failed to show that the amount of RM79,370.76 had been incurred as a result of the first defendant's breach. Interest of 8%pa was awarded on both sums from the date of writ to date of satisfaction; (6) (obiter) the normal measure of damages for breach of contract is prescribed by s 74(1) of the Contracts Act 1950, which is the statutory enunciation of Hadley v Baxendale (1854) 9 Ex 341. The courts have treated the position under the second limb of s 74(1), that is loss or damage which the parties knew, when they made the contract, to be likely to result from the breach of it, to be similar to the second limb of Hadley v Baxendale, ie the party may recover damages which may reasonably be supposed to have been in contemplation of both the parties, at the time they made the contract.

Malaysian Rubber Development Corp Bhd v Glove Seal Sdn Bhd [1994] 3 MLJ 569 Supreme Court, Ipoh (Abdul Hamid Omar LP, Edgar Joseph Jr and Mohamed Dzaiddin SCJJ).

See contract law, para VII [44].

Thiam Joo Pte Ltd v Lucky-Goldstar Trading (Singapore) Pte Ltd [1997] 2 SLR 269 High Court, Singapore (Christopher Lau JC).

In June 1984, the plaintiff entered into a contract to sell a property to the defendant at the price of $850,000. The sale was subject to (a) the purchaser's solicitors receiving satisfactory replies to their legal requisitions to the government departments, and (b) the Law Society's Conditions of Sale 1981. Completion of the sale was to take place on 10 October 1984. However on 20 August 1984, the defendant's solicitors wrote to the plaintiff's solicitors about certain aspects of the replies to their legal requisitions which were unsatisfactory. This concerned a retaining wall at the rear of the property. Then followed prolonged negotiations. Finally on 6 February 1985, the plaintiff's solicitors issued a notice requiring the defendant to complete within 21 days of the notice. The defendant failed to complete whereupon the plaintiff resold the property after expiry of the notice to another purchaser for $550,000. On 11 March 1986, the plaintiff commenced an action for the difference in purchase price, agent's commission and solicitors' costs. Judgment was given for the plaintiff for damages to be assessed and costs. The defendant appealed.

Held, dismissing the appeal: (1) the evidence showed a legal requisition which, even if it had been unsatisfactory, had been rendered satisfactory on 30 January 1985, by the competent authority. Consequently the court was satisfied that the legal requisition was satisfactory; (2) a vendor's obligation in a situation like this when he desires to resell the property is to do so within a reasonable time. What is reasonable time depends on the circumstances of each case which will include the state of the property market then prevailing for that type of property. The vendor has a duty to mitigate damages but he has no obligation to nurse the property for the benefit of the defaulting purchaser; (3) damages to be assessed by the registrar.

Wee Ming Choo v Wong Yip Chong [1987] SLR 258 High Court, Singapore (Chan Sek Keong JC).

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

See CONTRACT, Vol 3, para 1679.

Tay Joo Sing v Ku Yu Sang [1994] 3 SLR 719 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, Vol 3, para 2654.

The plaintiffs carry on the business of interior decoration and furniture manufacturing. They are claiming damages in the sum of $61,650, interest and costs against the defendant for breach of an oral agreement entered into on 9 July 1980 to decorate and furnish the defendant's flat (hereinafter known as 'the flat'). The defendant denies that there is any concluded contract and also disputes the quantum of damages.

Held: (1) on the evidence, the learned judge found that the parties had orally concluded a contract in the course of their meeting on 9 July 1980; (2) the plaintiffs have incurred the items of damages claimed, they had given ample notice to the defendant and the sale of the manufactured items was at the best available price in all the circumstances of the case. Accordingly, there will be judgment for the plaintiffs in the sum of $61,650 and interest thereon at the rate of 12% pa calculated from 1 December 1980 on which date the plaintiffs ought to have received their payment.

System Furniture Co Pte Ltd v Anthony G Wibisono 1984 High Court, Singapore (Lai Kew Chai J).

This case only concerned the counterclaim which was ordered to be retried by the Federal Court on 7 August 1967 (see [1968] 1 MLJ 24). On the retrial, the court merely had to decide on the quantum of damages under the first two items of the counterclaim (the other two items having been abandoned).

Held: (1) as to the first item of the counterclaim (namely the difference between the contract price and the lowest possible market price for 281,004 bricks of No 3 commercial quality) the defendants were not entitled to any damages as the offer made by the plaintiffs on 8 January 1965 was a reasonable one and the defendants should have mitigated their loss by accepting the plaintiffs' offer and no loss would have been suffered by the defendants if they had accepted it; (2) the second item of the counterclaim for $11,868 (being wages paid to 18 workers for 69 days at $172 per day) could have been avoided as it was the practice in the building trade for bricklayers and carriers to be sent away without pay if there was no work for them to do because of a lack of bricks; (3) the defendants were, however, entitled to recover nominal damages for breach of contract. The sum of $10 was awarded as nominal damages; (4) as the plaintiffs by their breach of contract caused the defendants considerable inconvenience and unreasonably delayed the construction of the block of flats, they should pay the defendants the costs of the retrial and the original trial of the counterclaim to be taxed on the lower scale.

Hong Leong Co Ltd v Pearlson Enterprises Ltd (No 2) 1965 High Court, Singapore (Ambrose J).

Tatung Electronics (S) Pte Ltd v Binatone International Ltd [1991] SLR 204 Court of Appeal, Singapore (Yong Pung How CJ, Chua and Karthigesu JJ).

See CONTRACT, Vol 3, para 3050.

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.

This was an appeal against the decision of the trial judge giving judgment against the appellant in the sum of $31,440 with interest and dismissing the appellant's counterclaim. The facts of the case were that, the appellant was at the material time the boyfriend of the respondent. Although the appellant did not have a driving licence at the material time, he had acquired an interest in a Mitsubishi car ('the Mitsubishi') which was hired in the name of a third party under a hire-purchase agreement. The appellant intended to acquire a Toyota MR2 sports car ('the Toyota') but he was unable to do so in his own name without a driving licence. In order to overcome such difficulty, it was intended that the Toyota would be registered in the name of the respondent until such time as the appellant was granted a driving licence when he would be substituted in place of the respondent as the registered owner of the Toyota. The appellant was to pay the monthly instalments of the Toyota but there was a dispute as to the provenance of the deposit for the Toyota of $8,500. The respondent's case was that the entire deposit was to be paid by the appellant. It was alleged by the appellant that $1,000 would be paid by him in cash and that the balance of $7,500 was to be paid by the respondent for the transfer to her of the appellant's interest and obligations under the hire-purchase agreement relating to the Mitsubishi. The respondent denied having agreed to take over the Mitsubishi, but stated that she found one Miss Kasmah to buy the Mitsubishi and that Miss Kasmah delivered a cheque for $7,000 which was handed to the vendor company supplying the Toyota ('the vendor'). The said cheque for $7,000 was dishonoured. As only $1,000 had been paid towards the deposit, the vendor sued the respondent for the balance and judgment therefore was entered against her. The appellant did not pay the instalments on the Toyota and the respondent paid such instalments until June 1991 when she invited the finance company to repossess the Toyota. The respondent also paid one of the instalments on the Mitsubishi but the appellant paid the rest of the instalments. The respondent sued the appellant for damages for breach of contract.

Held, dismissing the appeal: (1) if, as the trial judge found, the payment for the transfer of the appellant's interest in the Mitsubishi would be used to enable the appellant to pay the deposit on the Toyota, the Toyota agreement must be conditional upon the Mitsubishi agreement, whether that agreement was for a transfer to the respondent herself or for her to find a buyer. The fact that the appellant could himself have found a buyer for the Mitsubishi was no reason for rejecting the respondent's evidence that he asked her to find a buyer. There was ample evidence upon which the trial judge could properly find for the respondent on the issue of liability; (2) the respondent did not repudiate the hire-purchase agreement in respect of the Toyota as soon as she knew that the appellant was unwilling to pay the deposit to the vendor. However, the respondent was a trustee of the Toyota on behalf of the appellant and she would have required express instructions from him to dispose of the rights under the hire-purchase agreement relating to the Toyota but such instructions were never given. It was also material that her decision to retain the Toyota was made upon legal advice. In the circumstances the respondent was not shown to have failed to take any reasonable steps to mitigate her losses; (3) as regards the sum of $7,800 paid by the respondent under the judgment against her in favour of the vendor of the Toyota, the respondent has sued not only the appellant but also two other defendants for the same amount and had already obtained default judgments against those defendants. It was not suggested that those default judgments have been satisfied and the court found no valid ground for refusing a like judgment against the appellant; (4) (per curiam) the court rejected the argument on behalf of the respondent that there was no duty to mitigate because the claim was not for general damages but for a series of lump sums, on the ground that the claim was for damages for breach of contract and it matters not that under some of the heads of the damage specific sums were claimed.

Romzi bin Abdullah v Salwah bte Haji Saim [1993] 2 MLJ 564 Court of Appeal, Bandar Seri Begawan (Fuad P, Huggins and Derek Cons CC).

In February 1993, the first respondents offered to sell to the appellants steel bars of the quality ST 25. Based on this offer, the appellants entered into a contract with one Success Honour Development Ltd to sell to them 10,000 metric tons of ST 25 steel bars with a 10% tolerance, comprising of 2,000 metric tons each of the specifications 12, 16, 18, 20 and 22mm in diameter at the c i f price of US$306 per metric ton, delivery in one lot at Zhanjiang, China, latest by 31 March 1993 but later extended to 10 April 1993. Subsequently, at the request of the first respondents, the appellants agreed to accept steel bars of quality ST 18 instead of ST 25 and their agreement with Success Honour was amended to reflect this change. The appellants then concluded a contract with the first respondents for the purchase of the said steel bars to be delivered in one lot at the c & f price of US$295 per metric ton. Meanwhile, the first respondents entered into an agreement with the second respondents to supply the said goods to perform their contract with the appellants. However the second respondents could not supply the said steel bars and proposed an alternative shipment of 10,000 metric tons of steel bars of ST 25 and in the alternate quantities of 2,500 metric tons each of the specifications of 12, 14, 16 and 18 mm to be shipped between 1 and 10 May 1993. The appellants agreed to accept the late shipment provided, inter alia, the specifications of the deformed steel bars remained unchanged. The first respondents failed to reply to this request and the appellants thus terminated the contract with them. In awarding damages to the appellant the trial judge took into account, inter alia, the following matters. The trial judge held that the appellants ought to have mitigated their loss by two-thirds by accepting the first respondent's offer to supply 2,000 metric tons each of the alternative steel bars of ST 25 of the specifications of 12, 16 and 18 mm. Secondly the costs of insurance would have been borne by the appellants which would have to be deducted from the award of damages, and based on the figure produced by the second respondents, this amounted to US$9,000. Although the appellants were potentially liable to Success Honour for damages as a result of the first respondents' breach, the trial judge refused to allow this head of damages against the first respondents to be reserved for further assessment if and when the appellants met Success Honour's claim. Finally, the appellants were ordered to pay the second respondents' costs in the hearing before the judge. Against these issues the appellant appealed.

Held, allowing the appeal in part: (1) there was no reason for the appellants to mitigate their damages by two-thirds in the manner suggested by the trial judge. The first respondents had not made a firm offer of the alternative steel bars. Moreover, the alternative steel bars were of a different contractual specification in that they were ST 25 instead of ST 18, and the quantities as well as the dimensions specified were not identical; (2) there was no direct evidence adduced by either parties as to the cost of insurance. The trial judge, however, accepted the second respondents' insurance quotation as the appellants did not produce any quotations. As such they were now not entitled to complain; (3) there was no reason why the appellants should be penalized for commencing their action early against the first respondents by being precluded from obtaining a remedy from them if Success Honour should subsequently obtain judgment against the appellants, as the appellants' potential liability towards Success Honour arose directly from the first respondents' breach. This head of damages against the first respondents was accordingly reserved for further assessment if and when the appellants met Success Honour's claim .

China Resources Purchasing Co Ltd v Yue Xiu Enterprises (S) Pte Ltd & Anor [1996] 1 SLR 734 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

Sinotani Wood Pte Ltd v Rougier Sylvaco International SA [1994] 3 SLR 338 High Court, Singapore (Goh Joon Seng J).

See CONTRACT, Vol 3, para 2197.

The plaintiff's claim against the defendant was for damages suffered by the plaintiff by the failure of the defendant to observe the terms and conditions of a written contract dated 12 March 1968, entered into between the plaintiff and the defendant. The following facts were not in dispute. It was agreed between the plaintiff and the defendant that the plaintiff should sell and deliver to the defendant, and the defendant should buy and accept from the plaintiff, 50,000 metric tons of urea at US$69 per metric ton. It was a condition of the contract that payment should be made by way of letters of credit opened in favour of the plaintiff on various specified dates. The defendant failed to open the letters of credit on the due dates. The defendant admitted entering into the contract but contended that it was not entering into it as principal but as broker or agent, of which it was alleged the plaintiff knew, and that therefore the action did not lie against the defendant because it was merely acting as a broker or agent for a known principal. Counsel for the plaintiff submitted that the defendant had entered into the contract as principal and that no extrinsic evidence could be adduced by the defendant to show that it was acting as an agent. In order to fulfil the contract with the defendant, the plaintiff entered into a contract dated 10 March 1968, to purchase 50,000 metric tons of urea at US$66 per metric ton from Chimimport of Bulgaria. When the plaintiff failed to establish the necessary letter of credit, Chimimport claimed damages for non-fulfilment of the contract and finally settled for agreed damages of US$33,000, being 1% of the amount of the contract. Under the penalty clause, the plaintiff had to pay 2% of the total amount of the contract to Chimimport. The damages claimed by the plaintiff were for the sum of Singapore $549,000 based on the loss of profit (US$150,000) plus damages (US$33,000) which it had to pay to the supplier. However, the defendant contended that damages in this case were limited to the amount set out in the penalty clause. Thus one issue, inter alia, to be determined was the measure of damages to be awarded in this case.

Held: (1) the defendant appeared, on the face of the contract, to have been personally a contracting party and it must therefore be held to have entered into the contract as principal and it could not adduce evidence to show that it was acting as agent, by virtue of s 92 of the Evidence Act (Cap 5, 1970 Ed); (2) the general rule in the case of breach of contract is that the plaintiff, by way of damages, is entitled to be put in the same position he would have been in if the contract had been completed. In this case, there was no available market for the urea. Therefore, the plaintiff was entitled to the loss of profit as well as to recover from the defendant the damages which the plaintiff had to pay to Chimimport; (3) where the stipulated sum does not compensate for the actual loss suffered, the plaintiff has an election of either suing on the penalty clause in which case he cannot recover more than the stipulated sum, or he may sue for breach of contract and recover damages in full.

Bulsing Ltd v Joon Seng & Co 1969 High Court, Singapore (Chua J).

Heller Factoring Sdn Bhd (previously known as Matang Factoring Sdn Bhd) v Metalco Industries (M) Sdn Bhd [1995] 2 MLJ 153 Court of Appeal, Kuala Lumpur (Zakaria Yatim, Mahadev Shankar and Abu Mansor JJCA).

See CONTRACT, Vol 3, para 2169.

The plaintiff sued the defendant firm for damages for breach of a contract to charter their motor boat for a voyage to Burma and back. It was found on the facts that the defendant firm was liable for breach of contract. On the facts the court held it was difficult to ascertain what (if any) loss the plaintiff had suffered by reason of the breach of contract.

Held: as in this case the court was unable to assess damages on any legal basis, judgment should be given for nominal damages of $1, and each party be ordered to pay his own costs.

Tan Kup v Chop Teik Seng Leong [1949] MLJ 61 High Court, Penang (Bostock-Hill J).

The appellant and the respondent entered into a sale and purchase agreement in respect of a piece of property ('the agreement'). Two months later, the respondent suddenly terminated the agreement. The respondent agreed to pay damages to the appellant as assessed by the senior assistant registrar ('SAR'). The SAR granted the appellant nominal damages of RM15,000 on the ground that the appellant had failed to prove it had suffered any damage as a result of the respondent's termination of the agreement. The appellant appealed to the High Court against the quantum of damages as assessed by the SAR. During the hearing of the appeal, the appellant sought to adduce as evidence an affidavit which was affirmed by its valuer after the SAR's assessment had been made ('the affidavit'). The respondent objected to the affidavit being considered in the appeal.

Held, dismissing the appeal: (1) there had been no proper valuation of what the market value of the property would be at the contractual date for completion of the building on the property; (2) in view of the lapse of only two months from the date of the agreement to the date of termination of the agreement and in view of the fact that nothing had been done on the property during the two-month period, damages would only be nominal; (3) the affidavit concerned an additional valuation report which was available at the hearing before the SAR, if reasonable diligence had been used. Accordingly the affidavit should not be considered. Even if the affidavit was considered, it was of no consequence in this case.

Kim Import & Export Sdn Bhd v Perbadanan Pembangunan Bandar Civil Suit No D5Ð22Ð1160Ð90 High Court, Kuala Lumpur (Abdul Malek J).

See civil procedure, para III [31].

Banner Investments Pte Ltd v Hoe Seng Metal Fabrication & Engineers (S) Pte Ltd [1997] 1 SLR 461 High Court, Singapore (S Rajendran J).

China Resources Purchasing Co Ltd v Yue Xiu Enterprises (S) Pte Ltd & Anor [1996] 1 SLR 734 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, Vol 3, para 2019.

By an agreement dated 24 February 1979 the plaintiff agreed to sell to the defendant the premises at No 2 Kee Sun Avenue. The defendant purchased the said premises intending to demolish the old bungalow and to construct four new semi-detached bungalows on the said property. The said property was sold with vacant possession and the plaintiff was to vacate the said property as soon as the semi-detached bungalow marked Plot D in the plan had been completed. In compliance with the provision of the agreement, the defendant offered to sell Plot D to the plaintiff. The plaintiff did not accept the offer which expired on 31 December 1979. The plaintiff was required to quit and deliver up vacant possession of the bungalow by 30 June 1980, and on delivery of possession the defendant would pay the plaintiff $10,000 as agreed. On 20 December 1979 the plaintiff and his family went to India. On their return on 21 January 1980, they found the gate to the bungalow removed, the front steps demolished and the main door of the house sealed with planks. The basement of the bungalow was partly occupied by workers and construction materials. The plaintiff found the bedrooms full of dust and had to sleep in the bedroom at the rear portion. The plaintiff obtained an injunction on 11 March 1980, restraining the defendant from entering the bungalow. On 28 March 1980, the said injunction was allowed to continue until the hearing of the action.

Held: the defendant in breach of the agreement that the plaintiff was to enjoy possession of the bungalow had by himself, his servants, workmen and agents wrongfully entered and caused damage to the bungalow depriving the plaintiff of undisturbed possession of the bungalow. The plaintiff was awarded $15,000 ($2,500 pm the rent which the plaintiff would have to pay to rent another bungalow) as general damages. He was also awarded $700 ($100 ´ 7 months) for additional public utilities bill charges.

VL Ittiachen v Ho Nah Kang 1982 High Court, Singapore (Chua J).

This was an appeal from the decision of Abdul Hamid J reported at [1979] 1 MLJ 195. At the hearing of the appeal, liability was admitted and it was conceded that the appellants were not entitled to terminate the agreement and that the respondents were entitled to damages under s 74 of the Contracts Act 1950 (Act 136). The only question on the appeal and the cross-appeal was the quantum of damages. The main contention of the appellants was that the learned judge did not deal with tax and did not take this into account in awarding damages.

Held: (1) on the facts the learned trial judge was right in finding that the agreement was unlikely to be renewed. The loss of profit during the renewal period could not therefore be said to be a loss reasonably forseeable as likely to result from the breach and the learned trial judge was right to dismiss the respondents' claim for damages for anticipated loss of profit during the renewal period; (2) in the present case the payment to the appellants was more in the nature of capital payment than of trading receipts. Once the appellants terminated the contract the structure of the respondents' business was affected and their business virtually came to an end; (3) the estimate of damages by the learned trial judge was erroneous due to the omission to make any deduction for tax and the respondents were therefore awarded more than they were entitled; (4) the amount of damages awarded should be reduced by $250,000.

Daishowa (M) Wood Products Sdn Bhd v Kepong Wood Products Co Sdn Bhd [1980] 2 MLJ 68 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The plaintiffs contracted to transport two helidecks by sea from Singapore to a location some distance off Bombay, India, for the defendants. The contract provided that demurrage would be payable by the defendants to the plaintiffs if loading and discharging was not completed within a total of eight days. Clause 25 of the contract further provided that the plaintiffs would use due diligence to ensure that the voyage did not exceed 10[1/2 ]days. The actual voyage took 15[1/2] days. Only one of the helidecks was discharged within the laytime. The delay in completing the voyage resulted in the defendants breaching their contract with a third party, O, to deliver both helidecks in time for them to be installed by another party, M, before the onset of the monsoon season. By this action, the plaintiffs claimed the balance of the freight and demurrage together with contractual interest at 1[1/2]% per month on the amounts outstanding. The claims for freight and demurrage were not disputed. The defendants contended that the plaintiffs had failed to use due diligence to complete the voyage within 10[1/2] days and had fraudulently and/or negligently misrepresented the speed of the vessel used for the voyage. The defendants counterclaimed for damages for the losses resulting from the delay, including the damages for delay paid by the defendants to M and liquidated damages paid by the defendants to O.

Held, allowing the plaintiffs' claim in full and the defendants' counterclaim in part: (1) the balance of the freight and demurrage would be payable with interest at the contractual rate. The contractual interest was a genuine pre-estimate of the revenue the plaintiffs would lose if they were kept out of the use of the money due to them under the contract and was not a penalty; (2) the evidence showed that the probable reason the voyage exceeded 10[1/2] days was that the plaintiffs had failed to clean the bottom of the vessel, which had slowed down the vessel's speed. This was a failure to use due diligence and was a breach of cl 25 of the contract; (3) the defendants could claim for damage reasonably forseeable as liable to arise from the breach. What damage was reasonably forseeable depended on the knowledge of the parties at the time the contract was made. On the facts, the plaintiffs were aware of the defendants' arrangement with M to install the helidecks and that the helidecks could not be installed in the monsoon season. However, the plaintiffs were not aware of the provisions of the defendants' agreement with O and would not be liable for the liquidated damages paid by the defendants to O; (4) the counterclaim based on misrepresentation could not be sustained as (a) a concurrent cause of action would not lie in tort where the parties were in a contractual relationship; and (b) cl 19 of the contract provided that the contract contained the whole of the agreement between the parties and the clause excluded any implied term, collateral warranty and misrepresentation.

Chuan Hup Marine Ltd v Sembawang Engineering Pte Ltd [1995] 2 SLR 629 High Court, Singapore (GP Selvam J).

The respondent (`the plaintiff') was a tourist operator and the registered owner of a motor bus (`the vehicle') which it had purchased from the appellant (`the defendant'). On 22 February 1984, the vehicle was sent to the Road Transport Department (`the RTD') for inspection purposes upon which the RTD detained the vehicle on the ground that the engine number supplied was found to be different from the particulars of it kept by the RTD. The plaintiff was charged in court for an offence under s116(1) of the Road Traffic Ordinance 1958 for changing the engine of the vehicle without the authority of the RTD. The vehicle was detained for a total period of 73 days during which period the plaintiff hired a motor bus from a third party in order to carry on its business. Upon the return of the vehicle by the RTD to the plaintiff, it underwent repair works for which the plaintiff expended RM10,000. The plaintiff claimed against the defendant for the loss of use of the vehicle while it was in detention and for its depreciation.

Held, dismissing the appeal: (1) as the relationship was between the plaintiff as the buyer and the defendant as the seller in contract, and not with the third party assembler, the defendant owed a duty of care to the plaintiff to see that there was no defect in the title in the vehicle sold. In order to discharge the duty of care to the plaintiff, it was the responsibility of the defendant to ensure that the vehicle sold met with the specifications as contained in their contract of sale; (2) further, the defendant knew the purpose for which the plaintiff bought the vehicle and that the vehicle required periodic inspections by the authorities and any particulars found at variance with the record kept by the authorities would cause injuries to the plaintiff as the owner of the vehicle. Hence, the loss suffered by the plaintiff was foreseeable and not too remote. Also, the plaintiff's claim was a claim for the loss of use of the vehicle and the costs of repairs done consequent upon the conduct of the defendant for expenses actually incurred. A claim for expenses actually incurred could never be too remote; (3) (obiter) the plaintiff's claim could not be classified as a claim for economic loss as it was a claim for the loss of use of the vehicle and the costs of repairs done consequent upon the conduct of the defendant for expenses actually incurred.

Champion Motors (1975) Sdn Bhd v Tina Travel & Agencies Sdn Bhd [1997] 2 MLJ 160 High Court, Kuala Lumpur (Abdul Kadir Sulaiman J).

The plaintiff's claim was for recovery of the price of goods (bricks) sold and delivered to the defendant for use in a project for which the defendant was the main contractor. The project was completed and RM7,680,000 was paid to the defendant, leaving the retention sum of RM200,000 still owing by the owner of the project, Yangtze Kiang Bhd, to the defendant. The plaintiff obtained summary judgment against the defendant for the sum of RM163,585.41 and a Mareva injunction to freeze the RM200,000, which was alleged to be the only known asset of the defendant. The defendant appealed against the order for summary judgment and applied to set aside the injunction on the grounds that: (a) there was no real risk of dissipation of the defendant's assets; (b) there was no good arguable case and the plaintiff had failed to disclose the defendant's defence of set-off and counterclaim; (c) the defendant had assets within the jurisdiction; (d) the order granting the injunction was worded in peculiar terms; (e) there was prejudice caused to the defendant; and (f) the Mareva injunction was obtained for a wrong purpose. The defendant also applied for a stay of execution of the judgment pending the outcome of its counterclaim against the plaintiff for alleged breach of contract and claimed for: (i) liquidated and ascertained damages ('LAD') of RM32,000 which the defendant paid to Yangtze Kiang Bhd; (ii) transportation costs of RM400 incurred by having to buy replacement bricks; and (iii) overhead site expenses of RM121,800.

Held, dismissing the appeal: (1) it appeared that the only known asset of the defendant was the RM200,000 held by Yangtze Kiang Bhd. What happened to the RM7,680,000 paid to the defendant remained unexplained and the irresistible inference was that there was a risk that the defendant may dissipate the RM200,000 thereby frustrating the plaintiff of the proceeds of the action against the defendant. In an application for Mareva injunction, the plaintiff needs to show that he has a good arguable case, which is more than being barely capable of serious argument, but not necessarily one that the judge believes has got more than a 50% chance of success and secondly, that there is a real risk or a risk that the assets will be dissipated. Having considered the affidavit evidence of both parties, the court was satisfied that the plaintiff had met the requirements for a Mareva injunction; (2) the plaintiff had disclosed the defendant's defence and counterclaim in the affidavit in support of the Mareva injunction. Therefore, the defendant's claim that it was not disclosed had not merit and amounted to misleading the court. Further, the summary judgment obtained by the plaintiff, although now under appeal to the judge-in-chambers, indicated that the plaintiff had a good arguable case; (3) although the order granting the Mareva injunction may not be perfect compared to the precedent produced by the defendant, it was not fatal as the wording sufficiently conveyed the order obtained. However, assuming that the order was defective, the parties were at liberty to apply for it to be varied and reformulated; (4) prejudice to the defendant is not by itself a ground to set aside a Mareva injunction; (5) in this case, the Mareva injunction was to prevent the defendant from receiving the sum of RM163,585.41 standing to its credit with Yangtze Kiang Bhd, and thereby prevent the defendant from dissipating this sum of money, the only known asset of the defendant. Therefore, the contention of the defendant that the Mareva injunction was obtained for a wrong purpose had no merit; (6) the question whether there should be a stay of judgment pending trial of the counterclaim would depend on whether the defendant has a plausible or bona fide counterclaim. The defendant had persistently failed to pay the plaintiff for the bricks supplied and the defendant's cheque was returned unpaid. The plaintiff treated that as an act of repudiation by the defendant and discontinued further supplies. On the facts, the court rejected the defendant's allegation of breach of contract by the plaintiff and, as it was no longer a triable issue, summary judgment could and should be made. The plaintiff was also entitled to interest of 1.5% per month for overdue accounts as the defendant had full knowledge of this and did not protest when the invoices were presented; (7) in lieu of the payment of LAD, the defendant had paid RM32,000 to Yangtze Kiang Bhd by way of a trade discount. The discount was made well after the defence was filed and could not be allowed as any damages claimed by way of a counterclaim must be limited to the date when the writ was issued; (8) with reference to s 74 of the Contracts Act 1950, the discount was not contractual in nature and not one which naturally arose in the usual course of things or which the parties knew when they made the contract to be likely to result from such breach. It was remote in nature and not reasonably in the contemplation of the parties at the time the contract was entered into; (9) the counterclaim for cost of transportation for the replacement bricks was not tenable because the defendant did not suffer any loss due to the lower prices paid for the bricks. The gain made by the lower prices had offset the added cost of transportation; (10) the proportion of bricks not supplied by the plaintiff was so small compared to the total value of the contract that it was not within the reasonable contemplation of the plaintiff that it would have to pay damages of RM2,100 per day for breach of contract. Therefore this alleged loss for overhead site expenses was too remote; (11) even assuming that the plaintiff was in breach of contract, the defendant should have mitigated his loss. The bricks were common bricks and there was no shortage in the market at the material time. In fact, the defendants was already buying bricks from another supplier at cheaper prices. The counterclaim was therefore not plausible or bona fide and the order for stay should not be made.

Tansa Enterprise Sdn Bhd v Temenang Engineering Sdn Bhd [1994] 2 MLJ 353 High Court, Johor Bahru (Haidar J).

3 [2099] CONTRACT Damages – Remoteness of damage – Principle in Hadley v Baxendale applied – Loss of profit – Loss of opportunity – Whether recoverable – Damage arising naturally from breach of contract – Actual knowledge of special circumstances under which contract was made – Normal measure of damages – Meaning of being 'put on notice'

This was an appeal by the appellant to the Supreme Court against an assessment of damages that had been made against it. The appellant ('the vendor') had contracted to sell certain heavy construction equipment to the respondent ('the purchaser'). However, before the delivery of the said equipment, the purchaser had resold some of the said equipment to other sub-purchasers with the intention of making a profit. As it turned out, the vendor failed to effect delivery of the said equipment, and the purchaser sued the vendor for the non-delivery of the said equipment which it had purchased with the intention of reselling at a profit. The High Court found against the vendor and damages for breach of contract and for loss of agency rights was awarded to the purchaser, which fell to be assessed by the Registrar of the High Court. On appeal, the High Court's decision was upheld by the Supreme Court, and damages was then assessed by the Registrar of the High Court as follows: (a) loss of profit at RM1,766,429; (b) loss of sale commission (in respect of loss of agency rights) at RM150,000; and (c) loss of opportunity at RM456,000. On appeal, the registrar's aforesaid assessment of damages in respect of loss of profit and loss of opportunity was affirmed by the High Court. The vendor then appealed to the Supreme Court.

Held, allowing the appeal: (1) in assessing damages for the breach of a contract, two principles are always involved. Firstly, no compensation can be awarded for damage that is too remote, and secondly, and in respect of damage that is not too remote, the correct measure of damages must be adopted, ie the correct and usual principles of quantifying monetary compensation must be employed; (2) in assessing the damages that he awarded to the purchaser, the registrar appeared to have given undue emphasis to the proposition that an innocent party is to be placed, so far as money can do so, in the same position as he would have been in had the contract been performed. Furthermore, the registrar had erred on a vital point in completely failing to apply his mind to the principle of remoteness of damage as enunciated in Hadley v Baxendale (1854) 9 Ex 341; (3) the principle of remoteness of damage in Hadley v Baxendale contains two distinct rules, ie when two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may be fairly and reasonably considered either arising naturally (according to the usual course of things) from such breach of contract itself, or 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; (4) in regard to the registrar's assessment of damages for loss of profit, their Lordships applied the first rule in Hadley v Baxendale, and found that the purchaser's loss of resale profit was not a loss or damage that could be fairly and reasonably considered as arising naturally from the vendor's breach of the said contract, especially when there was an available market for equipment similar to those which the purchaser had bought from the vendor; (4) applying the second rule in Hadley v Baxendale, their Lordships also found that loss of profit was not recoverable in the instant case as the vendor had no actual knowledge of the special circumstances under which the contract for the sale of the said equipment to the purchaser was made, viz the vendor was not put on notice as regards the impending resale of the said equipment by the purchaser to other sub-purchasers for the purpose of making a profit; (5) therefore, as loss of profit was a loss or damage that was too remote from the vendor's breach of the said contract, the damages for loss of profit that had been awarded to the purchaser was totally set aside; (6) the award of damages for loss of opportunity was also unable to pass the test of remoteness of damage as laid down in Hadley v Baxendale, either on the first or on the second rule, and was, therefore, set aside in totality; (7) where there is an available market for goods similar to those which are the subject matter of the breach of a contract, the normal measure of damages is basically the difference between the contract price and the market price at the time of the breach of the contract. Thus, in the instant case, the registrar's assessment of damages for loss of profit as based on the difference between the contract price and the market price of the said equipment at the date of the trial was not right in any event; (8) in the context of the second rule in Hadley v Baxendale, being 'put on notice' means at least, and includes, a situation where the vendor can be said to have actual knowledge of the special circumstances under which the contract of sale was made, and such knowledge must have been conveyed to the said vendor with a sufficient degree of deliberateness, so that he has a very clear hint that there is a prospect of such a loss that may be caused to the purchaser, for which damages will be payable by him, if he breaches the said contract.

Eikobina (M) Sdn Bhd v Mensa Mercantile (Far East) Pte Ltd [1994] 1 MLJ 553 Supreme Court, Malaysia (Harun Hashim, Peh Swee Chin and Wan Yahya SCJJ).

Chin Shoo Cheen Steven & Anor v Ocean Investments Pte Ltd & Ors Suit No 1137 of 1990 High Court, Singapore (Warren LH Khoo J).

See CONTRACT, Vol 3, para 2869.

P, the purchaser, entered into a sale and purchase agreement with D, the vendor, for the purchase of a piece of land and house to be built thereon. D failed to honour the agreement and sold the house to a third party at a higher price. Judgment was given against D for damages to be assessed. One of the issues before the court was whether the damages to be awarded to P should be based on the market value of the property at the date of the breach of contract or at the date of judgment. In the instant case, P had sought relief under s 18(1) and (2) of the Specific Relief Act 1950.

Held: (1) in the instant case, P was not financially well off to pay anything more than he had bargained for the purchase of the house. It was therefore only fair that P be compensated by the measure of damages assessed on the market value as at the date of judgment so as to constitute a true substitute for specific performance; (2) the market value of the property at the date of judgment was M$145,000. However, having regard to the fact that P was guilty of delay in getting the suit heard early, the learned judge accordingly ordered M$20,000 less than the value of the property at the date of judgment. P was accordingly awarded compensation of M$125,000 less the contract price of M$38,000.

Ratnarajah s/o Paramanantham v Syarikat Ding & Co Civil Suit No 427 of 1980 High Court, Ipoh (Ajaib Singh J).

The second appellant, Rumah Nanas Rubber Estate Sdn Bhd, had agreed to sell to the respondent, Plenitude Holdings Sdn Bhd, certain land in Johor Bahru for RM47,939,958 for the purpose of development. The first appellant, Tan Sri Khoo, undertook to obtain a loan for the respondent and gave an further undertaking that in the event that he was unable to do so, he and the second appellant would join the respondent in a joint venture to develop the land ('the undertakings'). The respondent paid a deposit of RM4,793,995.80 ('the deposit') but failed to pay the balance purchase price within the stipulated period. The second appellant then terminated the agreement and forfeited the deposit. At the High Court, the trial judge held that the termination was not valid and ordered specific performance of the agreement with damages to be assessed. (See [1992] 2 MLJ 68.) The appellants appealed to the Supreme Court which dismissed the appeal and affirmed the judgment of the High Court. (See [1993] 1 MLJ 113.) Upon assessment of damages in the High Court, the appellants were ordered to pay: (i) RM62,783.50, being fees paid to the consultants and surveyors, for wrongful termination of the agreement; (ii) RM13.5m for loss of profits; (iii) RM867,969 for loss of cash flow investment; and (iv) RM1,756,772.91 as interest on the deposit. (See [1994] 2 MLJ 273.) The appellants have appealed against the quantum of damages. The issue before the court was whether the basis on which the judge had assessed the damages was correct, having regard to the particular circumstances of this case.

Held, allowing the appeal and awarding nominal damages of RM10: (1) the two situations in which an appellate court would be justified in interfering by reassessment of the damages would be where the trial judge had acted on a wrong principle or had made an entirely erroneous estimate of the damages. In this case, the judge's basis of assessment could not be supported in law; (2) the correct approach for the judge to have adopted when assessing damages was to make an estimate as to what the chances were of a particular thing happening, ie whether they were more or less even. In this case, with the increased cost of construction, not forgetting that land is limited and is always deemed to have a special value, the chances of the price of houses increasing was part of the ordinary course of things and more than even. Such an approach would have supported the profit projections of the second appellant's expert witness; (3) there was uncontradicted evidence that the land was worth RM119.5m in 1993. As the contractual price was about RM48m, it was manifestly clear that the respondent would have received a substantial windfall of about RM70m if it had sold the land. The profit which the respondent stood to make on the price increase of the land only because of the breach should, therefore, be deducted from the loss of profits. Not to do so would put the respondent in a better position than it would have been in if the contract had been performed in 1988. Upon the evidence, the respondent had not proved its claim for loss of profits; (4) as the respondent had secured title to the land and would most probably be developing it, the award for fees paid to the consultants and surveyors represented expenses which the respondent would have incurred anyway. The judge should, therefore, have disallowed the claim. Furthermore, the award included sales tax when the law on sales tax for professional services had not yet come into force; (5) as the respondent was able to raise the purchase price on its own, the undertakings were of no effect. Since the idea underlying the claim for loss of cash flow investment was the proposed joint venture scheme which never materialized, the award under this head must necessarily fail; (6) as there were concurrent findings by the judge and the Supreme Court that the agreement was never legally terminated, the deposit became the property of the second appellant and the respondent had no right to the use of the money. Therefore, the award for interest on the deposit was set aside; (7) the judge had assumed that the second appellant's expert had admitted that the respondent had suffered a loss when in truth the witness had said that had development commenced in 1993, the respondent would have made a subtantially larger profit. Furthermore, the judge had averaged the projected profit quantifications of the second appellant's expert witness and that of the respondent's expert witness when he should, in fact, have accepted one quantification over the other; (8) the appeal was allowed with costs. However, there was no order as to costs in the High Court because of the inconsistent positions taken by the appellants' counsel, ie in the High Court, counsel's primary contention was that some damages ought to be awarded, whereas on appeal, his primary contention was that only nominal damages should be awarded.

Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777 Federal Court, Kuala Lumpur (Edgar Joseph Jr, Chong Siew Fai and Wah Adnan FCJJ).

Toh Tiong Huat v PM Gunasaykaran (personal representative of the estate of Mayandi s/o Sinnathevar, deceased) & Anor [1996] 1 SLR 384 High Court, Singapore (Lai Siu Chiu J).

See CONTRACT, Vol 3, para 2951.

Tay Joo Sing v Ku Yu Sang [1994] 3 SLR 719 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, Vol 3, para 2654.

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

See CONTRACT, Vol 3, para 3117.

The respondent ('the purchaser') in this case bought a unit of property from the appellant ('the developer'). A booking fee was paid by the purchaser, and the sale and purchase agreement ('the agreement') was signed a few months later. In the agreement, it was provided that the vacant possession of the property should be delivered to the purchaser within 36 calendar months from the date of the agreement, or the developer would pay to the purchaser liquidated damages to be calculated from day to day at a prescribed rate. The developer later failed to complete the property within the stipulated time, and the purchaser sued for liquidated damages. The issue before the court was, for the purpose of ascertaining the date of delivery of the vacant possession in a claim for liquidated damages, whether time started running from the date of payment of the booking fee, or the date of the signing of the agreement.

Held, dismissing the appeal: for the purpose of ascertaining the date of delivery of vacant possession, the relevant date when time started to run was the date on which the purchaser paid the booking fee, and not the date of the signing of the sale and purchase agreement.

Faber Union Sdn Bhd v Chew Nyat Shong & Anor [1995] 2 MLJ 597 Supreme Court, Kuala Lumpur (Eusoff Chin CJ, Edgar Joseph Jr and Mohamed Dzaiddin FCJJ).

3 [2107] CONTRACT Damages – Sale and purchase of property – Measure of damages – Agreement for sale of flat – Housing developer failing to construct flat as promised – Agreement silent as to time for completion – Date at which market value of property to be assessed – Davies v Powell Duffryn Associated Colieries Ltd [1942] AC 601 (apprvd) Central Malaysia Development Co Ltd v Chin Pak Chin [1967] 2 MLJ 174 (consd) Cheng Chuan Development Sdn Bhd v Ng Ah Hock [1982] 2 MLJ 222 (consd) Tan Geok Khoon & Anor v Paya Terubong Estate Sdn Bhd (Penang High Court Civil Suit No 831 of 1984) (unreported) (consd) Johnson v Agnew [1980] AC 367 (consd) Malhotra v Choudhury [1980] 1 Ch 52 (cited)

P and D entered into an agreement by which D agreed to sell to P a unit of flat to be constructed on the land in question. The purchase price was stated to be M$47,000. D, however, failed to construct the flat and P entered a private caveat against the property. Subsequently, P filed an action against D claiming for specific performance of the agreement and damages in addition to or in lieu of specific performance. D admitted at the hearing of the application to remove the caveat that they were unable to construct the flat thereby breaching the agreement. D was ordered to pay damages to P in lieu of specific performance, the damages to be assessed by the senior assistant registrar. The registrar awarded against D damages in the sum of M$54,000 with interest at 8% pa and the refund of M$1,000, being the deposit paid by P, which was to carry interest at the same rate. The registrar arrived at the above sum by taking the difference in price between the market value of the property as at the date of judgment less the contract price of M$47,000. Being dissatisfied with the registrar's assessment of the damages, D appealed to the High Court. D contended that the measure of damages should be the market value of the property at the purported date of completion of the contract less the contract price. It was also contended that as P did not mitigate her loss, she was not entitled to claim the market price to be as at the date of judgment.

Held, dismissing the appeal: (1) in the instant case, there was no evidence that D was a licensed housing developer under the Housing Developers (Control and Licensing) Act 1966. There was also no proper sale and purchase agreement executed between the parties thereby not specifying the date or time for the completion of the sale. Therefore, in the absence of these facts, the market value should be assessed at the date of the breach which on the facts in this case must be at the date of the judgment when D admitted (at the hearing of the application for the removal of the private caveat) that they were unable to construct the flat. D's contention that the market value of the flat should be assessed at the expiry of 18 months from the date of the agreement was rejected by the court. In the result, the assessment by the registrar was upheld by the court; (2) the court was also satisfied, based on the facts, that P had not acted unreasonably in prosecuting her case. There was no evidence to show that P had not mitigated her loss.

Ong Seok Heng v Wee Cheong Motor & Housing Developer Sdn Bhd Originating Summons No 24-666-1985 High Court, Penang (Mohamed Dzaiddin J).

The plaintiffs, who are registered proprietors of various proportions of undivided shares in a piece of land in Selangor Darul Ehsan ('the land'), agreed to sell their respective undivided shares which amounted to approximately 70% of the land to the defendants. There were two sale and purchase agreements ('the agreements') and 10% of the purchase prices were paid to the plaintiffs. The plaintiffs also granted irrevocable powers of attorney to the defendants for the purpose of partitioning the land into two portions; one representing the portion owned by the plaintiffs and the other for the minority co-proprietors. The agreements stated that the completion date was six months from the date of the agreements or on the date when the issue document of title to the partitioned land was issued. The disputes arose as the application for the partitioning of the land took more than two years and the defendants had attempted to sell their beneficial rights in the land to a third party. The plaintiffs alleged that the defendants had breached the agreements by, inter alia: (i) selling the land to a third party; (ii) not being bona fide purchasers; (iii) having purposely delayed the process of partitioning; (iv) not being incorporated when the first sale and purchase agreement was entered into; (v) representing to the plaintiffs through a solicitor, Mr Xavier, that the purchase price would be paid within six months from the date of the agreements; and (vi) not informing the plaintiffs that the land was to be compulsorily acquired by the State Government of Selangor. The defendants, on the other hand, counterclaimed for specific performance on the ground that the arbitrary termination of the agreements by the plaintiffs was invalid.

Held, dismissing the plaintiffs' claim and allowing the defendants' counterclaim: (1) a purchaser derives beneficial ownership in land when the sale and purchase agreement for the sale of land is concluded. There is no need for the full balance of purchase price to be paid for beneficial ownership to exist. The defendants as assignees of the plaintiffs' shareholding in the land had the right to sell off their beneficial ownership to a third party. The defendants' powers of attorney were not utilized, instead the selling was in their own capacity as beneficial owners of the land; (2) in a contract of sale, the question whether a defendant is a bona fide purchaser is irrelevant where there exists no fraud or misrepresentation. What is important is that the agreement contains the fundamental elements, which are voluntary offer and acceptance, followed by valuable consideration paid to the plaintiffs; (3) from the evidence, there was no deliberate delay in securing the partitioning of the land. In fact, the defendants expedited the process by purchasing an adjoining piece of land with road frontage to secure an access to the land, as was requested by the authorities prior to the approval of the partitioning; (4) when the first sale and purchase agreement was executed, the defendants were not in existence. However, the agreements were subsequently ratified under s 35 of the Companies Act 1965. Also, the plaintiffs were estopped from raising this issue as they had until just before the trial, accepted the defendants as a legal entity in the first sale and purchase agreement; (5) there was no uncertainty in the terms of the agreements and it was clear that the main objective of the parties in the agreement was for the completion of the sale to take place after the land was partitioned; (6) Mr Xavier was the plaintiffs' solicitors, therefore, any representation made by him to the plaintiffs was a matter entirely of no concern to the defendants. Also, there has never been any official notification of the acquisition of the land by the State Government of Selangor; (7) as the defendants' counterclaim for specific performance was allowed, the counterclaim for special damages was not allowed because no actual loss was suffered. There was also no evidence of the losses suffered under general damages.

Ahmad bin Salleh & Ors v Rawang Hills Resort Sdn Bhd [1995] 3 MLJ 211; (1995) CSLR III[254] High Court, Shah Alam (James Foong J).

Chong Ah Kwee & Anor v Viva Realty Pte Ltd [1990] 2 MLJ 389 High Court, Singapore (Chan Sek Keong J).

See CONTRACT, Vol 3, para 1674.

The respondent had given the appellant a number of bottle moulds and the appellant had agreed to produce and supply plastic gum bottles made from the mould whenever there was an order from the respondent. The respondent had made orders for those bottles but the appellant had failed to supply them. At the end of the trial, the magistrate had ordered the appellant to pay the respondent an amount of RM20,972 together with interest at the rate of 8%pa thereon. During the hearing of the appeal, counsel for the appellant argued on two points, namely: (i) that the respondent's loss was unforseeable; and (ii) that there was no proof of the loss incurred. The issue for consideration was in relation to the assessment of damages made by the magistrate.

Held, allowing the appeal: (1) damages claimed had to be reasonably foreseeable by the party in breach of the contract but whether the party in breach could reasonably foresee such damages depended on his imputed or actual knowledge. In this case, the profits which the respondent lost from the sale of the plastic gum bottles was a direct loss and one which was a result of the failure to supply the bottles. Therefore the profit claimed was not too remote; (2) the ordinary assessment of damages in cases which dealt with the failure to supply goods could be found in ss 57 and 61 of the Sale of Goods Act 1957 and ss 51 and 54 of the UK Sale of Goods Act 1893, which basically was the difference between the contract price and market price at the time of the breach, when there was a market for the goods; and was not based on the profit obtained from the supply of such goods; (3) in this case, the goods which were to be produced by the appellant from the moulds given by the respondent were special goods with specifications given by the respondent and were not available in the market at the time of the breach. Therefore, the assessment of damages through the difference between: (i) the profits that the respondent would have obtained from the supply of the bottles by the appellant; and (ii) the profits that the respondent would have obtained if the respondent had bought the bottles from other sources, could not apply. The appellant was to be responsible to the respondent for the loss arising from the failure to supply the bottles; (4) in this case, however, although the respondent had proved the appellant's liability in failing to supply the bottles, there was insufficient proof regarding the lost profits. Therefore RM2,000 would be fair and reasonable nominal damages.

Bee Wah Plastic Factory Sdn Bhd v Francis Soh Kai Shuen (b/s Shatin Marketing & General Agencies) [1997] 4 MLJ 545 High Court, Penang (Jeffrey Tan JC).

3 [2111] CONTRACT Damages – Sale of goods – Non-delivery of goods – Award of nominal damages – Amount of damages not sufficiently proved – Pavia & Co SPA v Thurman-Nielson [1952] 2 QB 84, 88 (cited) Sinason-Teicher Inter-American Grain Corp v Oilcakes & Oilseeds Trading Co Ltd [1954] 1 WLR 1394 (cited) Ian Stach Ltd v Baker Bosley Ltd [1958] 2 QB 130 (cited) Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503, 514 (apprvd) F & G Sykes (Wessex) Ltd v Fine Fare Ltd [1967] 1 Lloyd's Rep 53 (cited) Trans Trust SPRL v Danubian Trading Co Ltd [1952] 2 QB 294, 304 (cited) Amalgamated Investment v Texas Commerce [1981] 3 All ER 577, 583 (apprvd) Hindley & Co v Tothill, Watson & Co (1894) 13 NZLR 13, 23 (cited) Soproma SPA v Marine & Animal By-Products Corp [1966] 1 Lloyd's Rep 367, 386 (cited) Koufos v Czarnikow Ltd (The Heron II) [1969] 1 AC 350 (cited) Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 (consd) The 'Pegase' [1981] 1 Lloyd's Rep 175 (cited) Haskell v Bagot (1911) 13 CLR 374 (cited) Aryeh v Lawrence Kostoris & Son [1967] 1 Lloyd's Rep 63 (cited) Lesters Leather & Skin Co v Home & Overseas Brokers (1948) 64 TLR 569 (cited) Selvanayagam v University of West Indies [1983] 1 WLR 585 (cited) Frank Mott & Co Ltd v Muller & Co (London) Ltd (1922) 13 Ll LR 492 (cited) Grebert-Borgenis v J & W Nugent (1885) 15 QBD 85 (cited) Patrick v British Grain Export Co Ltd [1972] 2 KB 535, 541 (cited) Household Machines Ltd v Cosmos Exports Ltd [1947] KB 217, 219 (cited) J Leavy & Co Ltd v George H Hirst & Co Ltd [1944] KB 24 (cited) Marzetti v Williams (1830) 1 B & Ad 415; 109 ER 842 (cited) Dixon v Deveridge (1825) 2 C & P 109 (cited) Twyman v Knowles (1853) 13 CB 222 (cited) Biggin v Permanite [1951] 1 KB 422, 438 (cited) Aerial Advertising Co v Batchelors Peas [1938] 2 All ER 788, 796 (cited) Ashcroft v Curtin [1971] 1 WLR 1731 (cited) Johnson v Kershaw 63 ER 1059 (cited) Potts v Miller (1940) 64 CLR 282, 303 (cited) Guan Soon Tin Mining Co v Ampang Estate Ltd [1973] 1 MLJ 25, 30 (cited) Sanjay Cotton Co v Omprakash AIR 1973 Bom 40, 43 (cited) Malaysia National Insurance Sdn Bhd v Malaysia Rubber Development Corp [1986] 2 MLJ 124 (cited) Beni v Bisan Dayal & Anor AIR 1925 Nag 445, 446 (apprvd) Bonham-Carter v Hyde Park Hotel [1948] WN 89 (cited) Lee Sau Kong v Leow Cheng Chiang [1961] MLJ 17 (cited) Miliangos v George Frank (Textiles) Ltd [1975] QB 487 (cited)

P sued D for damages for non-delivery of goods alleging loss of profits of resale. P were in the business of importing garments from suppliers in various countries including Malaysia. P's registered office was in Canada while that of D was in Penang. In their statement of claim, P alleged that at all material times D knew that P bought the goods in the ordinary course of their business for resale at a profit to its customer and that in breach of the said contracts, D wrongfully failed to deliver the goods as agreed. It was also alleged that P were unable to purchase similar goods on the market and therefore unable to supply their customers and so lost the profits they would have made on the resale of the goods. By their defence, D contended that there never was any concluded contract and that even if there were concluded contracts, D were discharged from performing their part of the contracts by reason of the failure of P to provide any letter of credit.

Held, awarding P nominal damages: (1) in the instant case, the primary defence of D that there was no concluded contract because in the case of each of the contracts sued on letters of credit had not been opened sixty days before shipment, was unsustainable having regard to the previous course of dealings between the parties. There was also no evidence to show that the parties had entered into a new arrangement which materially altered the previous course of dealings between them. The court found that D had breached their contractual obligations to furnish the shipping dates to P and that until and unless D discharged that obligation, P were under no obligation to open the letters of credit. The court, accordingly, held that D were liable for damages for breach of contract; (2) in the instant case, P had the burden of proving both the fact and the amount of damages before they could recover; (3) it is a firmly established rule that when documentary evidence is tendered, primary evidence of the document, that is, the production of the documents themselves, is essential. In the instant case, the statement containing the estimated losses suffered by P which was alleged to be extracted from the books of account of P, which were never produced, was inadmissible in evidence; (4) in all the circumstances, although P had shown the fact of damage, no evidence or no sufficient evidence had been adduced as to its amount. The court accordingly awarded P nominal damages of US$500, that being the currency of the contract.

Popular Industries Ltd v Eastern Garment Manufacturing Co Sdn Bhd [1989] 3 MLJ 360 High Court, Penang (Edgar Joseph Jr J).

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

See CONTRACT, Vol 3, para 1671.

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

See CONTRACT, Vol 3, para 1673.

The plaintiffs claimed damages for allegedly having bought 880,000 shares in Malayan Tin Printing Co Ltd (MTP) for the defendants, who had failed to pay for the shares and take delivery. The assistant registrar, pursuant to an application for summary judgment taken out by the plaintiffs, awarded them S$2,254,265.36, the amount attributed to the 880,000 MTP shares, with interest, plus a further sum representing loss of profit, also with interest. The evidence indicated that the plaintiffs had contracted to purchase 1,000,000 MTP shares from a third party on 19 July 1985, to be delivered on 18 January 1986. The defendants' contract with the plaintiffs, however, was dated 24 January 1986, with delivery to be taken one week later. The defendants denied that the plaintiffs had bought the shares on behalf of the defendants. As such, the plaintiffs had not sustained any loss and damages should be assessed as nil. The assistant registrar found that the defendants had known that the plaintiffs had contracted to buy the shares from the third party to fulfil their obligation towards the defendants and hypothesized that the parties had probably been acting together to circumvent the Code on Takeovers by using the plaintiffs to buy the shares with the intention of later transferring them to the defendants. The sum of S$2,254,265.36 was consequently found to be a direct and foreseeable consequence of the defendants' breach of their contract with the plaintiffs.

Held, allowing the defendants' appeal: (1) the plaintiffs had failed to discharge the evidential burden which lay on them of showing how their loss could be charged to the defendants; (2) the assistant registrar's hypothesis was no substitute for evidence on a question of fact. Furthermore, if the hypothesis were correct, the further question would have arisen as to whether the court should assist the plaintiffs in their claim, since the transaction could have been tainted with illegality; (3) a seller's profit, if any, would normally be included in the price he contracted to sell his goods. Where the buyer failed to pay for the goods and take delivery, and where there was an available market, the normal measure of damages was the difference between the contract price and the market or current price at the time when the goods ought to have been accepted. The seller could not claim loss of profit in addition to the damages ascertained according to this normal measure of damages or there would be double counting. The assistant registrar had therefore erred in awarding the further sum in addition to the normal measure of damages.

City Securities Pte (in liquidation) v Associated Management Services Pte Ltd [1995] 3 SLR 495; (1995) CSLR XIII [880] High Court, Singapore (Warren LH Khoo J).

The appellants were the owners of a building. Part of the building was rented out to the respondents for a period of five years commencing from 15 May 1977. This tenancy agreement was extended. The parties mutually consented to terminate the tenancy agreement on 31 March 1986. The respondents contended that they had to install air-conditioning ducts to the demised premises at the time of entry and incurred expenses. When the tenancy agreement was terminated, the appellants prevented the respondents from dismantling the air-conditioning ducts. A claim was instituted at the magistrate's court and after trial, the appellants were ordered to pay RM15,250 with interest and costs to the respondents. Reliance was made on a letter tendered by the respondents as the basis to award the said amount. However, the maker of that letter was not called to substantiate the evidence. The appellants appealed against the award.

Held, allowing the appeal: (1) the magistrate's court erred in admitting and relying upon the letter tendered by the respondents to make the award as to the price of the air-conditioning ducts. The statement made in the letter was not made contemporaneously with the occurrence or existence of the facts stated therein to bring it within the purview of s 73A(6) of the Evidence Act 1950. The letter was written on 1 December 1976 but adverted to events that happened on 30 November 1976. Further, there was no evidence to show that reasonable efforts had been made to trace the author of the letter to enable the respondents to rely upon the proviso to s 73A(1) of the Evidence Act 1950; (2) the magistrate's court was wrong to award the respondents damages in the absence of actual proof; (3) the magistrate's court erred in making an erroneous estimate of damages without taking into account depreciation of the air-conditioning ducts.

Johore State Economic Development Corp v Queen Bee Sdn Bhd [1995] 4 MLJ 371 High Court, Johor Bahru (Abdul Malik Ishak J).

The defendant gave a broker, Lee, an 'option' to procure a purchaser for the said premises within one week, failing which the 'option' would become null and void. In consequence Lee introduced the plaintiff as the purchaser to the defendant. The plaintiff negotiated with the defendant on the purchase of the premises at Clemenceau Avenue and the sale price was ultimately agreed at $132,500. A sum of $500 was paid to the defendant, and the plaintiff drafted a document (P1) which was signed only by the defendant. P1 contained the following material particulars: the receipt of $500 from the plaintiff, the description of the said premises, the purchase price therefor, and the fact that the transaction was a sale and purchase of the said premises. It also contained the following: 'The sale and purchase agreement must be signed within one week with 10% of the purchase price to be paid and completion shall take place within eight weeks from the signing of the agreement. The purchase is subject to satisfactory replies being received to all the legal requisitions.' The question before the court was whether P1 was a contract made between the plaintiff and the defendant for the sale by the defendant to the plaintiff of the said premises at the price of $132,500.

Held, dismissing the plaintiff's claim: the parties did not intend to be bound by P1 as a concluded contract but by the sale and purchase agreement to be prepared by the solicitors for the defendant and to be signed later.

Choo Si Seng v Lee Boon Sai 1984 High Court, Singapore (Thean J).

On 18 September 1969, the plaintiff agreed to purchase a piece of land with a semi-detached house to be built on it, for $52,000 from the defendant who were licensed developers. The plaintiff paid a deposit of $500 for which the defendants issued a receipt in the following forms: 'Received from Mr Yeo Long Seng the sum of $500 being booking fee for the purchase of P/Lot 16 Phase III Lucky Park'. On the same day the plaintiff was asked to sign a letter addressed to the defendants which letter contained the terms of instalment payments to be made by the plaintiff to the defendants and which ended with the following paragraphs: 'I hereby agree to sign the agreement within 14 days on receipt of the vendor's notice for signing same; failing which the vendor is entitled to cancel this booking and resell the property. I further confirm and agree that the completion date of handing over of house with vacant possession is expected to be on or before 31.12.1971.' By a registered letter dated 19 September 1969 addressed to the plaintiff, the defendants purported to inform the plaintiff that his booking was cancelled and they sent a cheque for $500 to the plaintiff as refund of the deposit which he had paid. The plaintiff through his solicitors returned the cheque informing the defendants that he wished to proceed with the purchase. In this action the plaintiff claimed for specific performance of the contract and in the alternative for damages for breach of contract. For the plaintiff it was contended that the receipt issued by the defendants for the deposit taken together with the letter of the same date which the plaintiff was asked to sign and hand over to the defendants constituted sufficient written memorandum for the purpose of the Statute of Frauds 1677 and accordingly there was a contract at common law. The defendants however claimed that they merely granted the plaintiff an option to purchase a house to be built and that such option was subject to a formal contract of sale in the form given in the Housing Developers ((Amendment) Rules 1969 and that they had validly revoked the option.

Held: (1) the receipt taken together with the letter sent by the plaintiff on 18 September 1969 constituted sufficient memorandum under the Statute of Frauds for the purpose of a contract at common law and accordingly there was an enforceable contract which was not made subject to a formal contract; (2) the Housing Developers (Control and Licensing) Ordinance 1965 and the rules made thereunder are intended to control developers and to protect bona fide purchasers; (3) the defendants were accordingly in breach of the contract but as damages could provide an adequate remedy the court would not decree specific performance. Damages assessed at $12,000.

Yeo Long Seng v Lucky Park (Pte) Ltd 1969 High Court, Singapore (Winslow J).

This was an action by the plaintiff ('ECYY') against the defendant ('KM') for damages as KM had wrongly terminated ECYY's service as sole marketing and sales agent for all property developed by KM on a piece of land ('the project'). KM had earlier appointed ECYY as marketing agent for the project if KM bought the land for the project. ECYY claimed 2% commission of the sale price of each and every apartment, commercial space and car park lot in the project sold according to the terms of the contract dan also 2% of the sale price of KM's future development, ie Menara KM which all amounted to RM3,465,000. The calculation of the commission for the sale of the project was based on a newspaper report on the amount which would be made by KM from the sale of the project while the proceeds of the sale of Menara KM was estimated by ECYY based on his experience as a valuer. In its defence, KM stated that ECYY should have claimed from other parties, namely the managing director of KM ('DW1') and the executive chairman of KM ('DW2') as the land was bought by them as individuals, and that the termination of the plaintiff's services was valid as the plaintiff had been dishonest in asking for undertable money in the marketing of another property belonging to KM. A further matter that arose was, after closing its case, ECYY's counsel made an oral application to postpone the trial to appoint a court expert to carry out a valuation of the projects to be developed by KM.

Held, allowing the application for damages for the amount of RM239,000 with interest at 8% pa from the date of judgment: (1) the evidence of all the witnesses showed that DW1 and DW2 were KM and KM was DW1 and DW2. The court had to lift the corporate veil in these circumstances. There was also an admission by KM that it had appointed ECYY on 29 June 1990 as its sole marketing and sales agent. Even though DW1 and DW2 bought the said property in their own names, they had bought the land on behalf of KM. The services provided by ECYY was not only concerning sales and purchases but ECYY had also loaned RM50,000 on 4 July 1990 to KM to enable KM to complete the purchase of the land. Therefore, the appointment of ECYY was valid and beginning from 29 June 1990 a contract of service existed between ECYY and KM; (2) all four of KM's witnesses gave different versions of how the plaintiff was dishonest even though they had received information on the matter from the same source, that is a tape recorded by one of the witnesses. The inconsistency between the witnesses in giving evidence was very apparent. Furthermore, other material witnesses that DW1 claimed had received phone calls from ECYY to pay undertable money were not called to give evidence in court. Therefore, even though there were evasions on ECYY's part in answering questions during cross-examination, KM could not satisfactorily prove its allegation. Therefore, the termination of contract by KM was invalid; (3) ECYY's application, which was made under O 40 rÊ1(1) of the Rules of the High Court 1980 ('RHC'), for the appointment of a court expert after the close of his case should not be allowed. ECYY should have known that according to the factual matrix of his case the opinion of an expert was very much needed. Order 40 r 1(1) of the RHC allows the court to appoint an expert only if there were a deadlock after the plaintiff's expert and the defendant's expert had given evidence. Furthermore, O 40 r 4 of the RHC clearly shows that whether an expert should be appointed or not should in fact be decided before a full trial commences and the cross-examination of an expert witness should take place during the trial or before the trial. Therefore, a postponement of the trial to allow ECYY or the court to obtain an expert witness after ECYY had closed his case should not be allowed; (4) ECYY's claim for RM3,465,000 was based on a newspaper report which stated that the sales of the project was expected to be RM65m and that KM would build Menara KM close to the project, but no other evidence was given. Also, the fact as to whether Menara KM would be built was not put forward and no witnesses were called to prove its existence. Therefore, ECYY had no right to make a claim on the sale price of Menara KM, and was limited only to a claim on the project; (5) ECYY only had a right to receive damages from KM for the breach of contract by KM, based on the value of sales that had been concluded up to now. This was because ECYY's right to make such a claim was based on the units in respect of which the sale and purchase agreement had already been signed. The amount of sales at RM40m should be used as the basis for the calculation as there was no other evidence given. The senior assistant registrar would not be directed to assess the amount of damages due as both parties had closed their cases and it would be unfair if both parties were given a second chance to prove the same matter. ECYY also could not claim for service tax as the damages awarded was for the breach of contract by KM and not for the claim of commission for work done by ECYY.

Ernest Cheong Yong Yin (di bawah amalan nama dan gelaran Ernest Cheong PTL Chartered Surveyors) lwn KM Engineering & Development Sdn Bhd [1996] 4 MLJ 438 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

See contract, para VIII [55].

YK Fung Securities Sdn Bhd v James Capel (Far East) Ltd [1997] 2 MLJ 621 Court of Appeal, Kuala Lumpur (Shaik Daud, NH Chan and Mahadev Shankar JJCA).

The appellants were a statutory body set up pursuant to the Penang Development Corporation Enactment 1971 ('the Enactment'). The respondents had obtained judgment against the appellants in the sessions court for damages for breach of contract by the appellants arising from the late delivery of possession of a dwelling house to the respondents who had agreed to purchase it from the appellants. The appellants appealed against the decision of the sessions court to the High Court. By cl 11 of the agreement between the parties, construction of the dwelling house had to be completed and vacant possession thereof was to be given to the respondents within 18 calendar months from the date of execution thereof. By cl 25(b) of the agreement, it was provided that in the event of non-compliance by the appellants with the requirements of cl 11, the appellants would indemnify the respondents by the payment of interest on the purchase price calculated from the due date until the date of delivery of vacant possession. At the trial, it was contended for the appellants that cl 11, and consequently, cl 25(b) were ultra vires the enactment and that they had been included in the agreement without the authority of the appellants and so were not binding on the appellants. The contractor employed by the appellants to construct the dwelling house was, by government policy, a bumiputra contractor, and by the same policy, could not have its services terminated summarily, and therefore it was contended that the contractor's delay in completing construction of the dwelling house constituted circumstances 'beyond the control' of the appellants within the meaning of the proviso to cl 11 so as to exempt the appellants from liability. It was contended alternatively that the inclusion of cl 25(b) was unauthorized and so was not binding upon the appellants. The agreement had been drafted by the appellants' director of administration, and the draft agreement had been approved by the appellants' housing committee. The agreement was signed by the director of administration on behalf of the appellants. There was evidence, inter alia, that there were available other bumiputra contractors who were able to undertake the task of constructing the dwelling house and that the appellants had not enforced their right to impose on the appointed contractor the agreed penalty for the delay.

Held, dismissing the appeal: (1) under the Enactment, the appellants had the power to enter into contracts such as the agreement in the instant case. Clauses 11 and 25(b), being usual terms encountered in building contracts of the kind under consideration were terms incidental to the obligation of the appellants under the agreement to construct and sell the dwelling house, an activity in which the appellants were not only empowered by but were under a duty imposed by the Enactment; (2) there was evidence to support the finding that the housing committee was a duly authorized delegate of the appellants in all matters relating to housing and so was empowered to bind the appellants in such matters. The director of administration having obtained the prior approval of the housing committee to the contents of the agreement, he had express authority to enter into the agreement on behalf of the appellants. In any event, upon the facts, he had ostensible authority to do so; (3) the fact that the appellants were unaware that the Housing Developers (Control and Licensing) Act 1966 did not apply to it did not make the agreement not binding upon it. In all respects, the agreement was precisely the contract the parties had intended to make and so it was binding upon the appellants in every respect; (4) even accepting the existence of public policy, the delay in the delivery of vacant possession of the dwelling house was not caused as a result of public policy but rather by a travesty of public policy and, as such, was caused by circumstances well within the control of the appellants.

Penang Development Corp v Teoh Eng Huat & Anor [1992] 1 MLJ 749 High Court, Penang (Edgar Joseph Jr J).

[Annotation: Affirmed on appeal. See [1993] 2 MLJ 97.]

3 [2121] CONTRACT Damages – Wrongful suspension of member by association – Special damages – General damages for mental anguish, emotional damage, humiliation and reputation – Malice factor – Baker v Jones [1954] 2 All ER 553 (refd) The Geo W McKnight (1947) 80 Lloyd LR 419 (refd) Lee v Showmen's Guild of Great Britain [1952] 2 QB 329 (refd) Lawlor v Union of Post Office Workers [1965] Ch 712 (refd) Russel v Duke of Norfolk [1949] 1 All ER 109 (refd) Board of Education v Rice [1911] AC 179 (refd) Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 (refd) Bonsor v Musicians' Union [1956] AC 104 (refd) Chong Kok Lim & Ors v Yong Su Hian [1979] 2 MLJ 11 (refd) Florence Bailes v Ng Jit Leng [1985] 1 MLJ 374 (distd) Wren v Holt [1903] 1 KB 610 (refd) Godley v Perry [1960] 1 WLR 9 (refd) Donoghue v Stevenson [1932] AC 562 (refd) Addis v Gramophone Co Ltd [1909] AC 488 (refd) Jarvis v Swan Tours Ltd [1973] QB 233 (refd) Jackson v Horizon Holidays Ltd [1975] 1 WLR 1468 (refd) Perry v Sidney Philips & Sons [1982] 1 WLR 1297 (refd) Abbott v Sullivan [1952] 1 KB 189 (refd) Bradford v Pickles [1895] AC 597 (refd) Allen v Flood [1898] AC 1

P is a well known athlete in Singapore and has represented Singapore in international competitions. D, an association, is vested with the power and responsibility to promote arrange and assist athletic competitions. P was sent to Japan for five weeks' training by D but due to uncomfortable circumstances in Japan, P returned to Singapore after one week. D set up a disciplinary committee (DC) to inquire into P's premature departure from Japan. D appeared before the DC on 11 June 1989 without legal counsel. The DC signed a lengthy report on the same day. On 22 June, D suspended P from all forms of track and field activities in and outside Singapore for a term of 18 months. P instituted an action claiming, inter alia, a declaration that the decision by D to suspend him was null and void and further claimed damages. P complained that D failed to comply with the rules of natural justice. At trial D contended that the jurisdiction of the court to try the case was founded on the supervisory function of the courts.

Held: (1) it is the inherent power of the superior courts to review the proceedings and decisions of inferior courts and tribunals or other public bodies discharging public functions. As D was a private organization, it did not come under the purview of the supervisory jurisdiction of the superior courts; (2) on the facts, justice was denied to P because D did not act in good faith in the way in which P was treated and in the manner in which the disciplinary proceedings were conducted; (3) the probability was that the report by the DC was drafted in advance and was not based on any findings by the DC. The hearing and purported findings of the DC were cruel and farcical. P was therefore excluded from sports events without any reasonable justification. The decision to suspend P is null and void; (4) the true nature of P's cause of action is breach of contract, based on an implied contract between P and D as an unincorporated association; (5) P was entitled to special damages of S$1,500 which was pleaded and proved and which amount he would have received from D had he not been suspended; (6) general damages for emotional damage, mental anguish, humiliation and reputation will not as a rule be awarded for breach of contract; (7) the malice factor does not afford a ground to award damages in tort or contract.

Haron bin Mundir v Singapore Amateur Athletic Association [1992] 1 SLR 18 High Court, Singapore (Selvam JC).

[Annotation: Affirmed on appeal. See [1994] 1 SLR 47.]

By a sale and purchase agreement ('the agreement'), the second defendant, Rumah Nanas Estate Sdn Bhd ('the vendor'), agreed to sell to the plaintiffs, Plenitude Holdings Sdn Bhd ('the purchaser'), a piece of estate land ('the land') for RM47,939,958. The land was purchased for the purpose of development and the vendor was aware of this fact. The first defendant promised to obtain a loan for the plaintiffs and gave an undertaking that in the event that he was unable to do so, the defendants would join the plaintiffs in a joint venture to develop the land. The purchasers paid a deposit of RM4,793,995.80 but failed to pay the balance sum within the stipulated period. The vendor then terminated the agreement and forfeited the deposit. The trial judge came to the conclusion that the termination of the agreement by the vendor was not valid and ordered specific performance of the agreement for the sale and purchase of the land, with damages to be assessed for wrongful termination and breach of undertaking. (See [1992] 2 MLJ 68.) The defendants appealed to the Supreme Court which dismissed the appeal and affirmed the judgment of the High Court. (See [1993] 1 MLJ 113.) In this application for assessment of damages which was made pursuant to the High Court order, the damages which fell to be assessed were, inter alia, for wrongful termination of the agreement, loss of profits on the development project and interest on the deposit of RM4,793,995.80 paid by the purchaser to the vendor.

Held, awarding the plaintiff approximately RM16.7m in damages, excluding interest: (1) as for the claim under wrongful termination of the agreement, the fees paid to the consultants and surveyors amounting to RM62,783.50 were allowed on the ground that the purchaser had submitted sufficient proof by submitting the relevant invoices. Other fees and the solicitors' costs were not allowed; (2) the defendants were fully aware that the plaintiffs had purchased the land for the purpose of development and that by not honouring their undertakings, the plaintiffs would be unable to proceed with the development and thereby suffer loss of profit on the proposed housing project. The loss suffered by the plaintiffs was a natural and probable result of the defendant's breach of the contract and any loss of profit normally to be expected which the developer would have earned but for the breach, is an allowable claim under the rule in Hadley v Baxendale (1854) 9 Ex 341; (3) the 'comparison' approach relied on by the vendor in assessing the loss of profits of the purchaser was not without flaws as, inter alia, the computation did not take into account the increase in building costs. Taking all factors into consideration, the court therefore took an average of the two figures provided by both the vendor and purchaser relating to the loss of profits, which amounted to RM19,113,500. However, there could be adverse conditions affecting the anticipated profits and a deduction of 30% should be applied thereby reducing the sum to a round figure of RM13.5m; (4) there was no basis for the claim under loss of opportunity cost of RM2,869,300 and accordingly, it was disallowed. However, in regard to cash flow investment, both the vendor's and purchaser's witnesses agreed that there was such a loss. The average of the two figures provided by the witnesses would amount to RM867,969 and this sum was therefore allowed for the loss suffered in regard to cash flow investment; (5) [1964] 2 WLR 269 and accordingly, the claim for RM5m was disallowed; (6) the sum of RM4,793,995.80 being the 10% deposit paid by the plaintiffs to the defendants had been wrongfully forfeited and as such, the plaintiffs had been denied the use of that sum of money. The defendants, by wrongfully terminating the agreement, must in all fairness compensate the plaintiffs. The interest of 8%pa should commence from the date the agreement was wrongfully terminated, ie 12 December 1988, till the balance of the purchase price was paid by the plaintiffs to the defendants on 31 December 1992, which amounts to RM2,279,290.52; (7) in regard to the claim for future profits, which in reality amounts to a claim for exemplary damages, the purchasers had not established their claim in accordance with the principles laid down in Rookes v Barnard [1964] AC 1129; [1964] 1 All ER 367;interest was further awarded at the rate of 5%pa on all the awards of damages (except for the sum of RM2,279,290.52) from the date of service of the writ until the date of judgment under s 11 of the Civil Law Act 1956 and thereafter at the rate of 8%pa until satisfaction under O 42 r 12 of the Rules of the High Court 1980.

Plenitude Holdings Sdn Bhd v Tan Sri Khoo Teck Puat & Anor [1994] 2 MLJ 273 High Court, Johor Bahru (PS Gill J).

The defendants were the owners of a bus. The bus met with an accident and was extensively damaged. The plaintiffs agreed to repair it for $69,180. The defendants took delivery of the repaired bus on 23 September 1983. The defendants paid $20,000 in November 1983. Two cheques for $49,180 were given in January 1984. Both the cheques were dishonoured. Thereafter, the defendants paid $5,000 in cash. On 18 February 1984, the plaintiffs' solicitors issued a statutory notice under s 218 of the Companies Act 1965 (Act 125) to pay the balance of $44,180 or face winding-up proceedings. The defendants then for the first time wrote to the plaintiffs that the coach repaired was not in accordance to specifications and of good merchantable quality. Meanwhile, the defendants offered to pay the amount by instalments provided an adjustment of $1878 was made in the repair bill. The plaintiffs did not accept the proposal. Meanwhile the defendants paid in cash $8000. The application for winding up came before the judge. As the debt was disputed, the judge refused to make a winding-up order. On 9 October 1984, the plaintiffs filed a writ and on 11 December filed an application for summary judgment. The senior assistant registrar gave the defendants leave to defend. The judge allowed an appeal by the plaintiffs against that order. The defendants counterclaimed for $33,000 as damages for breach of contract, interest and costs.

Held: (1) the defendants took delivery of the bus, operated it for quite some time and never took the plea that the bus had not been repaired as per specifications; (2) there was no failure of consideration; (3) the defendants' conduct in obstructing the plaintiffs' claim amounted to an abuse of the process of the court; (4) there was no material basis for the defendants' counterclaim.

Sun Soon Heng Coach Works Sdn Bhd v Nima Travel Sdn Bhd [1986] 1 MLJ 252 High Court, Johore Bahru (Shankar J).

This was an appeal from the decision of the High Court ([1972] 1 MLJ 11), dismissing the appellant's claim for a refund of $4,000 paid as a deposit towards the purchase of a house. The appellant contended, inter alia, that there was no concluded agreement between himself and the respondent.

Held, dismissing the appeal: (1) the application for the purchase of the house constituted a completed contract; (2) the deposit was earnest money, and as the appellant failed to proceed with the purchase, the respondent was entitled to forfeit it; (3) s 65 of the Contracts (Malay States) Ordinance 1950, did not apply to earnest money; (4) s 75 of the said ordinance did not apply when a contract was properly terminated and the deposit forfeited, whether or not damages were proved.

Karuppiah v Petaling Garden Co Sdn Bhd [1972] 1 MLJ 173 Federal Court, Kuala Lumpur (Azmi LP, Suffian and Ong Hock Sim FJJ).

The defendants were a firm of solicitors in Singapore retained by one Mr David Cam ('Mr Cam') on behalf of Toro Holdings Ltd of Vanuatu and one Mr Noel A Adam in the period AugustÐSeptember 1993. At that time, Mr Tiang Ming Sing ('Mr Tiang') who was said to be the beneficial owner of all the issued shares in the plaintiffs, a Singapore registered company, was in negotiation with Mr Cam in relation to the purchase of the entire shareholdings of another Vanuatu company known as Veneer Enterprises (Vanuatu) Ltd. On or about 31 August 1993, Mr Tiang signed the sale and purchase agreement, and paid to Mr Cam US$100,000 pursuant to the terms of the agreement. On or about 1 September 1993, Mr Tiang caused to be paid into the clients' account of the defendants, by way of telegraphic transfer, a further sum of US$250,000. Apart from payment of the said sum of US$250,000 into the clients' account of the defendants, there was no communication of whatsoever nature between Mr Tiang and the defendants. Mr Tiang and Mr Cam encountered problems in connection with some proposed amendments to the agreement. The agreement was, according to the plaintiffs, consequently aborted. Nine months later, Mr Tiang instructed his then solicitors to demand from the defendants the return of the sum of US$250,000. However, no refund was forthcoming from the defendants, for as early as September 1993 the defendants had paid out the said sum to their clients in accordance with their instructions. The matter then went into hibernation some time until 22 September 1994 when the present solicitors for the plaintiffs issued a fresh demand letter to the defendants. The defendants replied that they received the US$250,000 on their Vanuatu clients' instructions as their agents; those moneys were paid out from their account in September 1993 in accordance with their clients' instructions and that neither the plaintiffs nor Mr Tiang gave them any instructions nor imposed any conditions as to how the moneys should be dealt with. The plaintiffs commenced an action alleging that the defendants received the US$250,000 into their clients' account as agents for the plaintiffs. Alternative they contended that the defendants, by electing to retain the said sum and disbursing it subsequently, were also acting as solicitors for the plaintiffs. Additionally, it was averred that by disbursing the said sum without instructions and without prior communication from the plaintiffs, the defendants had acted negligently and were in breach of the duty of care owed to them in contract as well as in tort. The defendants by their defence denied liability to the plaintiffs in contract or in tort. Their position was that they acted as agents for their own clients and were never the agents for the plaintiffs.The defendants further denied that there was any solicitor and client contract or relationship between them and the plaintiffs. They averred that they were under no duty to communicate with or seek instructions from or make inquiry of the plaintiffs before disbursing the said sum to their clients. The assistant registrar struck out the plaintiffs' statement of claim on the ground that it disclosed no reasonable cause of action against the defendants, pursuant to O 18 r 19 of the Rules of the Supreme Court ('RSC'). The plaintiffs appealed.

Held, dismissing the appeal: (1) a reasonable cause of action meant a cause of action with some prospect of success when only the allegations in the pleadings were considered. The object of the rule was to stop cases which ought not to be launched, cases which were obviously unsustainable or patently frivolous or vexatious; (2) in an application to strike out a statement of claim on the ground that it was frivolous and vexatious, the court was entitled to and ought to look at the whole history of the matter. In such an application, the court in its inherent jurisdiction was entitled to look at affidavits as to the history of the matter and if in the light of that history the action was vexatious, the pleading could be struck out and the action dismissed; (3) the act of authorizing or employing a solicitor to act on behalf of a client constituted the solicitors' retainer by the client. The giving of a retainer was equivalent to the making of a contract for the solicitors' employment and the rights and liabilities of the parties under the contract would depend partly on any terms which they have expressly agreed, partly on the terms which the law would infer or imply in the particular circumstances with regard to matters on which nothing had been expressly agreed, and partly on such statutory provisions as were applicable to the particular contract); (4) the plaintiffs' statement of claim disclosed that they transferred funds into the clients' account of the defendants, not pursuant to any arrangement or communication with the defendants but in order to underpin a commercial transaction put in place by their Mr Tiang with regard to a company incorporated in Vanuatu. Whatever transpired between Mr Tiang and the plaintiffs was res inter alios acta and was never made known to the defendants until particulars were provided. In the circumstances, the assertion by the plaintiffs that by transmitting funds into the clients' account of a third party's solicitors, they had also intended to enter into a solicitor-client relationship with the defendants, lacked credibility and substance. If there was indeed any such intention, it was unclear from the pleadings who formed the intention. The disinterest shown by the plaintiffs and long period of time between the date on which the remittance was made and the time of their demand for refund did not support the view that the plaintiffs were earnest in entering into a solicitor-client relationship with the defendants; (5) agency was a relationship arising from consent usually expressed in the form of a contract. An agreement between a principal and agent may be implied in a case where each had contracted himself towards the other in such a way that it was reasonable for that other to infer from that conduct, consent to the agency relationship; (6) the pleadings of the plaintiffs did not suggest that there was any consensual or contractual arrangement between the parties. The fact of the plaintiffs' forwarding funds to the clients' account operated by the defendants with their bankers dids not in law give rise to an inference of an implied contract of agency between themselves. The defendants were acting solely for the third party and were contractually responsible only to them. The contention by the plaintiffs that there was in fact a principal-agent relationship between them, was ill-conceived; (7) for there to be a duty of care owed by one person to another, outside contract or fiduciary relationship, there must be a degree of proximity or special relationship between the two persons; (8) the degree of proximity between the plaintiffs and the defendants was such that the relationship between the parties was marked only by the extreme distance between them. The plaintiffs' self-confessed inaction for a prolonged period after the remittance of the funds did not support the contention that the plaintiffs did, from the outset, contemplate bringing about reciprocal obligations characterised by mutual rights and duties between the parties; (9) the cause of action in 'money had and received' was also not available to the plaintiffs since the moneys had already been paid over to the third party; (10) the general rule was that, subject to his duties to the court and the professional duties imposed upon his profession, a solicitor when acting for his client owed no duty to third parties; (11) a duty of care could not be extended to the present fact situation. There were no averments in the pleadings which indicated that the defendants knew that the plaintiffs were dependant upon the defendants carrying out any allotted task or assigned function. The plaintiffs remained silent and did not bother to know about the disposition of the funds. They did not at any time expect any duty to be undertaken for their benefit by the defendants. They used the defendants' clients' account only as a conduit to transfer funds to the Vanuatu parties. The statement of claim did not disclose a reasonable cause of action and the alleged breach of duty was an argument without any legal foundation; (12) if the money was earnest money or downpayment, the demand letters did not stipulate that it should be retained by the defendants as stakeholders or for any given length of time. The plaintiffs by their own admission remained silent and did not make any contact with the defendants until nearly nine months later. Such a long stupor and indifferent resignation on the part of the plaintiffs tended to oppugn against and undermine their much belated assertion that they expected the defendants to obtain their approval prior to the release of the funds; (13) the expression 'frivolous or vexatious' included proceedings which were an abuse of the process of court. Having regard to the manner in which the action was proceeded and the pleadings presented, to put this case forward for hearing would be an abuse of the process of court. This was a plain and obvious case where the summary procedure provided under O 18 r 19 should be invoked. The allegations contained in the statement of claim did not support the view that there was a cause of action with any prospect of success.

Active Timber Agencies Pte Ltd v Allen & Gledhill [1996] 1 SLR 478 High Court, Singapore (Rubin J).

The plaintiff had paid a sum of $4,000 as deposit for a plot of land in a building estate. Subsequently the defendants asked the plaintiff to sign the agreement for sale but he did not do so. The plaintiff claimed a refund of the sum of $4,000. His claim was dismissed in the sessions court and he appealed to the High Court.

Held: (1) the deposit of $4,000 in this case was earnest money and therefore as the appellant was unwilling to enter into the main contract to complete the bargain, he could not claim a refund of the deposit; (2) even if the $4,000 was not earnest money, the respondent was entitled to reasonable compensation under s 75 of the Contracts (Malay States) Ordinance 1950.

Karuppiah v Petaling Garden Co Sdn Bhd [1972] 1 MLJ 11 High Court, Kuala Lumpur (Mohamed Azmi J).

[Annotation: See the Federal Court's decision, [1972] 1 MLJ 173.]

The appellant contracted with the respondent to sell to the respondent his motor lorry. The respondent paid $300 as deposit. It was agreed between the parties that the sale would be completed in 15 days and this was reduced into writing. The sale was not, however, completed and the appellant recovered from the respondent the motor lorry which the respondent had been using as from the date of the contract. The respondent then brought an action to recover the $300 paid as deposit by him to the appellant. The magistrate in the Court of Small Causes found for the respondent. On appeal,

Held: there was evidence to show that it was the respondent who defaulted on the contract by failing to produce on due date and even thereafter the balance of purchase money required to complete the sale. As a deposit is primarily a security that the purchaser will complete and as in this case it was the purchaser who had defaulted, the seller was entitled to keep the deposit.

Ling Nguong Hock v Ting Ting Ung [1964] MLJ 116 High Court, Sibu (McGilligan J).

Selva Kumar a/l Murugiah v Thiagarajah a/l Retnasamy [1995] 1 MLJ 817 (Mohamed Azmi, Peh Swee Chin and Wan Adnan FCJJ)

See CONTRACT, Vol 3, para 1994.

By two separate agreements in writing, P agreed to purchase and D agreed to sell certain shares owned by it in DHSB for a total consideration of M$1.4 million. P paid a total of M$210,000 each under their respective agreements with D. When P failed to pay the balance of the purchase price by the extended date, D terminated both agreements and forfeited the sum of M$420,000, that is, M$210,000 under each agreement pursuant to cl 5(b) therein. P commenced proceedings to recover the total sum of M$400,000 paid to D under both agreements on the ground that it was not forfeitable under the respective agreements. As regards interest, P contended that it should be awarded from a date prior to the date of judgment having regard to s 11 of the Civil Law Act 1956. D resisted P's claims on the ground that a total sum of M$140,000 paid under both agreements was forfeitable deposit and that the balance of M$280,000 was fair compensation for the loss suffered by D in consequence of P's failure to complete the transaction. D also contended that interest should only commence from the date of the order of the court.

Held, allowing P's claims to the extent indicated below: (1) where money is deposited with either contracting party on the formation of a contract, prima facie it will be interpreted as a security for performance and hence be forfeited if the depositor in breach of the contract fails to perform his side of the bargain. Having regard to the evidence as a whole and upon the true construction of the agreements, P were each only entitled to recover the sum of M$140,000 from D. D was accordingly ordered to return to P a sum of M$280,000; (2) in the instant case, D could not claim the balance of M$280,000 as fair compensation as it had failed to discharge the burden of proof cast upon it under s 75 of the Contracts Act 1950 to show that it had suffered a loss and was therefore entitled to compensation; (3) as regards interest, the learned judge noted that D was the victim of the breach and P were the wrongdoers and that the refund was necessitated by P's own breach. It followed that D could not have been held to be withholding payment of any money wrongfully unless and until the court had made an order and was therefore not liable to pay any interest for the period prior to the date of the order of the court.

Guna Sittampalam & Anor v Aik Hua Properties Sdn Bhd [1989] 2 MLJ 162 High Court, Kuala Lumpur (Gunn Chit Tuan J).

This was an appeal from a decision of the Federal Court ([1969] 2 MLJ 253) allowing an appeal by the plaintiff from the judgment of the High Court ([1967] 1 MLJ 177). The question for determination in the proceedings was whether a vendor was entitled to forfeit a deposit paid on a contract for the sale of real property following its non-completion by the purchaser, though the vendor was not in a position to prove actual damage flowing from the purchaser's breach of contract. The appeal raised three points: (1) whether on the true construction of the contract the vendor was entitled to forfeit the whole deposit notwithstanding his inability to prove that he had suffered damage by reason of the purchaser's failure to complete; (2) whether in the circumstances s 75 of the Contracts (Malay States) Ordinance 1950, which is in the same terms as the s 74 of the Indian Contracts Act as amended, applied to the forfeiture in question so as to entitle the purchaser to recover his deposit notwithstanding his failure to complete; (3) whether s 65 of the Contracts (Malay States) Ordinance which is in the same terms as s 64 of the Indian Contracts Act applies to the forfeiture in question so as to oblige the vendor to return the deposit on termination of the contract as a benefit received under the contract.

Held, allowing the appeal: (1) the contract meant, unambiguously, that in the event of a failure by the purchaser to complete and notice to terminate being given, the vendor was at liberty to forfeit the deposit and to claim for any damage which he had suffered over and above the amount of the deposit, after giving credit for the amount of the deposit; (2) s 65 of the ordinance was not applicable to the circumstances of the existing case. The point raised was not one which could be sustained in the light of the authorities and the language of the section; (3) once it was decided that the construction of the contract was such that the sum of $377,500 was paid as a true deposit and was thus liable to forfeiture under the contract, in case of failure by the purchaser to complete, s 75 of the ordinance could have no application when the contract was properly terminated, and the deposit was forfeited whether or not damage was proved. There was no difference in this context between the expression 'deposit' and the expression 'earnest money'. A reasonable deposit has always been regarded as a guarantee of performance as well as a payment on account, and its forfeiture has never been regarded as a penalty in English law or common English usage.

Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89 Privy Council Appeal from Malaysia (Lord Hailsham LC, Lord Hodson and Lord Cross of Chelsea).

This was an appeal against the decision of the High Court ([1967] 1 MLJ 177). The appellant had agreed to purchase rubber lands for the price of $3,775,000 and had paid $377,500 under the agreement 'by way of deposit and part payment'. It was provided in the agreement that if there was default in completing the sale by the purchaser the amount paid by the purchaser 'shall be forfeited to account for damages for breach of contract'. The appellant failed to complete the contract within the time stipulated. The respondents thereupon rescinded the contract and forfeited the deposit. The appellant claimed the return of the sum of $377,500 paid by him. The learned trial judge dismissed the claim. It was contended on appeal that as the agreement provided for the forfeiture of the sum of $377,500 'to account of damages for breach of contract', the learned judge should have considered whether the sum was a genuine pre-estimate of damages, and as in this case there was no evidence that the respondents had suffered any damage the appellant should have been granted equitable relief.

Held, allowing the appeal: (1) and where as here the vendor had sustained little or no damage by reason of the breach of contract, the purchaser was entitled to claim a refund of any sum in excess of such damage; (2) on a true construction of the agreement it was intended that the sum of $377,500 should be forfeited to account of damages, so that the vendor could have claimed more if it turned out that the sum was inadequate as compensation for their loss;the sum paid in this case was not earnest money and therefore the vendor was not entitled to forfeit it on breach of the contract by the purchaser and was entitled to reasonable compensation as damages for such breach.

Jagathesan v Linggi Plantations Ltd [1969] 2 MLJ 253 Federal Court, Kuala Lumpur (Ong Hock Thye CJ (Malaya).

[Annotation: See also the decision of the Privy Council, [1972] 1 MLJ 89.]

The defendants had agreed to sell certain lands for the sum of $3,775,000 to one AN Karuthan Chettiar and the sum of $377,500 had been paid 'by way of deposit and part payment' in accordance with the agreement. Karuthan Chettiar assigned the agreement to the plaintiff. The sale was to be completed within 90 days from the date of the agreement and time was of the essence to the contract. The plaintiff failed to complete the sale and the defendants gave notice that the agreement was at an end and that the deposit had been forfeited. The plaintiff brought an action to recover the whole or part of the deposit made on the ground that the forfeiture of the deposit was a penalty and therefore void and that the damages suffered by the defendants should be assessed.

Held: (1) where in a contract between vendor and purchaser a sum is deposited by the purchaser by way of guarantee or security for the performance of the contract of sale and time is of the essence to the contract, the purchaser, if he fails to complete the sale at the essential time, cannot recover the deposit if it bears a reasonable proportion to the purchase price and there is a stipulation in the contract as regards forfeiture; (2) the deposit of 10% was reasonable in the case of contracts for the sale of land and therefore the plaintiff in this case was not entitled to its recovery.

Jagatheesan v Linggi Plantations Ltd [1967] 1 MLJ 177 High Court, Kuala Lumpur (Gill J).

[Annotation: See also the decisions of the Federal Court ([1969] 2 MLJ 253) and the Privy Council ([1972] 1 MLJ 89).]

The respondent entered into a sale agreement with the appellants to purchase from the appellants all the shares in a company for the price of $10 million. The sum of $1 million was paid as deposit and towards account of the purchase price and it was provided that if the purchaser failed to pay any of the instalments under the sale agreement the vendors shall be entitled to 'forfeit all sums thencetofore paid by the purchaser'. Time was declared to be of the essence to the contract. The respondent failed to pay the first instalment of $4 million on the due date in accordance with the agreement and the appellants thereupon repudiated the agreement and forfeited the said $1 million paid as deposit and towards the purchase price. The respondent applied for a declaration that the forfeiture clause of the sale agreement was invalid and unenforceable being in breach and violation of s 75 of the Contracts Act 1950 (Act 136), and also sought a declaration that the forfeiture of the said $1 million is illegal, null and void. The learned judge granted the declarations (see [1978] 1 MLJ 319) and the appellants appealed.

Held, allowing the appeal: on a proper reading of the sale agreement the $1 million forfeited in this case is a true deposit and was lawfully and properly forfeited by the appellants.

Sun Properties Sdn Bhd & Ors v Happy Shopping Plaza Sdn Bhd [1987] 2 MLJ 711 Supreme Court, Kuala Lumpur (Wan Suleiman, Hashim Yeop A Sani and Wan Hamzah SCJJ).

In this case, the appellant claimed specific performance of an agreement for the purchase of land from the respondent. The respondent had agreed to sell his share in 10 lots of land out of 13 lots owned by him. The purchase price was to be paid by instalments but it was agreed that the purchaser should retain the title deeds before the purchase price was paid in full in order to enable him to arrange for the sub-division and development of the land. The appellant paid the first instalment of the purchase price and the mortgage on the land was discharged but the title deeds were not handed by the respondent to the appellant. As a result the appellant refused to pay the second instalment when it was due. Subsequently, however, he paid two sums of $1,000 to the respondent. The respondent demanded payment of the balance of the second instalment and when he received no reply, he served a notice terminating the agreement and forfeiting the sum of $5,000 deposit. The respondent returned the balance of $7,500 by cheque to the appellant less the sum forfeited but this was returned by the appellant, who denied any breach of the agreement and gave the respondent notice to fulfil his obligations under the agreement. Eventually the appellant brought the action for specific performance against the respondent. There were two main issues in the case: (1) whether there was a condition precedent requiring the respondent to hand over the title deeds to be retained by the appellant prior to the payment of the second and third instalments; (2) whether the appellant had waived such condition by making the two payments of $1,000 each towards the second instalment. The learned trial judge held that there was such a condition precedent but it had been waived by the appellant. The appellant did not pay the balance of the second instalment and therefore his application for specific performance was dismissed. The appellant appealed.

Held: (1) the handing over of the title deeds to the appellant for his retention was a condition precedent to the payment by the appellant of the second instalment but in the circumstances the payment of the two sums of $1,000 towards the second instalment amounted to a waiver of his right to retain the title deeds; (2) the appellant had failed and refused to pay the balance of the second instalment even after the expiration of the extended time and after he sued the respondent for specific performance. This was not a case where it is just and equitable to grant specific performance; (3) in the circumstances it would be unconscionable to allow the deposit to be forfeited by the respondent and it is just and equitable for the money to be returned to the appellant.

K Umar Kandha Rajah v EL Magness [1985] 1 MLJ 116 Federal Court, Kuala Lumpur (Salleh Abas CJ (Malaya).

This was an appeal by the plaintiffs, administrators of the estate of Ng Lye Hoong, deceased, against the judgment of the High Court dismissing their claim ([1969] 1 MLJ 39). The deceased Ng Lye Hoong entered into an agreement with the respondent company for the purchase of land and premises in Kuala Lumpur. She paid the respondent company $10,000 and it was agreed that she would subsequently enter into a formal agreement and that on failure to do so after notice, the deposit would be forfeited. On failure of the said Ng Lye Hoong to enter into formal agreement, the respondent company wrote to her and said that if she should fail to sign the formal agreement, the respondent company would sell the land to other purchasers. Ng Lye Hoong then wrote to the respondent company requesting them to sell the property to other purchasers and to return her deposit of $10,000. Subsequently the respondent company informed the said Ng Lye Hoong that unless she signed the formal agreement the deposit would be forfeited. The appellants, as the administrators of the estate of Ng Lye Hoong, sued for the return of the deposit. The High Court dismissed their action and they appealed to the Federal Court.

Held, allowing the appeal: on the facts the respondent company had in their letter dispensed the deceased from performing her part of the contract and therefore the estate of the deceased was entitled to the return of the deposit.

Pan Ah Ba & Anor v Nanyang Construction Sdn Bhd [1969] 2 MLJ 181 Federal Court, Kuala Lumpur (Azmi LP, Gill FJ and Lee Hun Hoe J).

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

See CONTRACT, Vol 3, para 1931.

See contract, para X [38].

Segar Oil Palm Estate Sdn Bhd v Tay Tho Bok & Anor [1997] 3 MLJ 211 Court of Appeal, Kuala Lumpur (Shaik Daud, Siti Norma Yaakob and Mahadev Shankar JJCA).

The plaintiffs had issued a letter of credit to the defendants. The defendants knew that the facility granted was for goods yet to be supplied. They reformulated old invoices and supporting documents into one invoice and presented these for payments. S, the plaintiffs credit and bills officer, who processed the documents, was deceived into believing that the documents were genuine. S passed on the documents to M, who authorized payment. When it was discovered that the documents were not genuine the plaintiffs sued the defendants for the sum paid on the documentary credit.

Held, dismissing the claim: (1) the invoices and delivery notes were false. It was the intention of the defendants that the documents should be acted upon by the plaintiffs, so that the defendants could get paid; (2) however this was not enough for the plaintiffs to succeed. They had to prove that their management was induced by the false documents to pay. There was no evidence of inducement; (3) M did not testify, and the court could not surmise what was in M's mind when he signed the acceptance of the bill of exchange; (4) the claims based on fraud and mistake failed because of the lack of proof of causation.

Hill Samuel Merchant Bank Asia Ltd v Resources Development Corp Ltd Suit No 972 of 1987 High Court, Singapore (Warren LH Khoo J).

A was the chairman and managing director of TWD, a company incorporated in Sri Lanka. TWD entered into a contract with R under which they agreed to let R run a casino in a building owned by them. In consideration for this, R agreed, inter alia, to pay US$576,000 in advance rent. On execution of the agreement R paid US$288,000, ie half the agreed sum. Subsequently, A executed a letter of undertaking in which he promised to refund to R the sums paid by them to TWD if the casino licence did not materialize. R thereupon paid the balance of US$288,000 to TWD. TWD was not able to obtain approval for a casino and accordingly breached their agreement with R. R then sued A for the return of their money in accordance with the terms of the letter of undertaking that he had signed. R obtained summary judgment and A's appeal to the High Court was dismissed. A appealed further to the Court of Appeal. His main defence was that the letter of undertaking had been procured by economic duress, in that R were aware that TWD were in financial difficulties and had wrongfully withheld payment of US$288,000 in order to force A to execute the letter of undertaking.

Held, dismissing the appeal: (1) an examination of the undisputed facts revealed that there was no factual basis for the defence of economic duress. No complaint was made when only half of the agreed sum was paid to TWD on execution of the contract between them and R. No demand was made by A or anyone else for payment of the balance. A did not make any complaint after he signed the undertaking. He did not initiate any action to challenge the undertaking. He did not protest that he had been coerced into signing; (2) even assuming that there was some pressure on A to sign the undertaking, commercial pressure does not amount to economic duress unless it amounts to a coercion of will that vitiates consent. There was nothing before the court to indicate such coercion. A's appeal was accordingly dismissed.

Third World Development Ltd & Anor v Atang Latief & Anor [1990] SLR 20 Court of Appeal, Singapore (Sinnathuray, Lai Kew Chai and Thean JJ).

The plaintiff and the defendants had entered into a deed of settlement ('the deed'). The plaintiff applied to court inter alia for a declaration that the deed was void and unenforceable on the ground that the deed was executed by the plaintiff under economic duress. The plaintiff applied for summary judgment under O 81 r 1 of the Rules of the High Court 1980. The second defendant was the government of Malaysia.

Held, dismissing the application: (1) the prohibition stated in O 73 r 5(1) of the 1980 Rules is unqualified in relation to application for summary judgment against the government. The nature of the application in this case was to seek summary judgment by way of rescission of the deed. Accordingly, such an application fell squarely within the confines of the prohibition in O 73 r 5(1) of the 1980 Rules. In the circumstances, the court had no jurisdiction to entertain the application in this case; (2) assuming that the court had jurisdiction to hear the application in this case, the evidence did not show that the plaintiff had any factual basis to sustain the plea of economic duress. There was insufficient evidence to show firstly that the plaintiff had executed the deed against its will and secondly, that the plaintiff had no alternative course of action open to it at the material time. Finally there was insufficient evidence to show that the plaintiff was confronted with coercive acts by the defendants exerting the pressure. There might had been some form of commercial pressure applied upon the plaintiff at the time of the execution of the deed but such pressure did not constitute economic duress in the sense that it amounted to a coercion of the plaintiff's will which vitiated consent.

Ling Heng Toh (1964) Construction Co v Director of Public Works & Ling Heng Toh [1964] Construction Co v Director of Public Works & Anor Civil Suit No 50 of 1991 High Court, Sibu (Steve Shim JC).

D had a contract to supply their basket-ware to a big chain of stores in the UK. D entered into an agreement with P under which P were to deliver cartons of D's basketware at a rate per carton depending on the number of cartons. The agreement was silent as to the size of the cartons or the number of cartons necessary to constitute a load. When P arranged to make the first delivery, P's depot manager found that the cartons were larger than contemplated and that because of this there were fewer of them. The manager was convinced that it would not be financially viable to carry such a load at the rate agreed. He made it plain to D that P would not carry any more goods unless D agreed to pay a higher charge. Had D refused, P would not have many any further deliveries. D was a small company and all the three directors were personally committed to its success. They had secured a large order and it was essential to D's success and commercial survival that they should be in a position to make deliveries. This was known to P's depot manager. A new agreement was given to D. It was signed unwillingly and under compulsion by one of the three directors of D, who reasonably believed that it would be very difficult, if not impossible, to negotiate with another contractor. P sued for the amount due on this new contract.

Held, dismissing P's claim: (1) D's apparent consent to the agreement was induced by pressure which was illegitimate and it was not approbated. Such pressure amounted in law to economic duress, which vitiated D's apparent consent to the agreement; (2) alternatively, there was no consideration for the new agreement. P were already obliged to deliver D's goods at the rates agreed under the original agreement.

Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] 1 All ER 641 High Court, England (Tucker J).

These consolidated appeals were brought by C, a customer of B, against the dismissal of her appeals from the judgment of Tan Ah Tah J dismissing her claims and counterclaims against B. C contended before the Board that orders of court made with the consent of her then solicitor should be set aside on three grounds rooted in alleged mistake viz: (a) a mistaken assumption by C and B that B had an effective charge on C's property in Cuscaden Road; (b) that the Cuscaden Road property was effectively charged to secure an overdraft with B of C's husband, Y, whereas it was not because C's signature to the relevant confirmation of deposit of title deeds had been procured by misrepresentation made on B's behalf; and (c) B and C consented to the order in the mistaken belief by both that it formed a part of, or step in, a wider agreement having contractual force, or alternatively, such a mistaken belief by C or her then solicitor induced by B, or that B, knowing of it, did nothing to disabuse C. C contended that the confirmation of deposit of the Cuscaden title deeds was a memorandum of charge and, therefore, an assurance within the meaning of the Registration of Deeds Act (Cap 281, 1970 Ed) and inadmissible for non-registration, and oral evidence of the creation of a charge by the deposit was precluded under s 91 of the Evidence Act (Cap 5, 1970 Ed), or alternatively, that any such charge that may have existed prior to execution of confirmation of deposit was superseded by the confirmation, which itself was inadmissible for non-registration. However, C conceded that the confirmation of deposit contained an enforceable agreement by C to execute a legal mortgage if required by B and the Registration of Deeds Act would not have stood in the way of such enforcement and, therefore, even if C's contention under the Registration of Deeds Act and the Evidence Act were correct, as to which the Board made no ruling, the mistake was one of machinery only, and not sufficient to justify setting aside the consent order. C also alleged that the two guarantees she signed in respect of Y's indebtedness to B were unenforceable by reason of innocent misrepresentation made on behalf of B as to one such guarantee, and as to the second guarantee that B by two of its officials extorted C's signature by improper pressure. C further argued in relation to the two guarantees that the circumstances indicated a special relationship between herself and B which made it incumbent upon B to establish affirmatively, as to the first guarantee, that there was no misrepresentation, and as to the other, that there was no improper pressure.

Held, dismissing the appeals: (1) as the confirmation of deposit of the title deeds contained an enforceable agreement by C to execute a legal mortgage if required by B and such agreement was not affected by non-registration, B could have required C to execute a legal mortgage so that a mistake if there was one, as to the existence of a valid equitable charge, was a mistake as to the machinery for the enforcement of B's rights only; (2) there was no such mistake relating to the consent order as would justify setting it aside; (3) C had failed to prove the alleged innocent misrepresentation regarding the first guarantee; (4) C had also failed to prove the alleged improper pressure in relation to the second guarantee; (5) there was no special relationship between C and B in the circumstances which resulted in the burden of proof lying on B as to the alleged misrepresentation and improper pressure.

Maria Chia Sook Lan v Bank of China 1975 Privy Council Appeal from Singapore (Lord Simon of Glaisdale, Lord Morris of Borth-y-Gest, Lord Salmon, Lord Fraser of Tullybelton and Lord Russell of Killowen).

The appellant in this case claimed a sum of $4,200 alleged to be due to him by the respondent under a document in writing and made under seal of 20 July 1973 whereby the respondent had agreed to pay the appellant the sum of $600 per month during the appellant's lifetime and thereafter to pay the stated sum to the appellant's wife and children so long as the respondent had a toddy contract with the government. The respondent admitted the execution of the said agreement but contended before the trial court that the said agreement was unenforceable because it was made without any lawful consideration and that it was made under duress. The trial judge held in favour of the respondent. The appellant appealed.

Held, dismissing the appeal: there was no reason to interfere with the finding of facts by the trial judge who had heard and seen the witnesses and who was quite right in deciding that the said agreement was executed under duress and was the result of undue influence by the appellant.

Visvasam v Sathasivam 1978 High Court, Singapore (Chua J).

In this case, the respondent had applied for a declaration relating to the terms and conditions of service of his employment. He sued not only his employer but also the appellants, who acted as the agent of the employer and other rubber estates to recruit personnel for the rubber estates. The appellants applied to be struck out from the writ but their application was dismissed in the High Court as the learned judge held that the appellants were the agents of the employer and the respondent could rely on O 16 and r 7 of the Rules of the Supreme Court 1957 as there were doubts as to whom he should sue.

Held, allowing the appeal: (1) the appellants were not the employers of the respondent and the action should not have been brought against them; (2) the appellants as agents were not personally liable on contracts entered into by them on behalf of their principals.

Plantation Agencies Sdn Bhd v Haji Ariffin bin Haji Ismail [1978] 1 MLJ 219 Federal Court, Penang (Ong Hock Sim, Raja Azlan Shah and Wan Suleiman FJJ).

The plaintiffs were the operators of Ashibi Lounge which offered to guests who frequented the place the services of the hostesses provided by them. The defendants are the CPF Board. During the periods in question, the plaintiffs had two categories of hostesses, classified as full-time hostesses and freelance hostesses. The hostesses, the subject matter of the action, were all freelance hostesses. The basic terms and conditions on which the plaintiffs made use of their services were in writing. A hostess would normally receive a letter of employment and a letter of appointment. There were also many other terms, rules or regulations which were applicable to all hostesses but not set out in the typical letter of employment or appointment. The defendants claimed arrears of CPF contributions on behalf of the hostesses on the grounds that they were employees of the plaintiffs. The plaintiffs sought a declaration as to whether the hostesses were employees for the purposes of the Central Provident Fund Act (Cap 36) during the periods each of them had worked for the plaintiffs as hostesses at the plaintiffs' lounge.

Held, declaring in favour of the defendants: (1) the fundamental test approved by the Privy Council is whether the freelance hostesses were performing their services as persons in business for their own account. In the court's view, many of the factors referred to by the Privy Council in Lee Ting Sang which are consistent with a contract of service rather than a contract for services have been satisfied in this case; (2) the terms of employment were such that they bound the plaintiffs to provide employment to the hostesses once they reported for work. In this sense, there was mutuality. Once the hostesses reported for work, she was obliged to serve and the plaintiffs were obliged to allow them to serve. This was reinforced by the term that they were entitled to a daily wage, irrespective of whether their services were required or not; (3) having regard to all the factors, each of the freelance hostesses had an umbrella contract of employment with the plaintiffs which either party could terminate on one day's notice.

Kureoka Enterprise Pte Ltd v Central Provident Fund Board Originating Summons No 218 of 1991 High Court, Singapore (Chan Sek Keong J).

The plaintiffs were a company trading in electronic parts and components and employed the first defendant as one of their sales engineers. The employment contract contained a confidentiality clause requiring the first defendant not to divulge any confidential information relating to the plaintiffs' business which was acquired by him in the course of his employment with the plaintiffs, to any third party. The plaintiffs were not satisfied with the first defendant's services and indicated to him that he should try to secure another job. The first defendant subsequently told the plaintiffs that he had secured a job with the second defendants and that he would leave the plaintiffs' employ later. In the weeks following, the plaintiffs began to get feedback from certain of their customers that the second defendants had offered prices lower than the plaintiffs for goods that the customers needed. After some investigations, it was found that the first defendant had supplied the plaintiffs' documents to the second defendants. The plaintiffs subsequently sought, inter alia, summary judgment and an injunction against the first and second defendants restraining them from using information contained in the plaintffs' correspondence, lists and confidential documents which were in the custody or possession of the defendants. The second defendants contended that the first defendant voluntarily brought the documents to them and that their use of the documents was an innocent use in pursuing their legitimate commercial interest. They also claimed that they had not in any way induced the first defendant to breach his contract with the plaintiffs. The second defendants submitted that whether the use of the information was in innocent use or not was a triable issue and that it would not be appropriate for the court, on an O 14 application, to make findings of fact that the second defendants had induced a breach of contract or had the requisite knowledge.

Held, allowing the plaintiffs' application: (1) during the period that the second defendants were receiving confidential information from the first defendant, the second defendants knew that the first defendant was still in the employ of the plaintiffs; (2) it was a reasonable inference to make, in the circumstances, that the second defendants were encouraging the first defendant to keep them posted of the plaintiffs' business strategy so that the second defendants could profit at the expense of the plaintiffs; (3) it was no answer for the second defendants to say that, at that time, they did not know that there was a confidentiality clause in the first defendant's employment contract with the plaintiffs . Even if that assertion was true, it would be of no assistance to the second defendants for the law implied such a duty of confidentiality. It was clear that the second defendants actively abetted the conduct of the first defendant; (4) it would ordinarily be inappropriate to give summary judgment in cases alleging a conspiracy as the proof of the conspiracy would depend, to a large extent, on the cross-examination of witnesses. Whether there was a conspiracy would therefore be a triable issue. In this case, however, the evidence showing the collaboration between the first and second defendants in procuring confidential information relating to the plaintiffs' business was overwhelming; (5) the defence raised was a sham. There was really no triable issue and the only purpose served by granting leave to defend, either unconditionally or conditionally, would be to unnecessarily delay the proceedings.

BBS Electronics Pte Ltd v A Ravi Kumar Nair & Anor Suit No 1153 of 1996—High Court, Singapore (S Rajendran J).

On 1 April 1950, the respondent was engaged by the appellant as a bus-driver. On 1 May 1950, the appellant sold the bus which the respondent had been engaged to drive and dismissed the respondent. After certain proceedings before the Protector of Labour which had been decided in favour of the appellant, the respondent instituted a claim in the Kuching district court for three months' wages in lieu of notice at the rate of $90 a month. The court gave judgment for him for one month's wages at that rate. The appellant appealed on grounds which are set out in the judgment.

Held: (1) s 7 of the Labour Protection Ordinance, which confers power on the Protector of Labour to adjudicate in wage disputes, does not oust the jurisdiction of the courts; (2) an action by an employee under the provisions of ss 5 and 6 of the Labour Protection Ordinance is not an ordinary action for damages for breach of contract, and, consequently, the right of the plaintiff to wages in lieu of notice is in no way affected by proof that he could or did mitigate his loss; (3) on the evidence, the district court properly found that the plaintiff was employed on a monthly and not a daily basis.

Kueh Sing Khay v Lim Boon Chuan [1950] SCR 23 Supreme Court, Sarawak, North Borneo and Brunei

The first defendant was the Municipal Council of Sandakan ('the Council'). The plaintiff alleged that the Council had terminated the plaintiff's employment contract with the Council prematurely. The plaintiff had earlier approached the Chief Minister who approved the plaintiff's appointment as Vice-President (I) of the Council. The State Secretary to the Permanent Secretary of the Ministry of Town and Country Development ('the Permanent Secretary') upon receiving the Chief Minister's approval of the plaintiff's appointment, issued a letter to the President of the Council ('the President') to inform the President that the Minister concerned had approved the appointment of the plaintiff as Vice-President (I) upon the terms which the Chief Minister had agreed. For unknown reasons, a few months later, the appointment was terminated by a letter from the Council to the plaintiff. The plaintiff was paid one month's salary in lieu of notice which was not accepted by the plaintiff. The plaintiff claimed for loss of salary from the date of the alleged unlawful termination until the end of the contractual period ('the period') and other allowances as provided in the Chief Minister's letter of approval of the plaintiff's appointment. The council submitted that the Local Government Ordinance 1961 ('the Ordinance') and the Sandakan Municipal Council Instrument ('the instrument') had the effect of rendering the appointment of the plaintiff illegal because there was already an appointed Vice-President and because the plaintiff was at the relevant time not a member of the state public service. Clause 6 of the instrument, inter alia, provided that the Council shall be composed of the President, Vice-President and other appointed members. The plaintiff argued that the appointment of two Vice-Presidents was permissible pursuant to the Ordinance and the Council's Staff Regulations for Local Authority Staff (Sabah) 1964 ('the Regulations'). The plaintiff further maintained that he was deemed a member of the state public service pursuant to s 105 of the Ordinance. The Council argued that there was no contract entered into by the Council with the plaintiff because there was no contract executed between the plaintiff with the Council, and the Minister concerned did not decide on the appointment of the plaintiff but acted mechanically when he merely followed the decision of the Chief Minister. The Council alleged that the contract was not executed due to the absence of the seal of the Council on the contract upon which the plaintiff sued. The Council further contended that the contract between the plaintiff and the Council was governed by reg 37(2) of the Regulations which allowed the termination of the contract with one month's notice, and that the contract was in fact so terminated. Consequently, the damages of the plaintiff should be limited to one month's salary. The plaintiff relied on reg 1(3) of the Regulations which allowed the Minister to approve the appointment of a person on terms other than those set out in the Regulations.

Held, judgment for the plaintiff: (1) this was a matter of the interpretation of the relevant legislation. The court must ascertain the meaning of the legislation as it stands, to interpret it 'according to the intent of them that made it' and if the words are clear, to give effect to them. The court cannot go beyond the expressed language of the legislation. As far as possible, a legislation should not be read to give it an effect such that it is a pointless piece of legislation; (2) s 105 is a deeming provision and it turns an employee of the Council when he is carrying out his duties as such into a member of the state public service though he is not one but nevertheless, he would not be entitled to the benefits which a member of the state public service would be entitled. Section 105 does not turn someone into a member of the state public service to qualify for a post when in fact he is not one. Therefore, s 105 cannot be relied upon by the plaintiff as conferring on him the qualification that of being a member of the state public service when in fact he was not one so as to qualify to hold or to retain the post of Vice-President; (3) even though the plaintiff was not a member of the state public service and there was already an appointed Vice-President, there was no express provision in either the instrument or the Ordinance that prohibited the appointment or a contract of employment of the plaintiff. Such prohibition could not be implied because apart from the instrument, the Council is clothed with all the authorities that are spelt out in the Ordinance, and the instrument was to be read as one and read subject to the Ordinance. Far from prohibiting the contract that was entered into without complying with the instrument and the Ordinance, such a contract is expressly saved by s 37(3) of the Ordinance (s 37(3) provides that all contracts entered into by an Authority if otherwise valid shall have full force and effect notwithstanding that the directions have not been complied with); (4) a fortiori, when the designation of the plaintiff was Vice- President (I), which does not exist under the instrument. The contract was not illegal as there was no statutory provision prohibiting the employment of the plaintiff by the Council; (5) since the common law requirement of a seal for a contract by a corporation is not within the exemption of s 10(2) of the Contracts Act 1950 ('the Act'), the common law is thus altered by the Act with the result that a seal is no longer necessary for any contract by a corporation; (6) the evidence could not support the contention that the Minister was mechanical when making his decision appointing the plaintiff. From the facts, the Minister must have deliberated on the matter and there was no evidence to show otherwise; (7) since there was already a Vice-President, the contract employing the plaintiff must be for a post other than the Vice- President post of cl 6 of the instrument;the plaintiff was accordingly appointed on terms other than those set out in the Regulations which meant that the contract could not be prematurely terminated.

Chin Chen Fui v Majlis Perbandaran Sandakan & Anor Suit No S 164 of 1985 High Court, Sandakan (Ian Chin J).

To obtain leave to appeal when the amount involved is below the statutory amount, would-be appellants must show that a serious and important issue of law is involved. Rights of appeal are purely creatures of statute and the court cannot entertain any which cannot be brought strictly within the statutory limits.

Wong Yin & Ors v Wong Mook [1948] MLJ 164 Court of Appeal, Malayan Union (Pretheroe Ag CJ (MU).

The respondent, a woman inspector of police, was while unmarried given by the government rent-free quarters or an allowance in lieu. After she married on 20 August 1962 and went to live with her husband, however, she received neither the rent-free quarters nor an allowance in lieu. She applied for a rent allowance and eventually the government agreed to give her a rent allowance but with effect from 1 March 1965. She brought an action against the government for the housing allowance from the date of her marriage to 28 February 1965 and judgment was given in her favour in the sessions court. The government of Malaysia appealed.

Held: (1) the contract between a public servant and the government is of a special kind, as once appointed the government servant acquires a status and his rights and obligations are no longer determined by consent of both parties but by statute or statutory or administrative rules made by the government; (2) there was nothing in the circulars and regulations in this case that entitled the respondent to a housing allowance and therefore her claim should have been dismissed.

Government of Malaysia v Rosalind Oh Lee Pek Inn [1973] 1 MLJ 222 High Court, Kuala Lumpur (Suffian FJ).

The plaintiff company sought a declaration that salemen employed by their shop managers were not their employees for the purposes of the Employees Provident Fund Ordinance. It appeared that the shop managers were employed by the company under written agreements which gave a shop manager power to employ salesmen, salesgirls, clerks and servants and which provided that the shop manager was to be the employer of such salesmen, salesgirls, clerks and servants.

Held: (1) in view of the considerable control which the company had over the shop managers, the shop managers were the employees of the company; (2) in the light of all the evidence in this case, the shop managers could not be said to be acting as the agents of the company when they recruited their own salesmen to assist them and, therefore, there was no relationship of employer and employee within the meaning of the Employees Provident Fund Ordinance, between the plaintiff company and the salesmen employed by its shop managers.

Bata Shoe Co (Malaya) Ltd v Employees Provident Fund Board [1967] 1 MLJ 20 High Court, Kuala Lumpur (Gill J).

[Annotation: The decision of the High Court was affirming by the Federal Court in [1968] 1 MLJ 236.]

This was an appeal against the decision of Gill J ([1967] 1 MLJ 120) who had held that there was no relationship of employer and employee between the Bata Shoe Co (M) Ltd and the salesmen employed by the managers of the company's retail shops. Under the agreement between the company and the managers, the managers were given power to employ persons to assist them and it was stated that the managers would be responsible for payments under the Employees Provident Fund Ordinance 1951.

Held, dismissing the appeal: (1) construing a 'contract of service' in s 2 of the Employees Provident Fund Ordinance does not require the court to go beyond ascertaining whether such a contract existed or not, to the extent of exploring the wider field of an employee's liability for the unauthorized acts of putative agents; (2) the contract between the company and the managers was a valid one and it was clear that under it the managers and not the company were the employers and therefore the company was not liable to contribute to the Employees Provident Fund.

Employees Provident Fund Board v Bata Shoe Co (M) Ltd [1968] 1 MLJ 236 Federal Court, Kuala Lumpur (Barakbah LP, Azmi CJ (Malaya).

In this case, the plaintiff was employed as a sawyer in the plaintiff's sawmill. He was injured in the course of his employment and as a result lost three fingers of his right hand. Because of the injuries, he was refused further employment at the defendant's sawmill. He was out of work for one year until he found employment as a labourer. He sued the defendants and claimed general and special damages. The defendant denied liability contending that the plaintiff was not their employee but the employee of the defendant's contractor Lim within the meaning of the Workmen's Compensation Ordinance 1952.

Held: (1) the documentary evidence in this case constituted a clear admission by the defendants that the plaintiff was their employee and this admission, despite the evidence given by the witnesses for the defendants, remained unrebutted; (2) on the facts of the case, Lim could not be held to be a contractor within the meaning of s 19 of the Workmen's Compensation Ordinance, as he was not undertaking to execute any part of the defendant's sawmill business. He was merely a middle man or agent to procure workmen for the defendants to be employed at the defendant's sawmill. The employer of the workmen must be the defendant for whose business they were employed.

Mat Jusoh bin Daud v Syarikat Jaya Seberang Takir Sdn Bhd [1982] 2 MLJ 71 High Court, Kuala Trengganu (Salleh Abas FJ).

This was a consolidation of three actions by order of court. The plaintiffs were recruited in Australia as qualified accountants in the service of the Board. This was in response to an advertisement dated 23 March 1955 which, inter alia, stated that the 'Recruitment will be on a three-year gratuity-earning contract (renewable) and such officers may be considered by the Board after not less than three years' satisfactory service for emplacement on its pensionable establishment under a non-contributory pension scheme'. On 29 September 1955, the plaintiff Kennedy signed the contract which stated, inter alia, that the appointment was on gratuity-earning contract effective from the date of taking up duty and was for a tour of three years' resident service commencing from that date which might be extended on such terms and such periods which might be mutually agreed (Clauses I and II); Clause 10 provided for a gratuity on satisfactory completion of service provided the officer concerned was not emplaced on the pensionable establishment. A circular letter dated 24 May 1957 was sent by the Board stating that ' ... for several years now the recruitment policy and training programme of the Board have been directed towards early Malayanisation of Division I posts of the Board's establishment. Thus in accordance with the policy, since the end of 1955 when it has become necessary to recruit expatriate officers this has been done on contract terms only'. The plaintiffs became worried about their positions, and on the assumption that they were non-entitled officers they jointly wrote to the general manager setting out the circumstances which they said gave them reasons to assume that their employment, subject to an initial period of satisfactory service, would be permanent and pensionable. In reply, the general manager wrote stating that the plaintiffs were not considered to be 'An entitled officer'. Several correspondence ensued thereupon between the plaintiffs and the Board. On 3 April 1958 the Board wrote to all non-entitled officers, setting out offers either to remain on the present contract terms until the expiration of the current contract or to apply for further employment under a new form of contract. Under the new contract there was no prospect of pension of any kind. It was purely a gratuity contract. The plaintiff Kennedy signed it on 25 July 1958. On 15 September 1958 the Board credited the gratuity due to him under the old contract to his bank account. It was this conduct of the plaintiff which was considered as a waiver by the Board. On 1 August 1963, Kennedy and the other plaintiffs wrote to the Board asking for their cases to be reopened. The sole question before the court was whether by the terms of service and considering the previous practice of the Board the plaintiffs had reasonable prospects of appointment to the permanent establishment.

Held, dismissing the plaintiffs' claim: (1) they did not give an enforceable right to permanent and pensionable employment; (2) it was not the circular or the advertisment but the concluded contract between the parties which determined whether the plaintiffs were recruited with reasonable prospects of permanent and pensionable employment. There was no ground for holding that the plaintiffs could reasonably have supposed that their terms of service would give them the legal right to permanent and pensionable employment; (3) the circular and the advertisement were merely an invitation to an offer of employment on a three-year gratuity-earning contract (renewable) with an indication that such officers might be considered for emplacement on the pensionable establishment after a minimum period of 3 years of satisfactory service;the essence of waiver was that there must be an intention to affect the legal relations between the parties. If that could not be inferred from the conduct, there was no waiver.

GB Parker & Ors v Central Electricity Board, Kuala Lumpur [1967] 4 MC 86 High Court, Kuala Lumpur (Raja Azlan Shah J).

The appellant had claimed three declarations in the High Court as follows: (a) he is a member of Her Majesty's Overseas Civil Service; (b) he is eligible for designation as a designated officer within the meaning of the Schedule to the Overseas Service Ordinance (No 15 of 1961); and (c) it would be unlawful to refuse the plaintiff benefits such as inducement pay payable to a member of Her Majesty's Overseas Civil Service. The High Court ([1966] 1 MLJ 41) granted the second declaration and refused the third; the first declaration was not granted as it was held that there was no question in dispute. The appellant appealed against the court's refusal to grant declarations (a) and (c) and the respondent filed a cross-appeal on the ground that the learned trial judge erred in law in granting the second declaration.

Held: (1) the learned trial judge was right in exercising his discretion in not making the first declaration to declare something not in dispute especially as the first declaration would not assist in determining the appellant's rights to extra pay, if he has any such rights; (2) the appellant did not have a valid claim to inducement pay on the contract of employment or on the general orders and in any event the question of expatriation pay was a matter within the authority of the Governor-in-Council; (3) the designation of an officer as a designated officer was a matter for the Secretary of State of the United Kingdom and as the United Kingdom government was not a party to the action, the High Court was wrong in making the declaration that the appellant was a 'designated officer'.

Majumder v Attorney General of Sarawak [1967] 1 MLJ 101 Federal Court, Kuching (Harley Ag CJ (Borneo).

The appellant in this case who had been appointed Medical Officer, Sarawak, claimed three declarations in the High Court as follows: (a) he is a member of Her Majesty's Overseas Civil Service; (b) he is eligible for designation as a designated officer within the meaning of the schedule to the Overseas Service Ordinance (No 15 of 1961); and (c) it would be unlawful to refuse him benefits such as inducement pay payable to a member of Her Majesty's Overseas Civil Service. At the trial an admission was made on behalf of the respondent that the appellant was a member of Her Majesty's Overseas Civil Service. The High Court ([1966] 1 MLJ 41) granted the second declaration and refused the third; the first declaration was not granted as it was held that there was no point in dispute. On appeal, the Federal Court ([1967] 1 MLJ 101) affirmed the decision of the learned trial judge as regards the first and third declarations, but further decided that the appellant was not entitled to the second declaration as the designation of an officer as a designated officer was a matter for the Secretary of State of the United Kingdom and as the Secretary of State was not a party to the action, the High Court was wrong in making the declaration that the appellant was a 'designated officer'. The appellant appealed to the Privy Council.

Held, dismissing the appeal: (1) the learned trial judge was right in exercising his discretion in not making the first declaration but in view of the circumstances there should be a recital that the order was made upon the court taking into account that the respondent conceded that the appellant had been a member of Her Majesty's Overseas Civil Service since 1 December 1958; (2) as regards the second declaration it was within the discretion of the Secretary of State whether to designate an officer or not, and as the Secretary of State was not a party to the proceedings, the Federal Court was right in holding that the High Court could not make the declaration; (3) as the question whether an officer is entitled to inducement pay is for the Governor-in-Council whose decision is final and as on the facts the terms of the contract of employment did not entitle the appellant to inducement pay, the learned trial judge was right in refusing the third declaration.

Majumder v Attorney General of Sarawak [1969] 1 MLJ 132 Privy Council Appeal from Malaysia (Lord Guest, Lord Upjohn and Lord Diplock).

The plaintiff in this case was a qualified architect. The present dispute related to his appointment as Timbalan President (1) of the Majlis Perbandaran Sandakan. On 17 January 1985, the then Chief Minister of Sabah asked the plaintiff to submit his proposal of the terms and conditions for appointment as Timbalan Presiden (1) of the Majlis Perbandaran Sandakan for a period of two years. The plaintiff duly submitted his proposal which was agreed to by the Chief Minister. The Minister of Town and Country Development also approved the plaintiff's appointment. The defendant duly put the plaintiff to work, as required by the state government, to study and review the local authority's administration and financial management. By a letter dated 26 April 1985 from the Permanent Secretary to the Ministry of Town and Country Development to the President of the Majlis Perbandaran Sandakan, the state government withdrew the plaintiff's appointment to study and review the administration and financial management of the Sandakan Council with immediate effect. Following from this, on 6 May 1985, the President of the Municipal Council Sandakan wrote to the plaintiff enclosing a copy of the ministry's letter dated 26 April 1985. Then by a letter dated 6 May 1985, the Permanent Secretary to the Ministry of Local Government and Housing wrote to the President of the Majlis Perbandaran Sandakan, directing him to terminate the plaintiff's appointment as Timbalan President (1). The plaintiff was dismissed and given one month's salary in lieu of prior notice. The main issues in this case were: (a) in whose employment the plaintiff was; (b) whether the contract of employment was frustrated by the letter of withdrawal of the Permanent Secretary.

Held: (1) the court was of the view that the plaintiff was in the employment of the defendants, and not that of the state government. The appointment of the plaintiff by the minister was only a mode of making the appointment, but once appointed, he was the employee of the Sandakan Municipal Council since he was paid out of the council's funds; (2) the minister's withdrawal of the plaintiff's work in doing the review did not destroy the contract of employment. The withdrawal was only a step towards his dismissal and did not strike at the root of the contract he entered into with the defendants; (3) when the plaintiff's appointment was terminated, the defendant did not have regard to the contract existing between them and the plaintiff. They have therefore committed a clear breach of the contract.

Chin Chen Fui v Majlis Perbandaran Sandakan [1988] 1 MLJ 448 High Court, Sandakan (Abu Mansor J).

The appellants were a company engaged in shipbuilding and marine business. The respondents were all employees of the appellants but they were not members of the Shipbuilding and Marine Engineering Employees Union (the union). By their letters of appointment, the appellants had stated that the respondents were entitled to retrenchment benefits in accordance with the appellants' 'current' or 'prevailing' policies and practices. When the appellants decided to close down their operations, they signed a collective agreement with the union on 3 November 1987 and agreed to pay all unionized employees with more than three years of service, half a month's wages for each year of service pro-rated for any incomplete year of service, subject to a maximum of five months' basic wages or S$6,250, whichever was less. On 1 December 1987, the respondents were sent retrenchment notices by the appellants, informing them that they would be retrenched and paid benefits at the same rate as the appellants had agreed with the union. As a result, each respondent was paid S$6,250. On previous retrenchment exercises, the appellants had consistently paid employees with more than three years' service retrenchment benefits at the rate of one month's basic wages for each year of service, with no maximum limit. The respondents felt aggrieved and commenced this action. In the High Court, the respondents contended that due to the appellants' past consistent practice of paying employees with more than three years' service one month's wages for each year of service as retrenchment benefits, that was the 'current' or 'prevailing' practice and was a term of the contract of employment. Alternatively, the respondents contended that such a term must be implied into the respondents' contracts of employment. The trial judge accepted both of the respondents' contentions and ordered that the rate of the retrenchment benefits be tagged at one month's wages for each year of service. See [1994] 2 SLR 190. On appeal, the appellants submitted that they had an unfettered discretion in deciding the amount of retrenchment benefits payable and that their 'current' or 'prevailing' practice on 1 December 1987 was to pay the same rate as the collective agreement they had negotiated with the union. Secondly, the appellants contended that no term could be implied into the employment contract from their previous course of conduct of paying one month's wages for each year of service as retrenchment benefits.

Held, allowing the appeal: (1) the words 'current' and 'prevailing' are synonymous, both meaning in relation to time 'the present'; (2) therefore, the appellants had a discretion to formulate their practice or policy in quantifying the amount of retrenchment benefits they wished to pay their employees and although they had in the past exercised their discretion in a consistent way, they were not barred from exercising their discretion in some other manner to reflect their 'current' or 'prevailing' policy at that point in time; (3) a term would only be implied into a contract, including employment contracts, if it was necessary in the business sense to give efficacy to the contract and it was insufficient that the term implied would be a reasonable term; (4) since the amount of retrenchment benefits payable was expressed to be in the appellants' discretion and it was not necessary for business efficacy to imply a clause determining the amount of retrenchment benefits, it would not be implied into the contract that one month's wages would be paid for each year of service for employees with more than three years of service.

Bethlehem Singapore Pte Ltd v Ler Hock Seng & Ors [1995] 1 SLR 1 Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Goh Joon Seng J).

The defendants were a company engaged in shipbuilding and marine businesses. The plaintiffs were their employees but were not members of the Shipbuilding and Marine Engineering Employees' Union ('SMEEU'), to which some of the defendants' other employees belonged. It was common ground that the plaintiffs were entitled to retrenchment benefits in accordance with the defendants' 'current' or 'prevailing' policy and practice. Towards the end of 1987, the defendants decided to close down their operations. In November 1987, a collective agreement was signed between SMEEU and the defendants whereby all unionized employees with more than three years of service with the company were to be paid half a month's basic wages for each year of service pro-rated for any incomplete year of service subject to a maximum of five months' basic wages or $6,250, whichever was less. In December 1987, the defen-dants sent retrenchment notices to the plaintiffs, stating that the plaintiffs would be paid retrenchment benefits on the same terms as those in respect of unionized employees. The plaintiffs subsequently brought the present actions, contending that the defendants' consistent practice of paying employees with more than three years' service one month's wages for each year of service by way of retrenchment benefits in previous retrenchment exercises (of which there were ten altogether) had become a term of the contract of employment, or, alternatively, that it had become a term implied from previous course of dealing, and that they were entitled to retrenchment benefits on the same basis. The defendants argued that it had an unfettered discretion in deciding the amount of retrenchment benefits and that the 1987 decision represented the defendants' 'current' or 'prevailing' practice or policy.

Held, allowing the plaintiffs' claim: (1) applying the provision in the letters of appointment regarding retrenchment benefits, the evidence showed that there was a consistent practice followed by the company for many years right up to the time just before December 1987, of paying those with more than three years' service at the rate of one month's basic wages for each year of service. This is the 'current' or 'prevailing' practice; (2) alternatively, the consistent practice of the defendants may be treated as having become an implied term of the contract independently of the provisions in the initial letter of appointment. The rights and obligations of the parties to an employment contract are ordinarily not static and do evolve in the course of time, so the initial contract entered into between the employer and employee does not always reflect the rights and obligations which have been developed in the course of time. What the parties actually did after the conclusion of the initial contract of employment may, in an appropriate case, be more reliable evidence of the terms of the contract than what they agreed initially; (3) even if a company has, initially, an unfettered discretion under the terms of an employment contract to determine the quantum of retrenchment benefits, it will cease to have such a discretion at some point of time if it fixes a formula for the payment of these benefits and consistently adheres to such a practice; (4) in any event, if a contract gives one party to it the right to decide a matter which involves the rights and obligations of the two parties, that party must exercise that right reasonably, which, on the evidence, the defendants did not.

Ler Hock Seng & Ors v Bethlehem Singapore Pte Ltd [1994] 2 SLR 190 High Court, Singapore (Warren LH Khoo J).

The plaintiff was a postal clerk in the Postal Department of the government of the Federated Malay States. On the occupation of Malaya by Japanese forces he joined the postal department administered by the Japanese. Subsequently he went to India as a member and volunteer in the Indian National Army. After the liberation of Malaya he applied to the British Military Administration for reinstatement in the Postal Department. After considerable delay he was informed that he was dismissed from the service and would not be reinstated.

Held: his contract of service with the government of the Federated Malay States was terminated by reason of frustration by reason of the occupation of Malaya by the Japanese forces.

V Kandiah v Government of the Federation of Malaya [1952] MLJ 97 High Court, Kuala Lumpur (Wilson J).

The respondent entered the service of the appellants in 1910, as a probationer at Nazli in Turkey, and was placed on the permanent staff in 1912. There was no written contract of employment, but the respondent signed a declaration that he would adhere strictly to the regulations governing the pension and superannuation fund adopted by the Direction Generale as forming an integral part of the conditions of his engagement. The contract of employment was governed by Turkish law and his salary was in Turkish pounds. Having served at the various branches of the appellant bank, the respondent was transferred from Athens to Cyprus where he remained in the appellants' service until 1931 when he retired on the terms that he was entitled to a pension in accordance with the pension regulations at the rate of 48 per centum of the fixed salary received by him on 31 December of the previous year. His basic salary as expressed in Turkish money was Ltg 30 a month. Before the war the currency authorized as legal tender by the Turkish government was on a gold basis and the monetary unit was the gold pound. At the date of the contract the salary was paid to the respondent and other employees by means of that currency in gold coins, save as to fractional amounts. The Turkish currency had since depreciated in terms of gold. The respondent claimed to be paid his pension in Turkish gold pounds.

Held: the respondent's contention amounted to introducing into the contract the effect of a 'gold clause', although no such clause was anywhere expressly to be found in the transactions between the parties. A contract to pay so many pounds is not a contract to pay in gold, but is prima facie a contract to pay money according to the currency of the country where the payment has to be made. The contract in this case could not be construed to pay the respondent in gold, although gold was originally the normal form of legal tender. Adelaide Electric Supply Co v Prudential Assurance Co [1934] AC 122 referred to and applied.

Ottoman Bank of Nicosia v Ohanes Chakarian [1938] MLJ 71 Privy Council Appeal from Cyprus (Lord Thankerton, Lord Wright and Sir George Rankin).

In this case, the appellants were originally employees of the Malayan Railway Administration and therefore members of the public service of the Federation. On the establishment of the Lembaga Pelabohan Kelang, the appellants were transferred by the Minister of Transport to serve the respondent in accordance with sub-s (1) of s 52 of the Port Authorities Act 1963 (Act 21/1963). On 31 March 1966, the appellants exercised their option under sub-s (2) of s 52 of the Act to revert to the services of the Railway Administration. Because there were no vacancies for them in the services of the Railway Administration, the appellants continued to work for the respondent but on secondment basis. Under sub-s (3) of s 52 of the Act, the appellant's eligibility to serve the respondent on secondment basis was only to last for five years. The respondent, before the end of that period on 25 December 1971, offered them permanent employment as clerks in its services. The appellants accepted the offers on 31 December 1971. The salaries offered and accepted were those based on the Benham salary schemes. The Benham scale was replaced as regards civil servants by the Suffian salary scheme on 1 October 1970 with retrospective effect to 1 January 1970 but the Suffian scale was not applied to employees of statutory bodies. The employees of statutory bodies received their revision of salaries under the Harun salary scheme on 15 January 1975, with retrospective effect to 1 January 1970. As a result of the implementation of the Harun salary scheme, the respondent converted the appellant's salaries direct from the Benham scheme to the Harun scheme. The appellants objected to this method and contended that their salaries should first be converted to the Suffian scheme and then to the Harun scheme. The respondents refused to do so and the appellants took out a writ claiming arrears of salaries and ancillary remedies on the ground that the failure of the respondent to convert their salaries to the Suffian scheme before applying the Harun scheme to their salaries constituted a breach of the contract of employment. The suit was dismissed in the High Court and the appellants appealed.

Held: (1) at the end of the period of secondment, the respondent ceased to be bound by s 52 of the Port Authorities Act 1963. It was no longer under any obligation to employ the appellants either on secondment basis or on any other arrangement nor could the Railway Administration make any binding request to the respondent to employ the appellants. The question of continued employment of the appellant after the period of secondment, therefore, became a matter of discretion of the respondent under its general power of employing officers and servants and it was no longer governed by s 52 of the Act; (2) the appellants had ceased to be employees of the Railway Administration on their acceptance of the offers of employment by the respondent and they were no longer entitled to the Suffian scheme conversion. Acceptance of the offers clearly amounted to resignation taking immediate effect from the Railway Administration's services; (3) the refusal of the respondent to apply the Suffian scheme to the appellants per se without any breach of contract nor statute, cannot be the basis of the claim of right by the appellants to the Suffian scheme conversion. The appellants' entry into the permanent establishment of the respondent was based on contracts of employment and as there was nothing in the contract to show that the respondent must apply the Suffian conversion before converting their salaries to the Harun scheme, it is too late for the appellants to do anything and the court has no power to rewrite their contracts to include this provision.

Thangavelu Arumugam & Ors v Lembaga Pelabuhan Kelang [1983] 1 MLJ 292 Federal Court, Kuala Lumpur (Raja Azlan Shah LP, Salleh Abas FJ and Abdoolcader J).

The appellants took out a writ claiming arrears of salaries and ancillary remedies on the ground that the failure of the respondents to convert their salaries to the Suffian scheme before applying the Harun scheme to their salaries constituted a breach of their contract employment. The suit was dismissed in the High Court and on appeal the Federal Court dismissed the appeal -- see [1983] 1 MLJ 292, sub nom, Thangavelu Arumugam & Ors v Lembaga Pelabuhan Kelang. The appellants appealed.

Held, dismissing the appeal: the High Court and the Federal Court were correct in this case in holding that the appellants ceased to be employees of the railway administration on their acceptance of the offers of employment by the respondents and that they were no longer entitled to the Suffian scheme of conversion. The appellants have been unsuccessful in demonstrating that either the High Court or the Federal Court were in error in any respect in concluding that the appellants had entirely failed to make out their case.

Singaram Thandayuthapani & Ors v Lembaga Pelabuhan Kelang [1986] 2 MLJ 401 Privy Council Appeal from Malaysia (Lord Keith of Kinkel, Lord Templeman, Lord Oliver of Aylmerton, Lord Goff of Chieveley and Sir Robin Cooke).

In Chinese mines worked on the share system, a contract exists between the share coolies and the advancer (towkay labour).

Tai Shin v Chung Moi [1906] 1 FMSLR 1 High Court, Federated Malay States (Berrington JC).

The applicant applied for an order of certiorari to quash the decision of the Public Services 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 Services 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).

In this case, the plaintiff claimed salary and allowances under a contract of employment and damages for breach of contract and wrongful dismissal. The plaintiff entered the service of the defendant in India as a clerk in 1949, having agreed to abide by the rules and regulations applicable to the defendant's employees. About nine months later, he applied for a transfer to an overseas branch, undertaking to adhere fully to the terms and conditions of overseas service. In due course, the defendant decided to transfer him to its Singapore branch. The defendant had to obtain the permission of the Protector of Emigrants, Madras, for such transfer. On 22 May 1951, the defendant signed a form of application for such permission in triplicate, and the plaintiff also signed the form, expressing thereon his acceptance of the terms therein. On the same day, both parties signed another form in triplicate below the words 'Accepted the above terms'. The next day, the plaintiff presented to the Protector an unsealed envelope containing a letter from the defendant and both forms. The Protector granted the necessary permission subject to certain terms and conditions. Soon afterwards, the plaintiff sailed from Madras and arrived in Singapore on 4 June and started work at the Singapore branch of the defendant shortly after. By a letter dated 10 January 1955, the defendant terminated the plaintiff's service with immediate effect for alleged gross misconduct and insubordination and sent him a pay order for a month's salary and allowances in lieu of a month's notice. This pay order was returned by the plaintiff.

Held: (1) the terms of the agreement between the plaintiff and the defendant were set out not only in the form of permission but also in the form of application and in the defendant's letter to the Protector dated 22 May 1951, which accompanied the form of application; (2) conditions 10, 12, 14 and 15 of the form of permission did not form part of any contract of employment between the parties; (3) the defendant was not estopped from saying that the terms and conditions of the plaintiff's service were less favourable than those contained in the form of permission; (4) the plaintiff was estopped from saying that the sum of $184.50 set out in para 5 of the form of application represents his basic monthly salary; (5) as the plaintiff was employed on a month-to-month basis after the termination of the three year contract, one month's notice of termination of his service was reasonable and the claim for damages for breach of contract and wrongful dismissal must therefore be dismissed.

KS Panicker v Indian Overseas Bank Ltd [1959] MLJ 270 High Court, Singapore (Ambrose J).

By a written contract of service, the defendants agreed to employ the plaintiff as their factory chemist and production manager for a period of one year from 1 March 1958 to 28 February 1959 at a salary of $800 per mensem. On or about 7 March 1958 the plaintiff, with the consent of the defendants, went to India and did not return until the first week of May. He was not paid his salary for March and April. The defendants' factory did not start operating until July 1958. Towards the end of March 1959, the original contract was renewed by verbal agreement for an indefinite period and the plaintiff continued to work for the defendants. On 9 March 1961, the plaintiff gave three months' notice of termination of his services with the defendants. On 30 March, the plaintiff's services with the defendants were terminated by the defendants who paid him a month's salary in lieu of notice. The defendants alleged that the plaintiff had committed an act of disobedience in refusing a meeting when called to do so by the managing director. The plaintiff brought an action claiming salary for March and April 1958, holiday and leave pay, five months' salary in lieu of notice and return of his books.

Held: (1) therefore the plaintiff was entitled to his salary for March and April 1958; (2) there was no provision made in the contract for holiday leave pay and, accordingly, the plaintiff is not entitled to any additional salary; (3) a contract of employment for an unspecified period can be terminated by either side on reasonable notice; (4) considering the type of work for which the plaintiff was employed and the period for which he had worked for the defendants, reasonable notice should be three months' notice; (5) where a written agreement, which appears on the face of it to include all the terms agreed to by the parties, provides only for payment of wages or salary at certain times, no obligation to find work for the servant will be added, but if he remains ready to perform his services during the period covered by his contract, he is entitled to the agreed wages;a single act of disobedience will justify dismissal only if it shows that the servant is repudiating the contract or one of its essential terms. The act of disobedience in not attending the meeting was insufficient to justify the plaintiff's dismissal.

KV Pillai v Power Foam Rubber Products (Mfg) Co Ltd [1963] MLJ 268 High Court, Kuala Lumpur (Gill J).

This was an appeal against a successful claim by the respondent for liquidated damages for breach of contract of service. The appellants contended that on the true construction of the contract of service which was contained in a letter of 20 July 1961 and which read 'Termination of employment. This is to be by either party by three months' notice in writing to the other, provided always that in the event of professional misconduct we may forthwith terminate your employment without any notice or payment in lieu of notice', the plaintiff was not entitled to liquidated damages.

Held: (1) the words 'without any notice or payment in lieu of notice' are surplusage and in the events that had happened a term for payment of salary in lieu of notice cannot be implied; (2) although the respondent had been summarily dismissed unjustifiably, as the respondent relied solely on the contract and had not pleaded an alternative claim for damages for wrongful dismissal, he was not entitled to judgment on his claim founded on a wrong construction of the contract. Further there being no evidence that he had placed his services on the market and had failed to obtain any suitable employment, the respondent would have at most been entitled to nominal damages had it not been for the fact that he was paid his salary up to 31 March 1962.

Heron, Gethin-Jones & Liow v John Chong [1963] MLJ 310 Court of Appeal, Singapore (Wee Chong Jin CJ, Tan Ah Tah and Buttrose JJ).

The appellant entered the employment of the respondent council in 1950 and in 1953 he was taken on to their permanent staff. By virtue of s 16 of the Municipal Ordinance (SS Cap 133), the powers of apppointment to and removal from office were vested in the President subject to the proviso that approval by the councillors was required. On 1 October 1957 the appellant was dismissed. The appellant then commenced the present proceedings. At the trial Ong J dismissed his claim. On appeal the Court of Appeal in allowing the appeal awarded him damages amounting to three months' salary. The appellant in this appeal sought a declaration that the purported dismissal was ultra vires or null and void and that he continued to be and still continues to be employed by the respondents. There was also an alternative claim for damages for wrongful dismissal.

Held: where there had been a purported termination of a contract of service a declaration that the contract still subsisted would rarely be made and would not be made in the absence of special circumstances, because of the principle that the courts would not grant specific performance of contracts of service. In this case as there were no special circumstances, the appellant's remedy lay in damages for wrongful dismissal. Vine v National Dock Labour Board [1956] 1 QB 658; [1957] AC 488 distinguished.

Francis v Municipal Councillors of Kuala Lumpur [1962] MLJ 407 Privy Council Appeal from Malaysia (Lord Evershed, Lord Morris of Borth-Y-Gest and Mr LMD de Silva).

The respondents purported to act for certain teachers who were employed by the appellant. Disputes arose between the appellant, as the employer, of the one part and the teachers in the former employment of the appellant of the other part. A complaint was made to the Ministry of Labour and the minister referred the trade dispute to the Industrial Court. The reference to the Industrial Court was made before the respondents filed the civil suit in the High Court. The respondents applied for an interlocutory injunction and this was granted by the High Court. The appellant appealed.

Held, allowing the appeal: (1) in this case, the learned judge did not appear to give any consideration to the balance of convenience. If he had done so, he seemed to have disregarded the well-established rule that a contract for service or service contract would not be specifically enforced by the High Court (s 20(1)(b) of the Specific Relief Act 1950 (Act 137)) and that an injunction cannot be granted to prevent the breach of a contract the performance of which would not be specifically enforced (s 54(f) of the same Act); (2) no special circumstances appear to have been shown by the respondents in the court below nor was any attempt made to establish them during the hearing of the appeal.

Penang Han Chiang Associated Chinese School Association v National Union of Teachers in Independent Schools, West Malaysia [1988] 1 MLJ 302 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The plaintiff commenced this action for lump sum compensation of S$619,273.38 following the termination of the plaintiff's employment with the defendant. The lump sum reflected the plaintiff's average monthly earnings in the preceding 12 months multiplied by 60 months with 8% interest from 15 November 1990 until the date of settlement. The plaintiff's claim was founded on a deed dated 1 October 1984 (the deed) which the defendant claimed was illegal, null and void. The defendant claimed the plaintiff was governed by the same terms and conditions of employment then in force and those the Board of Directors may decide on from time to time. The plaintiff had been employed by the defendant as a trainee officer and worked his way to the position of company secretary. At each promotion he was given a letter of appointment which `bound him by the same terms and conditions of the bank as currently in force and which the Board may decide from time to time'. The plaintiff's position as company secretary was terminated by the defendant in a letter dated 15 November 1990, citing economic reasons for the dismissal. Three months' salary plus bonus were paid in lieu of notice. The plaintiff responded that his services with the defendant were governed by the terms of the deed and that the dismissal was not in accordance with the terms of the deed. The deed purported to witness various terms and conditions of employment between the defendant and the plaintiff. This was the first time the existence of the deed was averred to. The plaintiff demanded an arbitrator be appointed pursuant to a clause of the deed and the defendant responded that the plaintiff should appoint an arbitrator if he desired and reserved all their rights with regard to the matter. The plaintiff commenced the action and the defendant counterclaimed seeking, inter alia, a declaration that the deed was illegal, null and void, damages and such other relief as the court deem fit.

Held, dismissing the plaintiff's claim with costs to the defendant and granting the defendant's declaration that the deed was illegal, null and void but making no order as to damages: (1) at issue was whether the plaintiff was employed as company secretary by virtue of the deed. However the deed was not in existence when the plaintiff was appointed company secretary pursuant to the board meeting of 4 December 1984 as a result of which the letter of appointment was issued. The plaintiff was not appointed company secretary by virtue of the deed; (2) the terms and conditions which the plaintiff's service were subject to were the terms and conditions which he had agreed to be bound by when he commenced with the bank as a trainee officer and which he agreed to be bound by at each promotion. Although the terms did not specifically state the post of company secretary the terms could be applied without any difficulty to the position. The only way the plaintiff could base his case on the deed was if the terms had ceased to apply when the defendant had through the deed agreed to spell out new terms. The deed was executed and allegedly spelt out the plaintiff's terms and conditions as none allegedly existed whereas the letter of appointment clearly stated that the terms were to apply. The entire basis of the deed was faulty; (3) argument relating to the authority to affix the seal of the defendant to the deed and the authority to sign the deed went to the issue of whether the deed was illegal, null and void. There was no board of directors' meeting to approve the deed as the minute books did not contain any resolution concerning the deed. Consequently, there was also no resolution to affix nor authorize the signing of the deed. The plaintiff had relied on a power of attorney purporting authority on Bidari, the executive chairman, to make the deed on the part of the defendant; however, cl 3 in the power of attorney authorized Bidari to only engage general staff such as `clerks, cashiers, and other servants and brokers, solicitors, notaries and other agents' and not company secretaries. The ejusdem generis rule did not help the plaintiff as the posts described in the clause were of a lower grade and the general words of cll 22 and 24 in the power of attorney ought to be limited to staff of that genus and not a higher grade. As to the use of the seal of the defendant art 111 of the Articles of Association required, to clothe the deed with regularity, that the seal was `duly affixed' with authorization. Kelapa Sawit (Teluk Anson) Sdn Bhd v Yeoh Kim Leng & Ors [1991] 1 MLJ 301 held that the directors could only exercise their powers collectively by passing resolutions at board meetings unless the articles otherwise provide. Further, the articles of the company in question in Kelapa provided that the seal could never be affixed to any document except by express authority of a resolution of the directors. It had to therefore be determined whether the articles of the defendant contained similar provisions. Article 98 provided that the directors had to meet to despatch business and art 106 provided for use of the seal only with the authority of the directors. Therefore because there was no meeting of the board of directors and no resolution passed to authorize the execution of the deed, the deed therefore was a nullity; (4) the question then arose whether the deed could be valid as a contract. Beer v London and Paris Hotel Co (1875) 32 LT 715 was authority for the proposition that a contract on behalf of a company may be in writing signed by the person acting under its express or implied authority. Thus, even though the deed could have been in the form of a contract not under seal the deed had to have been signed with the express or implied authority of the defendant. Therefore there had to have been authority to enter the deed and as there was no authority on the part of the persons signing the deed it made no difference whether the document was a deed or an agreement under hand as the requisite authority to enter it was lacking. The plaintiff, as company secretary would have been aware of the need for a resolution of the board of directors and aware of the absence of such authority; (5) arguments were raised as to the deed being unlawful and void under s 24 of the Contracts Act 1950. Section 24(c) and (d) raised fraud involving injury to a person or property. The acts alleged to be fraudulent had to be stated and presented but the defendants did not mention fraud in their defence and did not state which of the acts were done fraudulently. This meant the issue of fraud had not been pleaded and could not be considered; (6) arguments were also raised as to the illegality of the deed because the directors who signed the deed had, to the knowledge of the plaintiff, exceeded their authority to the prejudice of the defendant. The deed was an attempt by the plaintiff to entrench his position in the face of an impending take over of the management. The defendant derived no benefit from the deed and the directors who entered into it had no authority to do so. The deed was executed without the authority of the defendant and therefore void. The officers of the company, including the plaintiff, who owed a fiduciary duty to the defendant to protect its interest had acted to its detriment by entering into the deed and were caught by the doctrine ex turpi causa non oritor actio, that no court should lend its aid to a man who found his cause of action on an illegal or immoral act; (7) the plaintiff pleaded that the defendant be estopped from denying the validity of the deed as the defendant had by agreeing to arbitration treated the deed as valid and caused the plaintiff to act to his detriment by agreeing to have the matter litigated rather than settled by arbitration as provided for in the deed. The defendant's letter suggesting arbitration was qualified with the caveat that the defendant reserved all rights with regard to the matter. The resolution of the issue of estoppel could be found in answer to the question whether the defendant had in any way induced the plaintiff into believing that the defendant would not question the validity of the deed and whether it would be unconscionable or inequitable for the defendant to now question the validity of the deed. The defendant, on the facts did nothing to encourage or induce the plaintiff to believe that the validity of the deed would not be disputed. The defendant made no admission, continued to refuse to pay the sum demanded under the deed, and reserved their rights. On the second question of whether it was unconscionable of the defendant to raise the issue of illegality, no conduct or representation of the defendant could be identified which made it unconscionable or inequitable for the defendant to raise the issue of the illegality of the deed. In fact, the converse was the case - the plaintiff procured the deed in a manner which if he were to succeed would mean the court would lend its aid to a man who found his cause of action upon an illegal or immoral act. Therefore the defendant was not estopped from raising the issue of the illegality of the deed which the court had found to be illegal and void; (8) the defendant counterclaimed against the plaintiff seeking various declarations and remedies. The declaration that the deed was illegal, null and void was granted and the surplusage prayers were not granted. As for damages, no attempt was made to prove what damages had resulted from the hidden deed and therefore no order was made.

Wan Othman bin Datuk Wan Yusof v Kewangan Utama (Malaysia) Bhd Originating Summons No KG 119 of 1992/(III)—High Court, Kuching (Ian HC Chin J).

The appellants appealed against the decision of the High Court ([1955] 2 MLJ 229) which had dismissed their appeal against the decision of the Commissioner of Labour, who had rejected a claim by the appellants to one month's wages in lieu of notice from their employers, the respondents. The facts were that the respondents being dissatisfied with the low yields of latex brought in by some tappers transferred a number of tappers (including the appellants) from fields they were then working in to other fields. The appellants refused to accept the transfer and they failed to turn up for work. The respondents then informed them that because of their refusal to obey the order of transfer and because they absented themselves from work they had broken their contract of service and were no longer employees of the estate. They applied for a month's wages in lieu of notice.

Held: on the facts, the order transferring the workers was not an unreasonable order, was not given mala fide and was not unlawful and, consequently, the appellants were not justified in their refusal to obey it.

Yong Yoke Sung & Ors v Sungei Way Estate [1966] 1 MLJ 175 Federal Court, Kuala Lumpur (Thomson LP, Pike CJ (Borneo).

There being no privity of contract between the plaintiff and the defendant the defendant was not liable to pay the arrears of wages alleged to be due to the plaintiff.

Jenis bin Drahman v Ong Teck Huat [1950] SCR 5 Supreme Court, Sarawak, North Borneo and Brunei

In this case, the appellant was appointed a lecturer in the Faculty of Medicine, University of Malaya, and the letter of offer expressly sets out a number of conditions including the following: '(ii) subject to satisfactory service, passing the prescribed examinations and fulfilling other relevant conditions you shall be eligible to be considered for confirmation in your appointment at the end of this period. (ix) You shall at all times, be subjected to the Constitution of the University of Malaya, statutes, Acts and regulations in force in the University of Malaya. Amendments and adaptations to these regulations and practices may, from time to time, be made by the Council of the University of Malaya'. The university council in a policy decision passed a resolution requiring all officers in groups A and B who are still on probation to pass the Peperiksaan Am Kerajaan in addition to any other examination as a prerequisite for confirmation in the posts. The resolution was embodied in a service circular. The appellant filed a writ seeking a declaration and an injunction to restrain the university from implementing the service circular on the ground that it is invalid and conflicts with the terms and conditions of his contract of employment and is also in violation of s 45(3)(b) of the Constitution of the University. The learned trial judge of the High Court held that the service circular was valid and not ultra vires the Constitution of the University. The appellant appealed.

Held: (1) the appointment of the appellant was under s 45(3)(b) of the Constitution of the University subject to 'such terms and conditions as may be prescribed by the Council'; (2) although no statute, Act or regulation has been made by the Council pursuant to s 4(1)(a) of the Constitution of the University defining or regulating 'prescribed examinations' for the purposes of the conditions of service, the provision providing for 'such terms and conditions as may be prescribed by the Council' should be given a broad as opposed to a narrow construction and one which will serve to achieve the broad objects and purposes Parliament intended; (3) the service circular in this case was one which was made in the exercise of the powers conferred by the Constitution of the University even if the occasion for its exercise arose as a result of contractual arrangement. The service circular was therefore valid and did not amount to a unilateral variation of the appellant's contract of employment; (4) there was no reason in principle why the Council could not implement its resolution by way of a service circular instead of by statute, Act or regulation.

Dr Paramsothy s/o Murugasu v University of Malaya [1983] 1 MLJ 289 Federal Court, Kuala Lumpur (Raja Azlan Shah LP, Abdul Razak and Abdoolcader JJ).

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 were 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 in this case 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).

3 [2176] CONTRACT Employment contract – Wrongful termination – Whether wrongful repudiation by one party results in automatic discharge of contract – Whether repudiation must be accepted for discharge – Granting of injunction to restrain implied negative undertaking – Whether specific performance can be granted to contracts for personal services – Specific Relief Act 1950, ss 20(1)(b), 54(f) & 55 – Heyman v Darwins Ltd [1942] AC 356 (refd) Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699 (refd) Gunton v Richmond-upon-Thames London Borough Council [1980] 3 WLR 714 (folld) Thomas Marshall Ltd v Guinle [1979] 1 Ch 227 (folld) Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 (refd) Francis v Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411 (distd) Hill v (CA) Parsons & Co Ltd [1972] 1 Ch 305 (refd) Vine v National Dock Labour Board [1957] AC 488 (refd) Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361 (refd) Sanders v Ernest A Neale Ltd [1974] ICR 565; [1974] 3 All ER 327 (refd) Lumley v Wagner (1852) 1 De GM & G 604 (refd) William Robinson & Co Ltd v Heuer [1898] 2 Ch 451 (refd) Warner Brothers Pictures Incorporated v Nelson [1937] 1 KB 209 (refd) Ehrman v Bartholomew [1898] 1 Ch 671 (refd) Howard v Pickford Tool Co Ltd [1951] 1 KB 417 (folld) Chappell v Times Newspapers Ltd [1975] 1 WLR 482 (refd) Pertama Cabaret Nite Club Sdn Bhd v Roman Tam [1981] 1 MLJ 149 (refd) Whitwood Chemical Co v Hardman [1891] 2 Ch 416 (refd) Mortimer v Beckett [1920] 1 Ch 571 (refd) Hivac v Park Royal Scientific Instruments [1946] Ch 169 (refd) Broom (Selangor) Rubber Plantations v RH Whitley (1919) 1 FMSLR 365 (folld)

By a contract of employment the plaintiff was employed by the first defendant to serve the first defendant as its executive chairman and managing director for a period of three years from 1 January 1989 to 31 December 1991. At a board meeting on 2 October 1989, the plaintiff was removed as chairman of the company and the second defendant was appointed chairman of the company in his place. At the same board meeting, the plaintiff was suspended of his executive powers and duties. The remaining defendants were members of the board. The executive powers and duties of the plaintiff as chairman and managing director of the defendant company were contained in the contract of employment. The plaintiff obtained injunctions (1) against the defendant company to restrain the defendant company from removing the plaintiff as chairman and managing director, and from preventing the plaintiff from exercising the powers and duties of the holders of such office, and (2) to restrain the second defendant from exercising the powers and duties of the office of chairman of the first defendant company.

Held, allowing the defendants' application in part: (1) in contract law, if one party wrongfully repudiates the contract, the contract will not automatically come to an end unless the repudiation is accepted by the innocent party. Contracts of employment are no exception to the general rule that repudiation does not terminate the contract until accepted. Section 55 of the Specific Relief Act 1950 ('the Act') provides that where a contract contains both a negative as well as a positive undertaking, even though the courts are unable to grant specific performance of the positive undertaking, an injunction to perform the negative undertaking may be granted. Although the court could restrain the servant from committing a breach of an express or implied negative undertaking, this right to apply for an injunction is subject to the proviso which is that the applicant himself has not failed to perform his obligations under the contract. The existence of the proviso clearly contemplates that the contract is subsisting until repudiation is accepted; (2) contracts for personal services cannot be specifically enforced under s 20(1)(b) of the Act. Further, s 54(f) of the Act provides that an injunction cannot be granted to prevent a breach of a contract the performance of which would not be specifically enforced. The reason is if one party has no faith in the honesty or integrity or the loyalty of the other, to force him to serve or to employ that other is a plain recipe for disaster; (3) it appears that in English law no injunction could be granted in the absence of any express negative stipulation to that effect. However there is statutory provision in s 55 of the Act for an injunction to be issued on an implied negative stipulation in the contract; (4) in the instant case, the removal from office of the plaintiff as chairman of the company and the suspension of his executive powers did not put an immediate end to the contract of service. This operates as a repudiation of the contract by the defendant company. It will result in the determination of the contract only when the repudiation is accepted by the plaintiff. The repudiation has not been accepted by the plaintiff and the contract of employment is still in force; (5) although the contract has not been discharged and therefore is still continuing because the repudiation has not been accepted by the plaintiff, it is however, a contract of personal service and the plaintiff is not entitled to a decree of specific performance to compel the defendant company to employ him as the executive chairman and managing director of the company; (6) although specific performance is not possible, the plaintiff is not prevented from applying for an injunction to enforce performance of the express or implied negative undertaking in the agreement. There is on the part of the defendant company an implied negative agreement not to appoint someone else as chairman until the expiration of the plaintiff's period of employment on 31 December 1991.

Dato' Abdullah bin Ahmad v Syarikat Permodalan Kebangsaan Bhd & Ors [1990] 3 MLJ 505 High Court, Kuala Lumpur (NH Chan J).

[Annotation: Reversed on appeal. See [1991] 1 MLJ 91.]

The appellants claimed against the respondents the sum of S$17,866.80 being the balance amount for services rendered and goods supplied by the plaintiffs at the request of the defendants, interest and costs. The defendants counterclaimed for non-completion of work or in the alternative, that the works were not completed within a reasonable time. The issues in the case were (a) what exactly was the contract between the plaintiffs and the defendants? (b) was there a breach of that contract by the plaintiffs? (c) if there was a breach, what are the consequences?

Held, dismissing the appeal: (1) in such a contract, the consideration is usually a lump sum which is payable only upon complete performance by the other party. The opposite of an entire contract is a divisible contract, which is separated into parts, so that different parts of the consideration may be assigned to severable parts of the performance, eg an agreement for payment pro rata; (2) neither the agreed price, since it is not due under the terms of the contract, nor any smaller sum for the value of his performance, since the court has no power to apportion the consideration; (3) the main exception to the principle that the partial performer of an entire contract cannot recover the agreed price is the doctrine of substantial performance. By this doctrine, a failure to complete only an unimportant part of the plaintiffs' obligation does not prevent his claim for the agreed price, subject to a counterclaim for damages which will go in diminution of the price; (4) the contract entered into between the parties was an entire contract and not a divisible contract. In an entire contract, complete performance by one party is a condition precedent to the liability of the other;when a party has performed only part of his obligations under an entire contract, he can normally recover nothing;the plaintiffs were in breach of the said contract in failing to complete the works by Chinese New Year, 2 February 1984, without any reasonable explanation. Whatever work was done, in any event, was defective.

Overseas Services Pte Ltd v Clovertex Pte Ltd District Court Appeal No 103 of 1991 Subordinate Courts, Singapore (Rahim Jalil, District Judge).

The plaintiff, a contractor, originally claimed that a sum of $16,580.18 which was reduced to $11,656.81, was due to him being the balance payable for work performed under an agreement dated 17 November 1970. By that agreement the plaintiff agreed to execute certain works, namely, to lay water pipes complete with specials and valves between Mak Mandin and Prai and between Mak Mandin and Jalan Raja Uda in Butterworth. Under the agreement, the defendant undertook to supply the pipes, etc at the site of work, whereas the plaintiff was to supply all labour and other equipment for laying the pipes. The contract also included work for the reinstatement of a cycle tract of a size and length and at rates detailed in the said agreement. The plaintiff claimed that he had performed the work of reinstatement of the cycle track by 15 July 1971 and the other works by 15 September 1971. The defendant, a company, denied that the plaintiff had completed the works in question as claimed by him, and averred that it was a term of the contract that the plaintiff would execute the works to the satisfaction of the defendant and the Chief Resident Engineer of the River Muda Water Scheme, who was in charge of the contract works, but in spite of repeated requests by the defendant to comply with the instructions, the plaintiff failed to complete the works as agreed. The defendant incurred expenses in completing the contract and counterclaimed for repayment of sums paid to the plaintiff or for damages.

Held: as the plaintiff had substantially completed the contract he was entitled to claim for any balance due to him for work done. The defendant was also entitled to crossclaim for the defects and omissions, and as the cost of completing the contract work and repairing work unsatisfactorily done overtopped the balance claimed by the plaintiff, the plaintiff's claim should be dismissed and judgment given for damages on the counterclaim.

KP Kunchi Raman v Goh Brothers Sdn Bhd [1978] 1 MLJ 89 High Court, Penang (Gunn Chit Tuan J).

On 6 February 1991 the plaintiffs entered into an equipment lease agreement ('the agreement') involving two sets of dyeing machines ('the machines') with the first defendants ('GPTI'). On 1 June 1990 GPTI executed two deeds of debentures in favour of two banks ('the debenture holders') whereby GPTI charged by way of fixed charges all the company's fixed assets (including all lands) plant, machinery, equipment, etc as well as all such assets acquired subsequently by the company, and by floating charges all the undertaking and the rest of the company's properties and assets including stock-in-trade, raw materials, goodwill, debts owing to the company, etc. There were persistent defaults in the payment of rentals of GPTI under the agreement. On 11 August 1992 the plaintiffs' solicitors wrote to the defendants (the second defendant being the guarantor of the agreement), terminating the agreement and requested for the return of the machines, whilst reserving their rights to damages and other sums due. GPTI averred that since the machines were affixed to the land, it could not be returned to the plaintiffs. The plaintiffs' solicitors focused on art 14 of the agreement which provided that the lessee had contracted out of their rights and the machines would continue to be owned by the plaintiffs notwithstanding that the machines were affixed to the land. The plaintiffs sought a declaration against GPTI in respect of whether the said art 14 superseded the provisions under the National Land Code 1965, and whether the plaintiffs were entitled to remove the machines which were affixed on GPTI's premises.

Held, allowing the declarations sought for: (1) (2) the onus is on the plaintiff to prove that the machines are chattels; (3) whether the machines are fixtures or chattels is a mixed question of fact and law, depending on the intention with which they must be taken to have been placed in the premises; (4) the presumption that a chattel on being attached to the soil or to a building prima facie becomes a fixture may be rebutted by showing that the annexation is incomplete, so that the chattel can be easily removed without injury to itself or to the premises, and that the annexation is merely for a temporary purpose and for the more complete enjoyment and use of the chattel as a chattel; (5) the effect of the 'retention of title' clause in the agreement was to prevent the machines from ever becoming a fixture and should remain a chattel. The court found that the machines were installed in the factory temporarily and their removal would not occasion material injury to the land. Under the terms of the agreement it was GPTI's duty to ensure that the machines were capable of being removed without causing material injury to the land. If in the course of removal, damage is caused, GPTI must shoulder this responsibility; (6) when charges in respect of the lands were registered in favour of the debenture holders on 16 November 1992, it was imperative of GPTI (under the terms of the agreement) to obtain a written acknowledgement from the debenture holders to the effect that the machines were not fixtures. This duty remained notwithstanding that the debenture holders were appointed on 1 June 1990; (7) the provisions in the agreement must be correlated to the annexation of the machines and the degree of annexation can then be derived. That degree of annexation - 'the legs cemented into a raised cement platform' - and done without the plaintiffs' written consent, in blatant contravention of art 14(1) of the agreement could point to only one conclusion, that the machines were chattels placed temporarily on the land; (8) it is trite law that where movables or chattels have been so affixed to land or to buildings on the land with the intention that it is to become partof the land, the chattel loses its nature as a movable and becomes an immovable or fixture and thus land;from the facts, it was found that the debenture holders knew of the ownership claims by the plaintiffs in regard to the machines and it would therefore be inequitable for the debenture holders through their agents to claim ownership of the same.

MBf Finance Bhd v Global Pacific Textile Industries Sdn Bhd & Anor Originating Summons No 24-105-93(T) High Court, Taiping (Abdul Malik JC).

In this case, the respondents alleged that they had advanced to one Ratnavale (since deceased) the sums of (a) $29,500 paid on 20 December 1966 by a United Commercial Bank cheque and (b) $250,000 paid on 21 March 1967 by a Algemene Bank Nederland cheque. The deceased repaid the sum of $50,000 leaving a balance of $229,500. The deceased died on 19 April 1973 and the appellants were the administrators of his estate. The respondents brought an action to recover the sum owing and the learned Judicial Commissioner who tried the case found in favour of the respondents. The appellants appealed and two issues were raised on the appeal: (i) whether the deceased received the sums; (ii) even if he did, whether the respondents' suit was not statute-barred, as the suit was commenced on 30 July 1974, that is, more than seven years after the money was received.

Held: (1) as regards the first payment of $29,500, it had been proved beyond doubt that this sum was received by the deceased. The cheque was paid into the bank account of the deceased; (2) as regards the second payment of $250,000, although this was made by cheque in favour of M/s Ong Huck Lim & Co with a crossing 'A/C Payee only' the evidence showed that it was endorsed by Mr Ong Huck Lim in favour of the deceased and paid into the bank account of the deceased; (3) the irresistible inference in this case is that the bank into which the cheques were paid must have collected the proceeds for the deceased's account. If the appellants denied the receipt of the sums and wished the court to believe that the deceased did not receive them it is they who should disprove the receipt. This they had failed to do; (4) the question whether the suit was statute-barred depends upon the purpose for which the sums were paid and the nature of the rights acquired by the respondents regarding the payments; (5) there is no provision in the National Land Code 1965 (Act 56/1965) prohibiting the creation of equitable charges or liens. Therefore equitable charges and liens are permissible under our land law. The words 'other charge on land' in s 21(1) of the Limitation Act 1953 (Act 254) must be construed to include equitable charges and liens as well; (6) in this case, the evidence showed that the first sum of $29,500 was meant to be a 10% deposit towards the purchase of land in which the respondents and the deceased were engaged in a joint venture. The transaction therefore resulted in an equitable charge in favour of the respondents. Section 21(1) of the Limitation Act therefore applied and the suit was not statute-barred; (7) as regards the second sum of $250,000 the evidence was not as clear-cut. On the evidence there was no sufficient proof on the balance of probabilities that this sum was given to the deceased as the respondents' share of the capital of a joint venture between them and the deceased to purchase the Meera Estate Ltd. It would appear that the money was a personal loan to the deceased which at the time of the suit had become statute-barred; (8) thus except for the first sum of $29,500 the appeal should be allowed.

Mahadevan & Anor v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266 Federal Court, Kuala Lumpur (Salleh Abas CJ (Malaya).

It is a custom of the trade relating to the shipment of goods between Sarawak and Singapore that mate's receipts are treated as documents of title in the same way as bills of lading. By reason of such custom, the issue of mate's receipts to the order of the plaintiff estopped the respondent from denying the plaintiff's right to possession of the goods.

Wah Tat Bank Ltd & Ors v Chan Cheng Kum & Ors 1965 Federal Court, Singapore (Wee Chong Jin CJ, Tan Ah Tah FJ and Chua J).

The appellant bought goods on credit from Chemitrade Sdn Bhd ('Chemitrade'). Chemitrade then entered into a factoring agreement with the respondent under which the respondent agreed to factor Chemitrade's book debts, ie the debts owed by the appellant to Chemitrade were assigned to the respondent. Notice of the assignment was given to the respondent. Chemitrade gave the respondent copies of the invoices in respect of each sale and delivery of goods to the appellant. The respondent then stamped the invoices with the indorsement that any objection was to be reported to the respondent within 14 days of its receipt, ('the indorsement') and sent them to the appellant. The appellant did not complain about any of the invoices within the 14-day period nor challenge the respondent's right to impose the 14-day period by way of the indorsement. The appellant paid the respondent on several of the invoices but later refused to make payment on 20 invoices ('the invoices'). The appellant argued that nothing was payable on the invoices due to a statement on the appellant's purchase orders that the amounts stated were to be offset against the cost of stocks returned to Chemitrade ('the statement'). The respondent denied knowledge of the statement and argued that since the appellant had not protested about the validity of the indorsement, it was entitled to assume the appellant had accepted it. The trial judge found for the respondent. The appellant appealed to the Federal Court on the grounds that the respondent, as assignee, could not unilaterally impose the 14-day limit, and that the agreement was not a valid assignment. The appellant also argued that the respondent's argument was in essence an estoppel, but since it was not pleaded, the trial judge erred in relying on it. On the other hand, the respondent cross-appealed against the refusal of the trial judge to enter judgment in its favour on two other items claimed for, which amounted to RM95,000.

Held, dismissing the appeal and cross-appeal: (1) a reasonable man in the respondent's position would be entitled to assume that the appellant had agreed to the imposition of the 14-day period as it did not merely remain silent by not objecting to it but had in fact made payment on some invoices. The appellant should not be allowed to question the validity of the indorsement after seven months as it would be unconscionable and inequitable for it to do so; (2) the doctrine of estoppel is a flexible principle by which justice is done according to the circumstances. It is a doctrine of wide utility and has been resorted to in varying fact patterns to achieve justice. The maxim 'estoppel may be used as a shield but not a sword' does not limit the doctrine of estoppel to defendants alone. Plaintiffs too may have recourse to it. Estoppel may assist a plaintiff in enforcing a cause of action by preventing a defendant from denying the existence of some fact which would destroy the cause of action; (3) there was no evidence to suggest that the respondent had knowledge of the statement and therefore, it was entitled to assume that the invoices were good for payment because the appellant had not informed it otherwise. It was unjust for the appellant to suggest that the respondent ought not to have paid Chemitrade on the invoices and the respondent should therefore be estopped from asserting that nothing was due on the invoices; (4) there were documents to suggest that the appellant, Chemitrade and the respondent had proceeded upon the assumption that the factoring agreement was a valid assignment. It would be unjust and unconscionable to permit the appellant to now challenge the meaning which the parties gave to the document; (5) even though estoppel was not pleaded as required under O 18 rr 7(1) and 8(1) of the Rules of the High Court 1980, the material facts giving rise to the estoppel were sufficiently pleaded without actually using the term 'estopped'. Furthermore, considerable evidence on the point was led at the trial by the respondent without objection from the appellant; (6) a court may permit a litigant to argue an unpleaded estoppel if it is in the interests of justice to do so. It is a matter within the discretion of the judge who must have due regard to all the circumstances of the case, including any prejudice that may be caused by the affected party being taken by surprise. Nevertheless, such departures should rarely be permitted, for otherwise, the rule that a party is bound by its pleadings will be rendered meaningless; (7) the respondent as assignee could not place itself in a better position than the assignor. The respondent took the assignment subject to all rights of set off which the appellant as debtor had against the assignor. Therefore, the two sums claimed by the respondent, which the appellant was entitled to set off against moneys due from the appellant to Chemitrade, were not allowed; (8) (obiter) (i) the doctrine applies to both representations of fact and of law; (ii) all that a litigant who invokes the doctrine of estoppel must do is to show that he was so influenced by the encouragement or representation that it would be unconscionable for the representor to enforce his strict legal rights. There is no need to show that he was induced to act in a particular way; (iii) the detriment element does not form part of the doctrine of estoppel. All that need be shown is that it would be unjust to permit the representor or encourager to insist upon his strict legal rights. A judicial arbiter would be entitled to have regard to the conduct of the litigant raising the estoppel. This may include the determination whether the particular litigant had altered his position, although such alteration need not be to his detriment.

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

The appellant's husband had a Mareva order imposed on him. In order to help her husband to trade in shares despite the Mareva order, the appellant signed all the cheques in her cheque book in blank, and handed them to her husband. The appellant's husband then entered into a written contract with Seremban Securities Sdn Bhd ('the respondents') to buy and sell shares through them. As the agreement was entered in the appellant's name, all transactions were done in that name. There was no suggestion that the respondents knew what the appellant's husband was up to. When the account with the respondents went bad, they brought an action against the appellant to recover the money owed to them. The appellant delivered a defence and counterclaim, arguing that: (i) there was no contractual relationship between the appellant and the respondents, as she had never signed the agreement and that the share account was never operated by her; (ii) the contract was tainted with illegality ab initio. The respondents' application to strike out the appellant's pleading was granted by the trial judge. The appellant appealed to the Court of Appeal. The appellant's counsel submitted that this case was unsuitable for resolution under the court's summary jurisdiction, as there were serious issues of fact and law which were plainly arguable. The appellant's counsel further complained that despite the fact that the appellant had raised triable issues, the trial judge had decided in the respondent's favour based on just one point, ie that two payments had been made to the respondents by way of cheques drawn on the appellant's account.

Held, dismissing the appeal: (1) there was nothing illegal about the contract relied upon by the respondents. There was no suggestion that the respondents entered into the agreement with the object of breaching the terms of the Mareva injunction; (2) this appeal could be resolved by refence to the doctrine of estoppel. The appellant, by her actings, would have led a reasonable man to believe that she had given her husband a carte blanche to act on her behalf. It could further be inferred from the undisputed facts that the respondents was influenced by the conduct of the appellant to entertain such a belief. Pursuant to the doctrine, the appellant could not now assert facts that would contradict her earlier conduct as that would be inequitable and unjust. She must face the consequences of the series of events which she set in motion by acceding to the husband's plan; (3) the trial judge was entitled to rely on the conduct of the appellant when testing the triability of the issues she had raised in her defence. This was a plain and obvious case in which the judge was well entitled to exercise the summary power to strike out a pleading; (4) (per curiam) the doctrine of estoppel is a flexible doctrine by which courts seek to do essential justice between litigating parties. The doctrine may be applied to enlarge or to reduce the rights or obligations of a party under a contract. Both plaintiffs and defendants may have recourse to the estoppel, and the doctrine is not confined to cases where a representation of fact has been made, or where a party has been encouraged by another to believe in the existence or in the non-existence of a fact.

Teh Poh Wah v Seremban Securities Sdn Bhd [1996] 1 MLJ 701 Court of Appeal, Malaysia (Gopal Sri Ram, Siti Norma Yaakob JJCA and Mokhtar Sidin J).

Ahmad bin Salleh & Ors v Rawang Hills Resort Sdn Bhd [1995] 3 MLJ 211; (1995) CSLR III[254] High Court, Shah Alam (James Foong J).

See CONTRACT, Vol 3, para 356.

The defendant was the owner of a double storey semi-detached house ('the demised premises') which was rented out to the plaintiff for three years commencing from 1 June 1991. The plaintiff had paid RM158,000 to the defendant as advance rental and utilities deposits. The special conditions of the tenancy agreement stated that the plaintiff was to use the demised premises to carry on the business of karaoke, musical lounge and KTV. It was alleged that the defendant orally undertook to convert the condition of use of the demised premises from housing to business. The necessary conversion was not obtained and the plaintiff filed this claim for the return of the RM158,000 paid to the defendant, alleging that the defendant's failure to obtain the conversion had frustrated the tenancy agreement. The defendant argued that: (i) the oral undertaking was not pleaded in the statement of claim; (ii) the issue of conversion was absent from the tenancy agreement; and (iii) the plaintiff was estopped by conduct from saying that he refused to occupy the demised premises until the issue of conversion had been settled by the defendant.

Held, allowing the plaintiffs claim: (1) O 18 r 11 of the Rules of the High Court 1980 ('the RHC') makes it clear that it is not mandatory to raise a point of law. The defendant's oral undertaking to convert the condition of the demised premises from housing to business revolved on the issue of conversion which was a point of law. That being the case, it was not mandatory to mention it in the plaintiff's statement of claim and the failure of the plaintiff to do so must not be held against him; (2) any bystander having sight of the tenancy agreement would simply react that the defendant, as an implied term of the contract, should obtain the relevant approval for conversion of the demised premises from housing to business. The circumstances of the case demand that the term specified be implied in the contract; (3) because of the failure of the defendant to obtain the necessary conversion, the tenancy agreement became impossible to perform. A contract is said to be frustrated when there is a change in the circumstances which renders a contract legally or physically impossible of performance; (4) s 92 of the Evidence Act 1950 merely prescribes a rule of evidence and it does not fetter the power of the court to arrive at the true meaning and effect of the tenancy agreement by taking into account the surrounding facts and circumstances of the case; (5) the question of whether a course of conduct amounts to a representation and which representation is meant to be acted upon in a certain way must vary according to the facts of each particular case and no general rules can be laid down for it. The defendant was at fault in not resolving the issue of conversion and he therefore cannot take advantage of an error to which he himself has contributed.

Ho Weng Leong v Ng Kee Chin [1996] 5 MLJ 139 High Court, Johor Bahru (Abdul Malik Ishak J).

3 [2186] CONTRACT Estoppel – Estoppel by conduct – Whether conduct of plaintiffs gives rise to inference that partnership is to continue notwithstanding death of partner – Failure of defendants to show existence of agreement that partnership not dissolved by death of partner – Ram Niwas Poddar v Diwan Chand Parma Nand & Ors AIR 1933 Lah 618 (cited) Kesrimal & Anor v Dalichand & Ors AIR 1959 Rajasthan 140 (cited) Nandlal Sohanlal, Jullundur v CIT, Patiala AIR 1977 Punjab & Haryana 320 (cited) Shivram Poddar v Income Tax Officer AIR 1964 SC 1095 (cited)

P and D were partners of a firm carrying on the business of goldsmiths and jewellers. L, one of the partners, died in 1982 and his legal administratrix and administrator were taken in as partners. Subsequently, in 1988, partners M and N died. P, accordingly, applied for a declaration that the partnership and business of the firm stand dissolved under s 35(1) of the Partnership Act 1961. D1-D7, with the exception of D3, opposed the application. D contended that there was an implied agreement that the partnership would not be dissolved upon the death of any partner of the firm. D contended that when L died and his administrators were taken in as partners in his place, P did not raise the issue of dissolution of the partnership. The conduct of the parties therefore raised an irresistible inference that there was an agreement between the parties that the partnership should continue even though one of the partners had died.

Held, allowing P's application: (1) under s 35(1) of the Partnership Act 1961, a partnership is dissolved as between the partners by the death of a partner. However, this is subject to any agreement to the contrary between the partners. The agreement to the contrary must have been made before the death of any partner. The burden of proving the existence of such an agreement to show that the partnership is not dissolved is on the party who asserts it; (2) having regard to the surrounding circumstances in the instant case, there was nothing either written oral or by the conduct of the parties to justify a conclusion that there was an agreement between the partners that the partnership should continue notwithstanding the death of a partner. When the administrators of L were taken in as partners, a new partnership came into being. The administrators were not admitted as new partners on the basis that there was an agreement to continue to show that P had acted in any way which may give rise to an estoppel. P's conduct could not be considered as evidence of agreement between the parties to continue with the partnership. The administrators of L were taken in as partners of a new partnership and not that of a continuing partnership; (4) for the above reasons, the partnership stands dissolved by the death of M and N in 1988.

Lee Choo Yam Holdings Sdn Bhd & Ors v Khoo Yoke Wah & Ors [1990] 1 MLJ 385 High Court, Kuala Lumpur (Anuar J).

[Annotation: Affirmed on appeal. See [1991] 1 MLJ 414.]

The respondents were beneficiaries of a marine hull insurance policy with the appellants for a Panamanian vessel, PAB ex Pablo V (the vessel). The respondents had purchased the vessel, then lying afloat off Montevideo, Uruguay, for the purpose of transporting a large consignment of pig-iron from Vitoria, Brazil, to Bangladesh. The policy was effected by way of an endorsement to the policy for another vessel, the Debralinas Pride, with effect from 30 May 1985, the date on which the delivery of the vessel was taken at Montevideo, and would be valid until the expiry of the Debralinas Pride policy on 28 December 1985. The policy incorporated the Institute Time Clauses. It limited the trading area of the vessel to the 'Far East and Pacific not West of Capetown.' Since the policy was thus limited geographically, it would not cover the vessel on her journey from Montevideo to Vitoria to load the pig-iron and on the further journey to Maputo in Mozambique to take on a cargo of asbestos. Hence the words 'including one delivery voyage from Montevideo to trading area' was added. Originally the policy required a satisfactory condition survey by the London Salvage Association (LSA). Since LSA surveyors were not available at Montevideo, the appellants agreed to the condition survey being undertaken by Sociätä Gänärale de Surveillance (SGS) subject to the conditions, inter alia, that the condition survey be carried out on the vessel, that all recommendations be complied with prior to sailing, and that the surveyor telex Lombard directly upon completion of the survey so that they may be given every opportunity to examine the condition of the vessel. The survey was completed by SGS surveyors who accordingly telexed Lombard. Lombard, on behalf of all the appellants, then issued the endorsement on the Debralinas Pride policy, containing the warranty as to 'satisfactory condition survey' by SGS. It was not disputed that the vessel was unseaworthy on her departure from Vitoria. On route to Maputo the vessel encountered rough weather with a swell, which caused a crack to appear on her hull. At Maputo, a survey by the classification society recommended certain repairs and that no further cargo be loaded into the No 6 hold. Temporary repairs were carried out but it was not clear whether the recommendations were complied with. After leaving Maputo, the vessel encountered rough weather which was not envisaged. Leakage began, and worsened, until the flooding spread through a manhole cover to the engine room, blacking her out. Shortly thereafter she sank. The respondents' claim against the appellants was allowed in the High Court. (See [1994] 2 SLR 887.) The appellants appealed on three grounds, namely, that the policy was a 'mixed policy' in that it was a policy for both time and voyage, and there was an implied warranty of seaworthiness; that there was a breach of the express warranty of satisfactory condition survey; and that the loss was caused by the vessel's unseaworthiness.

Held, dismissing the appeal: (1) the voyage from Montevideo to Vitoria and from Vitoria to the trading area was not a delivery voyage. There was no delivery voyage as delivery of the vessel was taken in Montevideo on 30 May 1985. The vessel had begun trading the minute she arrived at Vitoria to take on the cargo of pig-iron; (2) adopting a commonsense approach in characterizing the policy, the only sensible consideration that one could give to the words of the warranty, 'including one delivery voyage from Montevideo to trading area,' was that the geographical trading area limited in the policy was extended to cover the journey from Montevideo to Vitoria and thence to the trading area. There were no words in the policy to suggest that a 'voyage' from one terminus to another terminus - or a modification to the nature of the policy - was contemplated. The policy therefore remained a time policy; (3) as the policy was a time policy, the warranty of seaworthiness implied by s 39 of the Marine Insurance Act 1906 did not arise; (4) the express warranty of 'satisfactory condition report' must be construed in the factual matrix in which it was agreed. On the facts, it required only that the report was subjectively satisfactory to the appellants and not that the report had to be objectively satisfactory. Construing the warranty in such a way as to require the report to be inherently and objectively satisfactory would leave the owners entirely uncertain as to whether the vessel was covered by insurance and would lack all commercial reality. The report had been accepted as satisfactory by the appellants and there was no breach; (5) in any event, the appellants were estopped from contending that the SGS condition survey was unsatisfactory. The issue of the endorsement to the Debralinas Pride policy was a clear representation that the appellants treated the report as complying with the warranty and gave rise to a promissory estoppel, as the respondents relied on it by proceeding on the basis that they were insured; (6) the same facts also gave rise to an estoppel by convention as there was a mutual understanding or belief on the part of both parties that the report to the appellants constituted compliance with the warranty. That understanding or belief was known by the respondents to be the understanding or belief of the appellants because the appellants issued the endorsement without question, reservation or complaint immediately on receipt of the report. This was sufficient for the appellant's participation in this common or mutual assumption to be relied on by the respondents; (7) where a vessel encounters adverse weather or some unusual condition of the seas, which she is unable to withstand due to her unseaworthy condition upon sailing, the resulting loss is still to be attributed to the perils of the sea; (8) the trial judge had evaluated all the evidence before coming to the conclusion that the proximate cause of the loss of the vessel was adverse sea conditions. His finding that the fortuitous element which caused the loss of the vessel was the failure of the shell plating, which would not have occurred but for the action of the adverse sea conditions, was fully supported by the evidence.

Lombard Insurance Co Ltd & Ors v Kin Yuen Co Pte Ltd [1995] 1 SLR 643 Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Goh Joon Seng).

The respondent was at the material time the branch manager of the appellant's establishment in Johor Bahru. In that capacity, on 9 November 1988 the respondent had sold a Toyota Corolla motorcar to HH Lee Motor Credit ('Lee Motor') at Batu Pahat for RM42,941.48. This sale was concluded with the acceptance of a cheque dated 9 November 1988 which was meant to be full payment for the motorcar. Unfortunately, the cheque was dishonoured and Lee Motor was no where to be found. Consequently, the respondent was charged for gross misconduct and the charges levied against him were, namely (i) non-compliance with the appellant company's policies in relation to the administration of the Johor Bahru branch office; and (ii) causing financial loss amounting to RM42,941.48 to the appellant company by allowing credit facilites to Lee Motor. A domestic inquiry was held to look into the charges. At the conclusion of the domestic inquiry, the respondent tendered a letter dated 23 November 1988 wherein he admitted to the charges levied against him. He also appealed to the management to consider his long service of 23 years with the appellant company and implored that he be given 'a chance to continue working with the company'. However in view of the respondent's written admission and in the light of the gravity of the misconduct committed by him, the appellant terminated the respondent's services vide a letter of termination dated 26 November 1988 giving him one month's notice of the termination. The respondent therefore commenced civil proceedings in the sessions court for the following prayers, namely (i) for the loss of earnings for three months totalling RM12,480; (ii) for loss of bonus for two and the half months for 1988 totalling RM10,400; and (iii) for loss of earnings from December 1988 until February 1990 and from March 1990 until August 190 totalling RM75,360. The sessions court judge granted prayers (i) and (ii). The appellant appealed against this decision. The respondent argued that he was only bound by the first contract of employment dated 31 January 1977 which stipulated the period for termination as three months as opposed to the second contract of employment dated 1 January 1984 which stipulated the notice for termination to be one month. The respondent further argued that the latter contract was a unilateral contract which was unenforceable in law and that it was never meant to represent the terms and conditions of the contract of employment between the parties.

Held, allowing the appeal: (1) the respondent had enjoyed the benefits under the second contract until his dismissal on 26 November 1988. Consequently he should be estopped from denying that the second contract was not applicable. Having enjoyed the fruits of the second contract for that period of time, he had lost the right to repudiate the same. The prolonged delay on the part of the respondent amounted to an implied affirmation by the respondent of the second contract; (2) the principle of approbation and reprobation should be vigorously applied since the respondent had accepted the increase in salary under the second contract but rejected the one-month period for notice of termination. The second contract should thus be accepted as the contract of employment between the parties; (3) in light of the respondent's admission at a domestic inquiry, the court was under no further obligation to make any further inquiry and a decision or an order could be made based on the admission. In any event, the evidence supported the case against the respondent. The gross misconduct on the respondent's part must therefore be borne by himself and prayer (i) should not have been granted; (4) a bonus is a gift or gratuity as a gesture of goodwill, and not enforceable, or it may be something which an employee is entitled to on the happening of a condition precedent and is enforceable when the condition is fulfilled. But in both cases it is something in addition to or in excess of that which is ordinarily received. Since bonus was a form of gratuitous payment of a discretionary nature, the respondent was not entitled to it as of right. In this case the respondent was not entitled to the two and a half months' bonus claimed in prayer (ii).

UMW Toyota (M) Sdn Bhd v Chow Weng Thiem [1996] 5 MLJ 678 High Court, Johor Bahru (Abdul Malik Ishak J).

Prebore Piling and Engineering Sdn Bhd ('Prebore') had agreed to supply goods and services on credit to Pembinaan Gunung Mewah Sdn Bhd ('Gunung Mewah'). Prebore then entered a factoring agreement with UOL Factoring Sdn Bhd ('the respondent') to factor its bills to Gunung Mewah. The instant appellant acted as one of the guarantors, guaranteeing, both as surety and as principal debtor, the due performance by Gunung Mewah of its obligations under the factoring agreement. Upon the latter's default to make payment, the respondent instituted summary proceedings against the appellant to recover the amount due. In the High Court, the appellant argued that: (i) invoices in respect of a building contract, including certificates of payment could not be factored, as he had only guaranteed due payment for goods and services supplied by Prebore to Gunung Mewah; and (ii) the contractual relationship between Prebore and Gunung Mewah had been varied and that he was accordingly discharged from any further liability under the guarantee. The High Court judge found that there was no triable issue, and entered judgment against the appellant. The appellant appealed.

Held, dismissing the appeal: (1) any lawful debt may be factored, that is to say, may be assigned, and the court does not perceive that the position to be any different because the obligation to pay arises out of a building contract; (2) the appellant had expressly undertook the obligations of a principal debtor under the guarantee that he executed. It did not matter what happened between the assignor (Prebore) and the debtor (Gunung Mewah). As far as the respondent was concerned, it entered into the factoring arrangement encouraged by the appellant's promise to play the role of surety as well as principal debtor; (3) under the doctrine of estoppel, it would be entirely inequitable and unconscionable to permit the appellant to now assert that the promise he gave, and upon the strength of which the respondent acted, was unenforceable.

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).

In 1951 the respondents had granted the appellants a licence to operate a petrol station. The original station was demolished and the appellants relocated to Coronation Road. There existed two agreements between the parties, an operating licence and a supply contract. The operating licence gave the appeallants the right to enter upon land on which the station stood and to make use of the station for the sole purpose of marketing the respondents' petroleum products. The respondents were obliged to maintain the station and its accessories in good repair. Clause 12 of the operating licence allowed the respondents to determine the licence if the appellants committed any of the acts listed in the clause, in particular anything detrimental to the interests of the respondents. The supply contract governed the sale of motor fuels by the respondents to the appellants and their resale by the appellants. Sometime before August 1988, the Director of Fire Services issued letters of warning to the major oil companies in Singapore, including the respondents, advising them of the danger posed by the petrol station operators and their staff engaging in the performance of the prayer ceremonies for the 'hungry ghosts' month, in particular the lighting of candles and burning of joss paper. The respondent in turn issued similar warnings to their dealers, including the appellants. On 12 August 1988 an altar table with lighted candles and burning joss sticks were found on the premises of the appellants' station by the Auto Market Development Manager of the respondents. On 20 August 1988, the respondents' solicitors wrote to the appellants referring to the incident and advised that the respondents were reviewing the operating licence. On 22 August 1988, the respondents' solicitors gave the appellants notice of termination of the operating licence. On 21 September 1988, the appellants applied for an interim injunction restraining the respondents from repossessing the station and from withholding supplies of motor fuels. The respondents made an application of their own for an order restraining the appellants from continuing to remain in occupation of the premises. Both applications were heard by the High Court on 23 March 1989. The appellants' application was dismissed and the respondents' injunction was granted. The appellants appealed, contending, inter alia, that one of the main issues to be tried was the question of a promissory estoppel. The appellants contended they were granted an 'evergreen' contract by the respondents because the respondents had requested that they wait two years for a new station after the original station was demolished.

Held, dismissing the appeal: (1) the rule against varying a written contract by parol evidence did not prevent a party from raising promissory estoppel. The doctrine of promissory estoppel did not seek to contradict, vary, add to or subtract from the terms of a contract. It only operated to prevent a party having benefit of terms of a contract from enforcing them if the conditions for the operation of the doctrine were fulfilled. In the instant case the allegations of representations made were suspect and so indeterminate and ambiguous that they could not raise an estoppel against the respondents. In considering an issue of promissory estoppel, one had to ask what contractual provision was sought to be applied or enforced, and then to ascertain what representation had been made in relation to that contractual provision. There cannot be an estoppel in vacuo, unrelated to any contractual provision. The appellants conceded that the 'evergreen' contract would be subject to cl 12. This was as good as saying that no representations were ever made that the respondents would not terminate the licence when an event contemplated by the clause occurred; (2) the difference between a mandatory and prohibitory injunction lay in whether the status quo was disturbed. In the instant case it seemed clear that what the appellants sought was to preserve the status quo. The status quo must be the time before the respondents stopped supplying fuels to the appellants and before the appellants were compelled to cease operations; (3) the court should take whichever course that appeared to carry the lower risk of injustice if it should turn out to have been wrong at trial in the sense of granting the interim relief to a party who failed to establish his rights at the trial, or of failing to grant the interim relief to a party who succeeded at the trial. The guidelines for the grant of both mandatory and prohibitive injunctions were derived from this principle; (4) in the instant case, there was no question or serious questions to be tried, and the appellants were unlikely to succeed at trial.

Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 729 Court of Appeal, Singapore (Yong Pung How CJ, Chan Sek Keong and Warren LH Khoo JJ).

P sued D for liquidated damages for failure to serve employment for a specified period with P after D had been sent overseas for training. D admitted the claim but counterclaimed for the difference between her contractual daily allowance and the daily allowance actually paid to her during her overseas training. P claimed that D had waived all her rights to the sums claimed.

Held, allowing both the claim and counterclaim: the receipts signed by D in respect of the allowances received by her did not indicate full and final settlement of all amounts due to D. For payment of a lesser sum to be effective discharge of a larger sum owed, there had to be true accord. Here, D had never agreed to accept a smaller daily allowance. Also, even if there was an agreement to such an effect, true accord was negatived by the inequality in the bargaining power between P and D. D's counterclaim was thus successful.

Denny's Singapore Pte Ltd v Deborah Khoo Kim Bee District Court Appeal No 82 of 1987 District Court, Singapore (Francis Tseng, District Judge).

The defendant owned a piece of land which was charged to the plaintiff as security for the repayment of a government housing loan of RM64,306 in 1982. The defendant resigned his government post in 1983. At that time, he wrote to Bahagian Pinjamin Perumahan (BPP) informing it that his department head would cease to make monthly repayment deductions and that he would continue the monthly repayment by way of postal money order or deductions to be made by his new employer. BPP replied allowing the defendant to repay the loan by instalment. The defendant subsequently made several appeals against increases of interest rate or alternatively that his housing loan be transferred to his wife. Such appeals were rejected by BPP. In 1988, BPP gave the defendant a notice of demand and required the repayment of RM83,160.03. This notice was not complied with. A statutory notice was then served on the defendant. Two public auctions were then carried out in 1990 and 1991 respectively but both were unsuccessful. Then on 22 August 1991, the Pendadbir Tanah Kinta issued a certificate of reference under s 265(3)(c) of the National Land Code. The plaintiff then applied by originating summons pursuant to s 265 of the National Land Code for the defendant's land to be sold by way of public auction. In defence, the defendant alleged that the plaintiff had refused to transfer the defendant's loan to his wife; and that the plaintiff was estopped from raising or varying the interest rate from 4% to 10% due to a representation made in a letter in 1983.

Held, granting the application: (1) the Treasury would not entertain any application for a housing loan for the purpose of purchasing property belonging to a spouse under the terms and conditions drawn up pursuant to s 5 of the Housing Loans Fund Act 1971; (2) and (b) that the person to whom the representation was made must have relied on it to alter his position or in short there must be reliance. The representation, which may either be by conduct or statement, must be clear and unambiguous and intended to be acted upon (Muthiah v Lee Kor Fan [1966] 1 MLJ 105 followed); (3) the defendant had not relied on the representation made by the plaintiff to resign his position. He left his job on his own accord; (4) the plaintiff was not estopped from varying the interest rate. The plaintiff merely allowed the continuation of the housing loan on the same terms and conditions despite the defendant's resignation and as such was not precluded from enforcing the terms of the charge; (5) estoppel by representation must be founded upon the following conditions: (a) that there must be a representation made with the intention of inducing a person to alter his position or in short there must be a holding out;the defendant's own conduct of failing to repay the housing loan was left wanting for him to seek relief in equity (Liew Ah Hock v Malayan Railway [1967] 1 MLJ 53 followed).

Kerajaan Malaysia v Mohd Mokhtar bin Ali [1995] 4 MLJ 601 High Court, Ipoh (Abdul Hamid Embong JC).

P concluded an agreement with d ('agreement 1') for the purchase of a part of a factory ('the property') by themselves from D. Completion was to take place 14 days after receipt by P of notice to complete from D, but no provision was made for liquidated damages. JN, an advocate and solicitor, acted for both P and D in the transaction. It was brought to JN's attention that agreement 1 did not comply with the requirements of the Sale of Commercial Properties Act (SCPA) in that, inter alia, no completion date was stipulated. JN drew up a second agreement ('agreement 2') which was executed by P and D and backdated to the date of agreement 1. Agreement 2 differed from agreement 1 in that it provided for notice to complete to be given by D on or before 31 December 1983, and for liquidated damages for delay. TYH later acquired the whole of the issued share capital of P. After that, D gave P notice to complete after the date specified in agreement 2 and asked P to pay the balance of the purchase price which had not been paid and an amount to compensate for the actual area of the property being more than the specified area. P refused to pay the two sums and claimed to be entitled to liquidated damages for D's failure to issue the notice of completion on time. P started an action claiming, inter alia, liquidated damages for late completion. The quantum of liquidated damages was not disputed. D contended that P were estopped by their conduct and/or representations from saying that completion should have occurred by 31 December 1983, the completion date in agreement 2; alternatively that P had waived the clause relating to the completion date; or in the further alternative, that by reason of the events that took place a new agreement between the parties must be implied whereby completion was extended to a date to be notified to seller by P.

Held, granting P's claim: (1) the completion date inserted in agreement 2 was inserted arbitrarily by JN, the solicitor for both parties, in order to comply with legislation and for no other reason. The evidence showed that P by acts and words had represented to D that the date was inconsequential and that P would not hold D to it so long as P was let into possession as soon as possible; (2) D here had altered their position by working on Phase 2 of their development project (of which the property was part) and then amalgamating Phases 1 and 2 of the project into one lot for the procurement of individual titles instead of deferring completion of Phase 2 until title for Phase 1 had been procured. The two elements of estoppel had therefore been made out; (3) D's defence of waiver was made out as TYH, the new owner of P, allowed the completion date to pass without taking any action; (4) however, s 5 SCPA read with rr 6 and 7 of the Sale of Commercial Property Rules required that all terms of sale complied with the legislated form and no amendment was allowed. The defences of waiver and estoppel were prima facie supportable on the evidence but to allow them would mean that the above legislation would be defeated. On the grounds of public policy therefore, the defences could not succeed; (5) the third defence regarding the implied agreement was not supported by the evidence; (6) although not justified on the merits of the case, P was granted a declaration that liquidated damages were payable to them.

Fu Loong Photographer Pte Ltd v Mun Hean Realty Pte Ltd [1989] SLR 300 High Court, Singapore (Grimberg JC).

[Annotation: Reversed on appeal. See [1993] 1 SLR 713.]

Lombard Insurance Co Ltd & Ors v Kin Yuen Co Pte Ltd [1995] 1 SLR 643 Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Goh Joon Seng).

See CONTRACT, Vol 3, para 2113.

The second plaintiffs ('IFM') were a factoring firm that had an agreement with the first plaintiffs ('GT') whereby the latter assigned to the former all receivables due to them from the defendants under credit sales. The procedure under the agreement required IFM to check all invoices with the defendants before making payment to GT. GT's sales manager, PT, named two persons, Tooby and Dip of the defendants as persons IFM could refer to for purposes of such verification. Various payments were made to GT by IFM under the agreement on the strength of invoices sent to them. It was discovered later that PT had forged most of the invoice. The defendants denied ordering or receiving the goods. IFM, nevertheless, claimed the sums paid to GT from the defendants on the ground that the defendants were estopped from denying that the goods were in fact sold and delivered to them as the defendants had always been aware of IFM's interest in the receivables and by their conduct and/or representations, the defendants had permitted and induced IFM into believing that the amounts reflected in the invoices were due from the defendant.

Held, dismissing the plaintiffs' claim: (1) on the evidence, it was clear that the persons at IFM who were responsible for the verification of invoices had not followed the guidelines set out in IFM's manual; (2) the evidence also indicated that even if IFM had sought to verify some of the invoices in question, IFM had not relied on any representation by the defendants to make payment to GT. The delivery orders allegedly endorsed by the defendants did not state the actual price of goods delivered; (3) further, even if IFM had verified the delivery orders with Tooby and Dip, the latter two did not have the ostensible authority - as technician and chargehand - to make orders on behalf of the defendants and the defendants had never represented to IFM that they had such authority. Even if Tooby were an engineer, as the defendants' telephone operator allegedly represented him to be, he would not have such authority; (4) the defendants, in any case, had no duty to IFM to conduct their business in a manner which was secure for the latter's dealings.

Guan Teck General Supplies Pte Ltd & Anor v Hitachi Zosen Singapore (Pte) Ltd (formerly known as Hitachi Zosen Robin Dockyard (Pte) Ltd) Suit No 1925 of 1992 High Court, Singapore (Lai Siu Chiu J).

The plaintiff supplied electricity to the defendant's steel mill plant in Kemaman, Terengganu Darul Imam. The defendant was entitled to a 20% government discount on all electricity bills given to the defendant by the plaintiff with effect from 1 February 1987. Pursuant to a contract between the plaintiff and the defendant, the plaintiff sent the respective electricity bills, credit notes for the 20% discount, credit notes for other discounts, and covering letters confirming the amounts under the electricity bills, the amount of 20% discount, the amount of other discounts and the amount to be paid on a monthly basis. The plaintiff notified the defendant in July 1990 that the 20% government discount had been discontinued with effect from January 1990. Later the plaintiff sent letters to the defendant purporting to withdraw credit notes sent to the defendant. The defendant refused. The plaintiff commenced proceedings to claim back the 20% discount for the period from February 1988 to end of December 1989, which amounted to RM13,127,331.79 plus interest.

Held, dismissing the plaintiff's claim: (1) it was the plaintiff's obligation and duty to send correct electricity bills and credit notes for the 20% discount to the defendant; (2) the plaintiff at all material times knew that the defendant would rely upon the electricity bills and credit notes to make payment; (3) the plaintiff had at all material times represented, reconfirmed and re-assured the defendant that the 20% discount credit notes issued for the period February 1988 to 31 December 1989 were valid, accurate, binding and irrevocable. The plaintiff had not cancelled any of the discount credit notes. Nor had it raised any debit notes or invoice in place of the credit notes; (4) the plaintiff was estopped from enforcing its claim. It would be inequitable for the plaintiff to resile on the promise made. The defendant was induced by the documents to make the monthly payments in full and final settlement of the electricity charges. The defendant had relied upon the monthly discounted electricity bills in ascertaining the price of its steel billets and thereafter submitting its proposal to the government for price approvals of its steel billets which had already been sold to customers. It was impossible for the defendant to go back to government for review of the prices or to claim any price variations from customers (Sim Siok Eng v Government of Malaysia [1978] 1 MLJ 15; and WJ Alan & Co v El Nasr Export & Import Co [1972] 2 QB 189 followed).

Tenaga Nasional Bhd v Perwaja Steel Sdn Bhd [1995] 4 MLJ 673 High Court, Kuala Lumpur (Low Hop Bing J).

Seagate Technology Pte Ltd & Anor v Goh Han Kim [1995] 1 SLR 17; (1995) CSLR XX[877] Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Goh Joon Seng J).

See COMPANIES AND CORPORATIONS, Vol 3, para 655.

See contract law, para VII [34].

Wan Othman bin Datuk Wan Yusof v Kewangan Utama (Malaysia) Bhd Originating Summons No KG 119 of 1992/(III)—High Court, Kuching (Ian HC Chin J).

The claimants and the respondents had made an agreement for the sale of shares in a company which owned a building complex in Singapore. Under the comprehensive bargain: (a) the claimants agreed to sell their shares in the complex to the respondents for $50 million to be paid partly in cash and partly by four million fully paid Sime Darby shares; (b) the respondents agreed to arrange at the request of the claimants a placement of $8 per share of the four million Sime Darby shares should the market price fall below $8 per share; (c) the respondents undertook to arrange a loan of up to $32 million to the claimants by a consortium of banks. It was a term of the sale agreement that the respondents should obtain the approval for listing of the shares in all stock exchanges which list Sime Darby shares. The respondents did not in fact obtain approval for the listing of the shares on the Stock Exchange of Malaysia. The claimants learned on 3 April 1976 that the respondents had not obtained listing approval in Kuala Lumpur and on 10 May 1976 they wrote to the respondents rescinding the contract. The claimants claimed a return of their shares in the complex. The dispute between the parties was referred to arbitration by an arbitrator who referred a special case stated to the court. The case stated was whether on the facts found and the true construction of the contractual bargain between the parties the claimants were entitled to the relief claimed by them. The learned arbitrator came to the conclusion on the facts that the respondents were obliged to obtain the approval of the Kuala Lumpur Stock Exchange for the listing of the four million Sime Darby shares within a reasonable time and that the respondents had failed to do so. He also found that the claimants should have exercised but failed to exercise their rights to rescind the arrangements within a reasonable time. He found that the claimants by their subsequent conduct had chosen to affirm the share sale agreement and were therefore bound by it. The learned arbitrator further held that the claimants were estopped from rescinding the agreement and that by 10 May 1976 restitutio in integrum was no longer possible.

Held: (1) the respondents were obliged to obtain the approval of the Kuala Lumpur Stock Exchange for the listing of the four million Sime Darby shares and a term should be implied in the agreement that they should do so within a reasonable time; (2) on the other hand there was no obligation on the part of the claimant to exercise their right to rescind the agreement within a reasonable time; (3) in this case, the claimants rescinded the contract five weeks after they discovered that listing approval had not been obtained. This was in the circumstances a reasonable time; (4) in the totality of the circumstances the acts of the claimants in making payments under the contract during the time when they were considering their position after finding that the listing approval had not been obtained did not constitute affirmation of the contract; (5) the respondents were not estopped from rescinding the agreement; (6) restitutio in integrum was possible; (7) the claimants were entitled to the reliefs they claimed.

Chng Hen Tiu & Anor v Sime Darby Holdings Ltd 1978 High Court, Singapore (D'Cotta J).

The plaintiffs' claim against the defendant was for breach of contract and for a sum claimed to be due under a hire-purchase agreement. Pursuant to a master recourse agreement ('P1') entered into between the plaintiffs as the financiers and one Sin Nam Huat ('the dealer'), the dealer requested the plaintiff to provide hire-purchase facilities to the defendant ('the hirer'). Pursuant to this agreement, the dealer forwarded the relevant documents including the hire-purchase agreement and the delivery receipt to the plaintiffs, both duly signed by the defendant. The plaintiffs accepted the dealer's request and agreed to provide the required facilities to the defendant. On 25 April 1983, the plaintiffs as owners of the machines and the defendant as hirer entered into a hire-purchase agreement ('P7'). P7 incorporated all the usual terms, including one requiring the hirer to pay rentals regularly, in default of which the plaintiffs, as owners of the machines, would be entitled to immediate possession of the machines and termination of the agreement. On 13 November 1984, the plaintiffs issued to the defendant a notice of intention to repossess the machines. An authority to repossess was also issued to the dealer. Subsequently, the notice of termination of the agreement was also issued to the defendant. At the time that the notice of intention to repossess was issued, it was alleged that the defendant had paid 14 of the 23 instalments due to the plaintiffs. The goods which were the subject of the hire-purchase never existed - this was not disputed by either party to the action. The defendant denied ever paying for the goods, claiming the plaintiff must have received the alleged payments from the dealer, not from the defendant. He further claimed that he had signed the delivery forms on the assurance that the machines would be subsequently delivered to him, and that he had written to the plaintiffs when he did not receive the machines he was purported to have hired.

Held, dismissing the plaintiffs' claim: (1) where the subject matter of a contract is non-existent, there is a total failure of consideration and as such the contract is void. This is equally true of hire-purchase agreements: the financiers should not be allowed to retain any payments made to them; (2) the signing of the delivery receipt alone could not form the basis for estopping the defendant from raising the fact that the goods were non-existent in their defence. The totality of the evidence had to be considered to determine whether the hirer had made any such representation as to give rise to estoppel. Also, the alleged payments by the defendant to the plaintiffs could not amount to a representation relied on by the plaintiffs to its detriment because P1 required the plaintiffs to pay the dealer as soon as the formalities between the hirer and the dealer had been completed, not after instalments were paid to the plaintiffs by the defendant; (3) further, the plaintiffs were responsible to inspect the goods delivered to the hirer before any payment was made to the dealer. They could not now attempt to shift the blame for their omission onto the defendant. The plaintiffs could not, therefore, claim that they had relied to their detriment on the representation of the defendant as it was their own laxity in adhering to the strict provisions of the terms of the contract which had led to the dispute; (4) (per curiam) as the practice of requiring the hirers to sign blank delivery forms is a practice well-known among the financiers in Malaysia, financiers should be more prudent in ensuring that the hirers have, in fact, received the goods; it is the duty of the financier to deliver the goods specified in the hire-purchase agreement.

Hong Leong Leasing Sdn Bhd v Tan Kim Cheong [1994] 1 MLJ 177 High Court, Kuala Lumpur (Visu Sinnadurai J).

Hang Lung Bank Ltd v Datuk Tan Kim Chua [1988] 2 MLJ 567 High Court, Singapore (Lai Kew Chai J).

See CONFLICT OF LAWS, Vol 3, para 948.

On 8 May 1981, the plaintiff's husband entrusted to the defendant a car belonging to the plaintiff for servicing. He had been sending the car for servicing to the defendant for about a year. He left the car in the open yard in front of the workshop building and there handed over the motor vehicle to the chief mechanic. As was his practice he left the key in the car and left for work. He was to collect the motor vehicle the same evening. He returned at 7 pm to collect the car. He saw the car and it had already been serviced. However, he was told that the chief mechanic had gone home and that he was to come back the next day to collect the car. The plaintiff's husband returned on the following morning to collect the car but the car was not there. He was told that the car had been stolen. The car was eventually recovered in a damaged condition by the police and returned to the plaintiff. The plaintiff's claim was for the loss of her car. It was conceded by the defendant that this was a case of bailment for reward and that the onus was on him to show that the loss did not happen in consequence of his neglect to use appropriate care and diligence. The defendant averred that he had taken all reasonable precautions in safeguarding the vehicle. In the alternative the defendant claimed that he had provided reasonably sufficient notice of the terms and conditions upon which the plaintiff's vehicle was being accepted on the defendant's premises for service by virtue of two exemption notices which had been placed in prominent and visible portions of the defendant's premises.

Held, allowing the plaintiff's claim: (1) on the exemption notices, the court would accept the evidence of the plaintiff's husband that he had not seen them nor had his attention been drawn to them by the defendant or his agents; (2) against the background of car thefts in Singapore the defendant had not taken appropriate measures to immobilise the car and so make it difficult for the thieves to take it away. This could have been easily done by the defendant by the removal of the distributor arm and thus make it as immobile as one could possibly make a motor vehicle to be; (3) judgment would be given for the plaintiff in the sum of $8998.75 and costs.

Kua Lee Ngoh v Jagindar Singh t/a Speedway Station [1987] SLR 239 High Court, Singapore (Rajah J).

Under a contract of carriage, the defendant was shipping a motor car belonging to the plaintiff, from Kuching to the consignee in Limbang, Sarawak, during which maritime journey, the defendant's vessel sunk and the plaintiff's said motor car was never recovered. The plaintiff sued for breach of the contract of carriage, and alternatively, for negligence in the carriage, care and charge of his motor car during shipment. The action was dismissed as the trial court accepted the defendant's plea of frustration, and also found the plaintiff unable to prove negligence. The plaintiff appealed on the following grounds: (1) on the facts, there was no frustration of the contract of carriage; (2) the trial court had erred in law in not invoking res ipsa loquitur; (3) the trial court's findings of fact were against the weight of the evidence. The issues before the court were: (1) whether there was frustration of the contract of carriage; (2) whether res ipsa loquitur should apply; (3) whether the defendant was negligent in the carriage, care and charge of the said motor car; (4) whether the exemption clause as contained in the Freight Advice Bill could be relied upon by the defendant. [bb[Held, allowing the appeal: (1) frustration of a contract only occurs when, without negligence on the part of either parties, the contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it radically different from that which was undertaken by the contract. Being the party pleading the defence of frustration, the defendant had failed to discharge the burden of proving frustration or 'inevitable accident' as the court was not convinced that the sinking of his vessel was, as alleged, an occurence beyond his control and which could not have been avoided even with the exercise of reasonable care and skill. Other than the pumping out of water from its bilge, nothing else was done to save the tilting vessel from sinking, nor were investigations immediately conducted by the crew to find out why the vessel was tilting and why there was water in its bilge. And instead of steering the tilting vessel to safety to the nearest coast or jetty, it was diverted to the inland port of Sibu, spending 131/2 hours travelling along the Sarawak river, which incidentally, was served by jetties and the two river banks all along the way; (2) the trial court had erred in law by not invoking the doctrine of res ipsa loquitur in regard to the issue of negligence. The doctrine applies as the plaintiff's motor car was completely in the charge of the defendant, and the presumption is that it would not have been lost without the negligence of the defendant. Thus, the burden was not upon the plaintiff to prove negligence, but had shifted to the defendant who has to rebut the presumption that he was negligent. And as the defen-dant had failed to show that it was more probable that the sinking of the vessel was due to some specific cause rather than his presumed negligence, or, that he had used all reasonable care in and about the management of the said vessel, the presumption had not been rebutted and the defendant must be presumed to have been negligent; (3) the very existence of the Freight Advice Bill containing the exemption clauses on which the defendant sought to rely, was not established by the defendant. It was improbable that a Freight Advice Bill containing the said exemption clauses was actually issued to the plaintiff, as alleged by the defendant, since the cost of shipment of the motor car was to be borne and settled by the consignee in Limbang, Sarawak and not by the plaintiff. The court agreed with the plaintiff's contention that he was not aware of the existence of the exemption clauses as they were never brought to his attention; (4) the defendant's allegation that the plaintiff had voluntarily consented to accept the risks of shipment, and to waive any claim in respect of the loss suffered because the plaintiff had refused to follow his advice to obtain insurance coverage for the motor car in transit, was not acceptable to the court. The defen-dant's advice to the plaintiff to obtain insurance coverage was a statement of a very general nature, and, if the defendant had meant that the requirement for insurance was for the purpose of indemnifying himself against the risks of shipping the said motor car, or excluding any claims that may arise thereafter, then that requirement should have been expressed in a clearer and more compulsory manner; (5) an appellate court is entitled, as in the present case, to interfere with the findings of fact of a trial court if, and only if, there are valid reasons to think that the trial judge had not taken proper advantage of his having seen and heard the witnesses, and that his conclusions based on the facts before him were against the weight of the evidence, and therefore, plainly wrong.

Ghee Seng Motor v Ling Sie Ting Civil Appeal No KG 14 of 1992(II) High Court, Kuching (Abdul Kadir Sulaiman J).

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).

See CONTRACT, Vol 3, para 1647.

Goods were shipped on board the first defendant's ship to be carried to Penang and delivered there to order or assigns under a bill of lading which contained the condition that 'in all cases and under all circumstances the company's liability shall absolutely cease when the goods are free of the vessel's tackle and thereupon the goods shall be at the risk for all purposes and in every respect of the shipper or consignee'. Following a custom which has long been established in Penang in the interests of quick despatch and for the convenience of the ship as well as of the smaller consignees, the ship's agents when she arrived in Penang delivered the plaintiff's goods to the second defendant, who was a landing contractor and lighterman, appointed by them. While the goods were in the second defendant's lighter a storm of wind and rain arose whereby the lighter sprang a leak and the plaintiff's goods were damaged.

Held: the first defendants were not liable to the plaintiff, because there had been no delivery under the bill of lading which was not spent by the goods being placed in the lighter and accordingly the provisions exempting the shipowner from liability applied; (2) the second defendant was an agent or servant of the first defendants and until the bill of lading was exhausted by delivery according to the exigency of its terms, the second defendant remained the agent for the shipowner. He, like the first defendants, could invoke a clause of the bill of lading providing exemption from liability for loss or damage resulting from 'rain, perils, dangers and accidents of the sea.

Ebrahim v British India Steam Navigation Co & Anor [1928] SSLR 14 High Court, Straits Settlements (Sproule J).

Goods were delivered on board the defendants' ship to be carried to Penang and delivered there to order or assigns under bills of lading which contained the condition that 'in all cases and under all circumstances the liability of the company shall absolutely cease when goods are free of the ship's tackle, and thereupon the goods shall be at the risk for all purposes and in every respect of the shipper or consignee'. They were delivered to landing agents appointed by the defendants, and for that purpose had been discharged from the ship's tackle into lighters sent by the said agents, but by fraud, in which the said landing agents participated, never reached the consignee.

Held: although there had been no delivery, as to cesser of the defendants' liability directly, the goods were 'free of the ship's tackle' was perfectly clear, and it must be held to be operative and effectual to protect them.

Chartered Bank v British India Steam Navigation Co Ltd [1909] AC 369 Privy Council Appeal from the Straits Settlements (Lord MacNaghten, Lord Atkinson, Lord Collins and Sir Arthur Lewis).

The plaintiff was at all material times a wholesaler and supplier of wallpaper and carpets. The first defendants were warehousemen for reward having their warehouse at No 351 Upper Bukit Timah Road, Singapore ('the warehouse'). The second and third defendants were building contractors. At the material time, the plaintiff's goods were stored at the warehouse under a warehousing agreement dated 22 April 1986. In October or November 1986 during the currency of the warehousing agreement, the first defendants carried out some renovation and refurbishment works to the office section of the warehouse. The contract for these renovation and refurbishment works was awarded to the third defendants. Part of the renovation works required the cutting of an overhead water pipe. This was performed by the third defendants' workers, who left two cut-off ends of the pipe uncapped over the weekend to the knowledge of the first defendants' servant. As a result of water escaping from the cut ends, the plaintiff's goods were damaged by flooding. Based on a survey conducted the damage and loss sustained by the plaintiff was calculated at S$391,909.88. As the plaintiff received no satisfactory response from the defendants to his claim based on the survey, he commenced these proceedings on 18 June 1987 against the first and second defendants. On 21 April 1988, the third defendants were joined as a party. The plaintiff had obtained leave to enter judgment against the second defendants. The third defendants represented by the official receiver did not defend the claim against them when the matter came up for hearing. The plaintiff's claim against the first defendants was for negligence or breach of duty as bailees or warehousemen for reward to take proper care of his goods entrusted to them. The first defendants however contended that they had taken all reasonable precautions as warehousemen to ensure the safety of the goods in the warehouse and that the cause of the damage was not due to any lack of proper care on their part or on that of their servants or agents. Alternatively they relied on certain exemption clauses under the warehousing agreement.

Held, allowing the claim: (1) '... The legal relationship of the bailor and bailee of a chattel can exist independently of any contract. The nature of those legal duties, in particular as to the degree of care which the bailee is bound to exercise in the custody of the goods and as to his duty to re-deliver them, varies according to the circumstances in which and purposes for which the goods are delivered to the bailee' (Morris v CW Martin & Sons [1965] 2 All ER 725); (2) to ensure that the place where the goods are stored is a fit and proper place for the storage of the goods is one such duty to take reasonable care; (3) the court held that in allowing the two cut-off ends of the overhead pipe to remain uncapped without a pail below each cut-off end of the pipe to catch any dripping water when the warehouse was closed for the weekend, the first defendants had not taken reasonable care to see that the area where the plaintiff's wallpaper and carpets were stored was fit and proper for storage of such goods and the first defendants were hence liable for negligence; (4) applying Canada Steamship Lines v Regem [1952] 1 All ER 305, the court held that the exemption clauses relied on by the first defendants did not exempt them from liability for a breach of their duty to ensure that the place where the plaintiff's goods were stored was fit and proper for such purpose; (5) with regard to damages, in a case of bailment, the general principle is restitutio in integrum and the measure of damages recoverable is hence the replacement value; (6) the plaintiff had carried out salvage work by separating the undamaged from the damaged rolls and wherever possible cutting out the undamaged parts of partially damaged rolls. The cost of the operation including the use of forklift amounted to S$2,047. In addition, the plaintiff claimed S$1,947.40 for survey fee paid to Cleghorn, warehouse charges and loss of profits. The survey fee was a disbursement item in the bill of costs in the proceedings and would be disallowed. The court disallowed the claim for warehouse charges as these would have been incurred even if this incident had not occurred. The claim for loss of profit was too remote for recovery; (7) it was for the first defendants to prove that the plaintiff had failed to mitigate his loss and on the facts, they had failed to discharge that burden to the court's satisfaction.

Chua Keng Mong v Hong Realty (Pte) Ltd & Ors [1994] 1 SLR 73 High Court, Singapore (Goh Joon Seng J).

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

See CONTRACT, Vol 3, para 1642.

3 [2209] CONTRACT Exemption clause – Duty of care – Negligence – Valuer – Valuation of property – Duty of care to purchaser of property – Exclusion of liability – Whether exclusion reasonable – Candler v Crane, Christmas & Co [1951] 1 All ER 426 (cited) Yianni v Edwin & Sons [1981] 3 All ER 592 (apprvd) Smith v Eric S Bush [1987] 3 All ER 179 (affmd) Harris v Wyre Forest DC [1988] 1 All ER 691 (revsd)

In both cases, the purchasers of property sued surveyors for alleged negligence in the preparation of valuation reports for the purpose of obtaining mortgages. The surveyors had not been employed by the purchasers but by the building society (in the first case) and the District Council (in the second case) which had advanced the money. The valuation reports did not disclose that the houses in question had serious defects which eventually led to serious damage. The purchasers bought the houses relying on the surveyors' reports. In both reports, the surveyors sought to exclude liability by means of an exclusion clause. In the first case, the purchaser's action succeeded both at first instance and on appeal. In the second case, the action succeeded at first instance but was reversed by the Court of Appeal on the ground that the exclusion clause effectively excluded liability. Appeals were brought to the House of Lords.

Held, dismissing the first and allowing the second appeal: (1) he is liable in tort if he receives instructions and is paid by the mortgagor, but knows that the valuation is for the purpose of a mortgage and will be relied upon by the mortgagee. The valuer assumes responsibility to both mortgagee and purchaser by agreeing to carry out a valuation for mortgage purposes knowing that the valuation fee has been paid by the purchaser, and knowing that the valuation will be relied on by the purchaser in order to decide whether or not to enter into a contract to purchase the house; (2) the valuer is a professional person who, by training and experience and exercising reasonable care and skill, will recognize defects and be able to assess value. He will only be liable if other qualified valuers consider that, taking into consideration the nature of the work for which he is paid and the object of that work, he has been guilty of an error which an average valuer, in the same circumstances, would not have made and as a result of that error, the house was worth materially less than the amount of the valuation on which the mortgagee and purchaser relied; (3) the valuer can escape the responsibility to exercise reasonable skill and care by an express exclusion clause, provided the exclusion clause does not fall foul of the Unfair Contract Terms Act 1977; (4) in considering whether the exclusion clause may be relied upon in each case, the general pattern of house purchases and the extent of the work and liability accepted by the valuer must be borne in mind. A typical house is bought for a large sum with money borrowed at high rates of interest and repayable over a period of a quarter of a century. In these circumstances, it is not fair and reasonable for mortgagees and valuers to agree together to impose on purchasers the risk of loss arising as a result of incompetence or carelessness on the part of valuers; (5) in deciding whether or not an exclusion clause is fair and reasonable, the following factors must be taken into consideration: (a) were the parties of equal bargaining power? (b) in the case of advice, would it have been reasonably practicable to obtain the advice from an alternative source taking into account considerations of costs and time? (c) how difficult is the task being undertaken for which liability is being excluded? (d) what are the practical consequences of the decision on the question of reasonableness?; (6) a valuer who values property for a mortgage is liable either in contract or in tort to the mortgagee for any failure on his part to exercise reasonable care and skill in the valuation. He is liable in contract if he receives instructions from and is paid by the mortgagee;on the facts, the defendants in both cases had been guilty of negligence and the exclusion clauses were not effective to exclude liability.

Smith v Eric S Bush; Harris & Anor v Wyre Forest District Council & Anor [1989] 2 All ER 514 House of Lords, England (Lords Keith, Brandon, Templeman, Griffiths and Jauncey).

P deposited convertible bearer bonds with D, a bank, as security to cover facilities extended to him. The bonds were originally held by a member of the Euro-Clear system, which provided a convenient settlement system for convertible bearer bonds. As part of their service, members of the Euro-Clear system would inform clients of notices of redemption in respect of such securities. P was originally to have deposited the bonds with a UK-incorporated merchant bank in the same group as D; this merchant bank was a member of the Euro-Clear system. However, D subsequently required that the bonds be deposited with it instead. D failed to inform P in time of notice of redemption of the bonds, as a result of which P suffered a substantial loss. P sued D for breach of duty of care. D's defence, apart from denying that such a duty of care existed, was that they were exempted from liability by reason of an exemption clause.

Held, granting P's claim: (1) D had accepted P's convertible bonds as collateral for his banking facilities. They had done so as part of their banking business. The request to physically deposit the bonds with D had come from them, as a result of which P gave up the convenience of the Euro-Clear system which would have informed him of any notice of redemption. Under the circumstances, D had a duty to inform P of any notice of redemption; (2) D were in breach of this duty in that they had not taken steps to ascertain when notice of redemption was given, thereby failing to inform P in time for him to convert his bonds into shares; (3) the exemption clause did not avail D as on its true construction it only applied when D was acting as bailee of goods, not in a case where bonds were deposited with it as collateral; (4) even if the exemption clause were apt, it was formulated after the agreement relating to the deposit of the bonds and therefore did not bind P.

Peter Ralph Grossley v Chartered Bank [1988] SLR 973 High Court, Singapore (Rajah J).

This case concerns a fire loss claim in respect of printed circuit board (PCBs) use in disk drives and the liability of the defendants under a policy of insurance whereby they agreed to insure the plaintiffs and to hold them indemnified against any loss, destruction or damage to the property identified in the said policy. The property insured under the policy included amongst other things all stock and trade of raw materials and semi-finished and finished products situated at the plaintiffs' premises subject to certain exclusions endorsed or expressed in that policy. During the currency of the policy on 5 March 1990, 339 PCBs undergoing a burn-in test in a burn-in oven at the plaintiffs' premises were damaged by fire. Whilst the PCBs were in the oven undergoing the burn-in test, one of the PCBs which apparently had a faulty component short-circuited and caught fire. The resultant fire destroyed a total of 213 units of the PCBs. The plaintiff claimed under the policy of insurance in respect of 338 PCBs (less the one PCB that failed). The defendants in their defence relied on cl 133(f) - an exclusion clause - in the policy which provided that it did not cover 'property damaged as a result of its undergoing any process or whilst being worked upon. The defendants contended that the PCBs were damaged whilst being worked upon or alternatively the damage was caused as a result of the PCBs undergoing a process, ie the burn-in test in a burn-in oven. The defendants further argued that the fire which occurred in the burn-in oven should not be viewed in isolation, but was part and parcel of the 'process' itself. The plaintiffs, however, contended that the damage to the PCBs were a direct result of the fire and had nothing to do with the burn-in process.

Held, disallowing the claim: (1) it was both the burn-in process and the thermal combustion from the failed PCB which caused the fire, and both these causes were concurrent and interdependent in that neither would have led to the damage but for the other. As such, the insured's loss was attributable to both the burn-in process and the failed PCB; (2) the burn-in process was a process as defined in the exclusion clause; (3) applying Cairns CJ's dicta in Wayne Tank and Pump Co v Employers Liability Assurance Corp [1974] 1 QB 57 where there are two causes equal in effectiveness and interdependent on each other, so long as one cause comes within the exclusion clause, the plaintiffs' loss cannot be recovered; (4) in the circumstances, since the burn-in process falls squarely within the words of the exclusion clause, the clause applied to defeats the plaintiff's claim.

Singatronics Ltd v Insurance Co of North America Suit No 757 of 1991 High Court, Singapore (Rubin JC).

In 1988, the appellants made several contracts with the respondents concerning the transport of the respondents' goods to an exhibition in Jakarta. Of these, the first and second governed the transport of the exhibits to Jakarta, while the third was concerned with transfer of the exhibits to a bonded warehouse after the exhibition. Subsequently, some of the exhibits were delivered, without the respondents' instructions, to the respondents' Indonesian distributors, PT Sudagu Dianta. A dispute then arose. Sudagu Dianta eventually paid S$206,800 to the respondents but the dispute between the parties remained unresolved. The appellants' charges under the contracts remained unpaid, and in 1990 a suit was instituted by the appellants to recover the same. The respondents counterclaimed for the value of the items misdelivered. The judge allowed both the claim and the counterclaim and awarded the respondents the cost, stocking cost and profit margin of the exhibits misdelivered. On appeal, it was argued by the appellants that the delivery had been authorized by the respondents. The appellants relied on the authority alleged by them to have been given to one Fonteijn or the apparent authority of Sudagu Dianta. It was also contended that exemption clauses contained in the Standard Trading Conditions of the Singapore Freight Forwarders Association (the SFFA Terms) had been incorporated in the contract. Further, it was argued that the S$206,800 paid by Sudagu Dianta was in full satisfaction of the claim. The receipt of that payment was alternatively said to be a waiver of the tort. The quantum of the award was challenged as well, particularly as regards the stocking costs and profits, which were said not to be supported by the evidence.

Held, allowing the appeal in part: (1) neither Fonteijn nor Sudagu Dianta had any authority. In particular, Sudagu Dianta were only the respondents' distributors or selling agents in Indonesia; (2) the SFFA terms were not expressly incorporated in the third contract. There was also no course of dealing between the appellants and the respondents justifying the incorporation of those terms, as the only prior dealings between the parties were the first and second contracts, which were parts of one transaction; (3) it was open to the respondents to accept from Sudagu Dianta a sum of money which was less than the actual value, leaving the balance to be claimed from the appellants; (4) the respondents remained entitled to pursue their claim for the balance against the appellants; (5) the settlement was a matter between the respondents and Sudagu Dianta only;the respondents could not be said to have elected to waive the tort committed by the appellants by coming to a settlement with and receiving payment from Sudagu Dianta;the costs of the items were proved, but there was no evidence as to the stocking costs and profits. Accordingly, the amount of damages was reduced by the exclusion of the two items.

Trans-Link Exhibition Forwarding Pte Ltd v Wadkin Robinson Asia Pte Ltd [1996] 1 SLR 713 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

The appellant had, on payment of RM295 to the respondents, agreed to have his car waxed and polished by them. He left his car at the respondents' premises in the basement of the Sungai Wang Plaza Complex and was given a receipt ('the receipt') with which to claim for the car. When the appellant returned to collect his car from the respondents, he found that it had been damaged while being driven by an employee of the second respondent to a lower floor of the basement. The appellant sued the respondents for the costs of repairing the car at RM3,630.85; costs of hiring another car for one month at RM1,790; 25% depreciation in the value of the car at RM9,128.81; and costs of engaging an independent adjuster at RM169. The suit was dismissed with costs after a full trial in the magistrates' court on the ground that an exemption clause at the back of the receipt which stated that the respondents were 'not liable for any loss or damage whatsoever of or to the vehicle, its accessories or contents. Vehicle and goods are at owner's risk' exonerated the respondents. The appellant appealed. At the appeal, the respondents raised the objection that relevant documents relating to the appellant's claims, eg the receipt for the costs of repairs ('the repair receipt') and the appellant's credit card receipt, were only marked for identification and not as exhibits. The makers were not called, thereby denying the respondents of the opportunity to cross-examine them.

Held, allowing the appeal with costs: (1) it is settled law that an exemption clause however wide and general does not exonerate the respondents from the burden of proving that the damage caused to the car were not due to their negligence and misconduct. They must show that they had exercised due diligence and care in the handling of the car; (2) in this instance, the respondents had not adduced any evidence to show that they had exercised due care and diligence when handling the appellant's car. On the contrary, there was ample evidence to show that the respondents had been negligent when their employee had involved the car in an accident while driving it to a different floor of the basement car park. On this conclusion, the appeal must be allowed; (3) although the maker of the repair receipt was not called, this should not have prevented the magistrate from marking it as an exhibit, particularly when the appellant had produced a copy of his credit card receipt to show that he did make such payment. The receipt for the rental of another car too could easily have been marked as an exhibit; (4) the court allowed the costs of repairs at RM3,630.85; costs of hiring another car for one month at RM1,790; and costs of engaging an adjuster at RM169. However, the claim for depreciation at 25% was disallowed as there was no evidence to support such a rate of depreciation. Depreciation occurs regardless of whether there has been an accident or not, the only difference being the rate of depreciation which in this case was not proved. Interest on all sums allowed was awarded at 8%pa from the date of damage to date of payment.

Chin Hooi Nan v Comprehensive Auto Restoration Service Sdn Bhd & Anor [1995] 2 MLJ 100 High Court, Kuala Lumpur (Siti Norma Yaakob J).

A collision occurred between a water taxi owned by D2 and a boat owned by the armed forces and driven by D1. The driver of the water taxi was killed. P were passengers in the water taxi; they suffered injuries in the accident and P1's husband died. On the back of the receipt for the fare was written 'all passengers are at their own risks'. The issue was whether D1 or D2 was at fault. D2 also argued that the exclusion clause on the back of the receipt exonerated him from liability.

Held: (1) in a contract of carriage it is open to the carrier to limit his liability for negligence. However, before he can do so, it is necessary to fulfil two conditions: (a) he must give reasonable notice to the passenger of this exclusion and (b) his liability must be excluded in clear terms; (2) in this instance, there was no evidence of the presence of any notice outside or in the boat, nor anything on the front of the receipt given by the carrier to make the passenger realize that there was an exclusion on the back of the receipt. Nor would any passenger regard a receipt to be a contractual document if his attention was not drawn to the exclusion clause; (3) moreover, the actual words used made no reference to the negligence of the carrier, which would be necessary before any exclusion clause could be effective to bar a passenger's remedy against the carrier. Thus, D2 failed to fulfil the conditions necessary to make the exclusion clause effective; (4) there are no special regulations specifying the priority of power-driven craft in Brunei waters. In the absence of such regulations, the normal rule will apply, as it does on the high seas, that a power-driven vessel must ensure that it passes to the port side of any oncoming vessel. The boat driven by D1 did not keep to this rule but struck the prow of the water taxi with the front port side of the army long boat. D1 was driving the army boat on the wrong side of the river and he was doing so at a speed greater than was prudent in the circumstances (it had rained and visibility was down to a few yards); (5) D1 was convicted by a magistrate of navigating his boat in a negligent manner so as to endanger human life. If the rule in Hollington v Hewthorn applied, this would mean that evidence of the conviction was not admissible. However, the court considered that the case should not be applied in Brunei as it was wrongly decided. There was a presumption by reason of the conviction that D1 was guilty of some degree of negligence in the navigation of his boat. This presumption was not rebutted; (6) the water taxi was driven negligently in two respects: first, by a failure to instal a proper system for cleaning the windscreen in heavy rain and secondly, by a failure to reduce speed when visibility was limited; (7) under the circumstances, D1 was 75% to blame for the accident and D2 25% to blame. Hollington v Hewthorn [1943] KB 587 not followed.

Jennifer Mcalpin Lynn & Ors v AK Ludin bin PG Salimin & Anor Suit Nos 143 of 1987 and 214 of 1988 High Court, Brunei (Roberts CJ).

The respondent, a supplier and exporter of wallpaper and carpets, stored his goods in the appellants' warehouse pursuant to a contract of bailment made between the two parties. Sometime in November 1986, the appellants commenced renovation works in the warehouse which involved, inter alia, the installation of a 'T' joint in the storage area where the respondent's goods were kept. This entailed the cutting of a section of the overhead water supply pipe, which work was carried out on 20 December 1986 (a Saturday) by two workmen in the employ of the sub-contractors. Having been informed by these two workmen that the main valve to the main water supply line had been shut, the appellants' maintenance officer left the cut ends of the pipe uncapped over the weekend without further precautions being taken. When the warehouse was re-opened on Monday 22 December 1986, it was discovered that the area under the cut ends of the pipe had flooded, thereby soaking the respondent's goods which were placed there. The respondent sued the appellants for damages, alleging that they had been negligent in the discharge of their duty of care as bailees of his goods. The appellants denied negligence and claimed that in any event they were saved from liability by the exemption clauses contained in the contract of bailment. At trial, evidence was given by two different witnesses which showed that it was not prudent to leave the cut ends of a pipe in the water supply system open over a weekend without capping the open ends or at least providing pails under the cut ends to gather any dripping water, notwithstanding that the main valve to the water supply system had been shut and the system drained of water within it. The trial judge concluded, therefore, that in allowing the cut ends of the overhead pipe to remain uncapped over the weekend without even a pail below, the appellants had failed to take reasonable care to see that the area where the respondent's goods were stored was a fit and proper storage place for such goods. He awarded the respondent damages in the sum of S$224,503.84, a decision against which the appellants appealed.

Held, dismissing the appeal: (1) the appellants' duty of care as bailees of the respondent's goods entailed more than merely entrusting the installation works in the storage area to a sub-contractor they believed to be competent. Their duty was to take reasonable care to see that the place where the respondent's goods were kept was fit and proper for that purpose and to protect the goods against any unexpected danger. In failing to take the necessary precautions (apart from shutting off the main valve to the water supply line) to obviate water flowing out of the open ends of the pipe in the water supply system in the storage area, the appellants failed to render the storage area a fit and proper place for the storage of the respondent's goods over the weekend of 20 to 22 December 1986. Regard should be had in particular to the fact that the appellants' own witnesses had expressed the view during the trial that it was imprudent to leave the cut ends of a pipe in the water supply system open over a weekend without capping the open ends or at least providing pails beneath the open ends; (2) furthermore, the appellants were not excused from liability by the exemption clauses in the contract of bailment. Exemption clauses must be construed strictly to apply to the particular circumstances the parties had in mind at the time they entered into the contract. In this case, the appellants and the respondent could not have intended that the exemption clauses in the contract of bailment would apply when some act had intervened to alter the circumstances in which the exemption clauses would ordinarily apply. The intervention of the works undertaken to install a 'T' joint in the overhead water supply pipe in the storage area was the event which rendered that area unfit for the storage of the respondent's goods; yet it could not have been in the contemplation of either the appellants or the respondent that the exemption clauses would apply in circumstances other than those which the storage area was in prior to the intervention of the works undertaken on 20 December 1986.

Hong Realty (Pte) Ltd v Chua Keng Mong [1994] 3 SLR 819 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

The plaintiffs carry on the business as merchants and were at the material time the customers of the defendants who are bankers. The plaintiffs purchased a vessel which had been ordered to be sold by the High Court of Colombo acting in the exercise of its admiralty jurisdiction. On 6 May 1976, the plaintiffs signed a memorandum of agreement with Silooka Steels Ltd ('Silooka') for the sale of the vessel to the latter for the purpose of scrapping. Pursuant to the agreement, Silooka established through Habib Bank Ltd, Karachi ('Habib Bank') a letter of credit for the purchase price of US$383,130. Under the letter of credit, which expiry date was 24 September 1976, one of the documents required for negotiation was a cable from the master of the vessel confirming that she had safely arrived at the Karachi outer anchorage not later than 9 September 1976. Enroute from Colombo to Karachi, the vessel sustained mechanical breakdown and she returned to Colombo. In the meanwhile, the letter of credit had expired. Therefore, the plaintiffs, by memorandum dated 14 February 1977, instructed the defendants to send the relevant documents to Karachi on collection basis. The memorandum stated that the defendants 'having exercised due care in the selection of any correspondent ... shall not be responsible for any act, omission, default ... of each correspondent or sub-agent ....'. Pursuant to the plaintiffs' instructions, the defendants on the same day forwarded the documents to Muslim Commercial Bank Ltd ('MCB') at Karachi with instructions to present the documents for payment. Agreeing to the condition imposed by Habib Bank for undertaking the collection, the plaintiffs instructed the defendants who in turn instructed MCB to authorize Habib Bank to deliver documents to Silooka against payment in Pakistani rupee equivalent of US$383,130 to be held by Habib Bank pending remittance approval. However, Habib Bank subsequently released or allowed the use of the documents resulting in the transfer of the vessel to Silooka, the breaching and scrapping of the same, without receipt of the Pakistani rupee equivalent. In earlier proceedings, the plaintiffs had sued Habib Bank, claiming the sum of US$383,130 by way of conversion for money had and received and damages for breach of contract. Their claim was dismissed. The plaintiffs thereafter commenced the present proceedings against the defendants, claiming that the latter are liable for the breach of duty on the part of Habib Bank acting as their sub-agent.

Held, dimissing the claim: (1) Habib Bank were at the material time the sub-agent of the defendants. If a banker employs a sub-agent for the purpose of collecting bills, he is responsible to the customer for negligence on the part of such sub-agent. The defendants are liable for the breach of duty to act with reasonable care on the part of Habib Bank in releasing or allowing the use of documents entrusted to them for collection without receipt of the Pakistani rupee equivalent; (2) the defendants were not parties in the plaintiffs' suit against Habib Bank. Neither were they the privy or successor in title of Habib Bank. The defence of res judicata or issue estoppel therefore fails; (3) the defendants are not excluded from liability under the Uniform Rules for the Collection of Commercial Paper since they do not govern the relationship between the customer and the remitting bank unless it is incorporated in the contract; (4) the defendants are, however, relieved of liability by the exclusion clause contained in the memorandum of instructions dated 14 February 1977. It has not been suggested that the defendants were negligent in the selection of Habib Bank to be their sub-agent. It is clear on a plain reading of the clause that the defendants shall not be responsible for 'any act, omission, default' of Habib Bank but that their responsibility shall be only for their acts. The plaintiffs' loss was not caused by any negligent act or breach of duty on the part of the defendants.

AA Valibhoy & Sons (1907) Pte Ltd v Banque Nationale de Paris [1994] 2 SLR 772 High Court, Singapore (Goh Joon Seng J).

City Car Rentals & Tours Pte Ltd v Sim Jwee Kiat [1988] SLR 262 High Court, Singapore (LP Thean J).

See CONTRACT, Vol 3, para 1959.

A hired a car from R for four days at S$180 per day. He also paid a further S$10 per day for a collision damage waiver. The hiring agreement provided in cl 5(b) that the collision damage waiver would relieve the hirer of all liability for damage arising out of collision, save for the first $1,000. However, cl 5(c)(vi) provided that the hirer would be liable for collision, loss or damage caused by the negligent operation of the vehicle. The car was damaged in a collision due to A's negligence. R claimed the full damages against A. A pleaded that he was only liable for S$1,000. The trial judge found for R. A appealed.

Held, allowing the appeal: (1) the payment of the S$10 per day for the collision damage waiver was akin to the payment of an insurance premium. What kind of damage was waived was a matter of interpretation; (2) a hirer under a contract of bailment has a contractual duty to take reasonable care of the car and is not liable for loss or damage to the car unless such loss or damage is caused by his negligence. A hirer is not liable for damage to a chattel under bailment if such loss or damage is due to an inevitable accident or act of God; (3) accordingly, the collision damage waiver could only be in respect of the hirer's liability in negligence. There could not be a waiver of liability for non-negligent damage since there was no such liability; (4) therefore, A's liability to R was limited to S$1,000. The appeal was allowed.

Sim Jwee Kiat v City Car Rentals & Tours Pte Ltd [1990] SLR 136 Court of Appeal, Singapore (Lai Kew Chai, Chua and Rajah JJ).

The respondent stayed at a hotel owned by the appellant. He went out one afternoon and left his room key with the hotel receptionist. The receptionist gave the key to an unknown person who said that some of the respondent's workers had come to collect his key. Upon his return, the respondent found that his personal belongings in his room were missing. The respondent did not instruct anyone to collect his room key. The respondent sued the appellant for negligence. His evidence was that he had always left his key at the reception and would collect it himself. The appellant's Hotel Regulation contained the following exemption clause: 'The Hotel will not assume responsibility for valuables or money lost from the room.'The sessions court judge held that the respondent's room key had been handed over to persons unknown and that the loss suffered by the respondent was a result of the negligence of the appellant's employees. The appellant appealed and relied on the exemption clause as a defence.

Held, dismissing the appeal: (1) the question for determination by the sessions court judge was essentially one of fact and he had the advantage of seeing and hearing the witnesses. It was only in a rare case that an appellate court would be justified in coming to a different conclusion from the trial judge on the question of credibility; (2) general words of exclusion would not ordinarily protect a contracting party from liability for negligence. To protect him from liability for negligence, the words used must be sufficiently clear, usually either by referring expressly to negligence or by using some such expression as 'however caused'; (3) here, the exemption clause did not clearly or specifically exempt liability for negligence; (4) the appellant, by its servants, was plainly negligent in failing to look after the respondent's room key and the receptionist had negligently parted with the key; (5) as for the award of damages, the trial judge had not acted upon any wrong principle of law.

Premier Hotel Sdn Bhd v Tang Ling Seng [1995] 4 MLJ 229 High Court, Kuching (Elizabeth Chapman JC).

This was a claim brought by the plaintiff against the defendant for RM428,288.98, the value of the plaintiff's items stolen on 19 May 1992 between 3am and 5.45am while being stored at the premises rented to the plaintiff by the defendant. Pursuant to the terms of the tenancy agreement entered into between the plaintiff as tenant and the defendant as landlord on 23 March 1990, a monthly charge of RM800 was payable by the plaintiff to the defendant for the provision of security, cleaning and upkeeping services. Counsel for the plaintiff contended that the theft had occurred as a result of the defendant's negligence in not taking the proper security measures at the relevant time. Counsel for the defendant argued that the defendant was covered by an exemption clause as stated in cl 4(d) of the tenancy agreement which provided, inter alia, that: 'Éthe Landlord shall incur no liability to and shall not be liable to the Tenant for any damage, injury or loss which may at any time during the term hereby created be caused or suffered by the tenant or to any property or goods of the Tenant in or about the Demised Premises occasioned by or arising from fire, water, storm, tempest, earthquake, insects, theft,É .' Counsel for the plaintiff submitted that cl 4(d) had not effectively excluded negligence although it excludes theft and the resulting theft was because of the defendant's servant's negligence.

Held, dismissing the plaintiff's claim with costs: (1) there is no interpretation which governs a circumstance that causes theft and the definition of theft should be given its ordinary meaning and cannot be enlarged; (2) although the theft may have been caused by the defendant's negligence and the defendant was responsible for the overall security of the area tenanted, the defendant is exempted from liability for theft howsoever caused even though the word 'negligence' has not been included in the exemption clause; (3) even if there was no exemption clause, the defendant would not automatically be held liable for the loss by virtue of the fact that the plaintiff paid security charges to the defendant. This is because the provision of security, cleaning and upkeeping services cannot guarantee that theft would not occur and the plaintiff was still required to prove that there was negligence on the part of the defendant.

Robert Bosch (SEA) Pte Ltd v Goh Ban Huat Berhad; Straits & Island General Insurance Sdn Bhd (Third Party) Civil Suit No D5-22-415-1993 High Court, Kuala Lumpur (Abdul Malek J).

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

See CONTRACT, Vol 3, para 1645.

By a contract in writing ('the contract'), the appellant ('Sekawan') agreed to provide security services at the premises of the respondent ('Thong Guan'). A theft occurred at the premises, resulting in the loss of Thong Guan's goods. Thong Guan sued Sekawan for breach of contract and, alternatively, negligence. Sekawan relied on an exemption clause in the contract which provided that it was not liable for any loss suffered by Thong Guan unless the loss was solely caused by the negligence of Sekawan's employee. Sekawan argued that the loss was in fact caused by the negligence of Thong Guan's own guard, who was not at the premises on the night in question although he was on duty. Sekawan, however, did not adduce any evidence to prove that Thong Guan's guard was negligent. The sessions court judge disregarded both the issues of the exemption clause and negligence of Thong Guan's guard on the ground that they were not pleaded in Sekawan's statement of defence, and allowed Thong Guan's claim. Sekawan appealed.

Held, dismissing the appeal: (1) as the issues of the exemption clause and the negligence of Thong Guan's employee were not pleaded in Sekawan's statement of defence, the sessions court judge was correct in disregarding them. Neither could Sekawan now raise the issues on appeal; (2) Thong Guan's claim was made under the contract and, therefore, the position of its employee could not in any way affect the contractual duty of Sekawan. The contract made no reference that there would be other guards on duty and hence, Thong Guan had no obligation under the contract to provide other guards; (3) from the facts, the theft could not have been a quiet affair and the stolen items could only have been taken away in either two or three lorries over a period of 1[1/2] hours if three persons were involved. There was also noise caused by the opening and closing of the metal sliding door. The guard was to remain awake all the time and could not have missed hearing the noise but failed to take the necessary action; (4) (obiter) even if the exemption clause could be raised as a defence, the burden was on Sekawan to show that it applied.

Sekawan Guards Sdn Bhd v Thong Guan Sdn Bhd [1995] 1 MLJ 811 High Court, Kuala Lumpur (Wan Adnan J).

The plaintiffs were a company dealing in ornamental carpets and rugs. They leased from the defendants a shop unit in a development owned by the defendants. On the morning of 17 April 1992, an accident happened, in which water came through the false ceiling above the plaintiffs' shop and damaged a substantial portion of the plaintiffs' stock of carpets and rugs. It was found in the district court below that the escape of the water was due to the negligence of the defendants. However, the court held that cl 36.1(b) of the tenancy agreement exempted the defendants from liability for their negligence and dismissed the plaintiffs' claim. The question was whether the learned district judge was correct in holding that cl 36.1(b) of the tenancy agreement applied to exempt the defendants from liability for their negligence.

Held, allowing the appeal: (1) the assumption of the law was that a party to a contract was not to be taken as having exempted himself from liability for his own negligence unless he used express language to that effect; (2) the defendants had to show that cl 36.1 could have only referred to the negligence of their own servants and agents and was incapable of referring to other heads of liability than such negligence. Clause 36.1 as an exemption clause did not necessarily refer only to injury, damage and loss arising from the negligence of the defendant's servants and agents. It should not, therefore, have been construed as exempting the defendants from liability for the negligence of their servants and agents. Sufficient content could be given to the clause by confining its ambit and operation to third party claims and liabilities to their parties.

Pars Carpet Gallery Pte Ltd v Marina Centre Holdings Pte Ltd [1997] 2 SLR 486 High Court, Singapore (Warren LH Khoo J).

This was an appeal against the decision of the Federal Court ([1967] 2 MLJ 214) allowing the application of the first respondent for leave to substitute his name for that of the appellant then before that court, and to add the second respondents as second appellants. The Federal Court without going into the merits of the appeal itself, held on the facts that the applicant had a legal interest in the appeal and therefore he ought to be given leave to intervene. The sole question before the board was concerning the substitution of the parties to the appeal which was effected by the interlocutory order of the Federal Court.

Held, dismissing the appeal: (1) where a contract is made between three parties and has not been discharged by performance, none of the rights and obligations which it creates can be extinguished except by agreement between all three parties unless upon the true construction of the contract a particular covenant by one party is collateral to the remainder of the covenants and was intended for the exclusive benefit of one of the other two parties, in which case the rights and obligations under that particular covenant can be extinguished by agreement between the covenantor and the other party for whose exclusive benefit it was intended. With this exception any agreement between two only of the three parties to a contract though it purports to extinguish rights and obligations under the contract is incapable in law of doing so and can have effect only as a covenant not to sue; (2) one of the principal objects of O 16 r 11 of the Rules of the Supreme Court 1957 is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard. To achieve this object calls for a flexibility of approach which makes it undesirable in the present case, in which the facts are unique, to attempt to lay down any proposition which could be applicable to all cases. Per curiam: 'It has sometimes been said that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between "legal" and "commercial" interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?'

Pegang Mining Co Ltd v Choong Sam & Ors [1969] 2 MLJ 52 Privy Council Appeal from Malaysia (Lord Hodson, Lord Guest, Lord Pearce, Lord Pearson and Lord Diplock).

Magenta Resources (S) Pte Ltd v China Resources (S) Pte Ltd [1996] 3 SLR 62 High Court, Singapore (S Rajendran J).

See CONTRACT, Vol 3, para 2150.

The plaintiffs entered into a contract to supply 50,000 metric tons of 'prilled urea of USSR origin' c & f China to the defendants. On the same day the plaintiffs entered into a back-to-back contract with their suppliers in Switzerland for the same. The first shipment of 25,000 metric tons was to be made within 45 days of receipt of a workable letter of credit (LC). The defendants opened an LC in favour of the plaintiffs on 21 October 1991. The LC was valid until 26 December 1991 and stipulated that the first shipment of 25,000 metric tons was to be effected not later than 30 November 1991. An amendment to the LC was issued on 28 October 1991 which provided, inter alia, that the latest shipment date in the LC be 14 December 1991. The expiry date of this amended LC was 9 January 1992. On 1 November 1991, the defendants attempted to cancel the contract. The plaintiffs agreed, provided it would not jeopardize their position with their suppliers. These negotiations failed. On 18 November, the plaintiffs informed the defendants that they could not terminate their contract with their suppliers on mutually acceptable terms, and that the defendants would be responsible for any loss incurred thereby. The defendants reverted the next day requiring the plaintiffs to go ahead immediately with the shipping of the first batch of the urea. In early December, however, the plaintiffs warned the defendants that there might be a delay in the shipment of the urea because of political unrest in the USSR. On 9 December 1991, the USSR ceased to exist as a political entity. On 12 December, the suppliers invoked the force majeure clause against the plaintiffs as the upheavals, changes and uncertainties in the republics of the former Soviet Union were such that the urea could not be shipped as originally planned. The plaintiffs requested the defendants to amend the LC to extend the latest shipping date to early January. The defendants sent a telex to the plaintiffs agreeing to accept the urea if shipped in early January but intending to hold the plaintiffs responsible for all delays caused. Nothing was said regarding the plaintiffs' reference to the force majeure clause. In late December, the plaintiffs, at the request of the defendants, extended the performance bond to 8 March 1992. The plaintiffs requested the defendants to amend their LC but the defendants refused saying that there was no point in incurring extra bank charges when the plaintiffs could not confirm the latest dates by which the goods would be shipped. In mid-January 1992, the defendants called on the performance bond for the following reasons: (a) the plaintiffs had failed to deliver the urea by the latest shipment date of 3 January 1992 allegedly promised by the plaintiffs; (b) the letter from the USSR Embassy in Singapore which the plaintiffs had obtained as a force majeure certificate was not in accordance with cl 17B of the contract in as it was not issued by a competent authority in the place where the force majeure occurred. On 31 January 1992, the plaintiffs' solicitors wrote to the defendants' solicitors to say that the plaintiffs treated the defendants' conduct on calling in the performance bond on 14 January 1992 as a repudiatory breach, accepted the breach and claimed damages for such breach. They then commenced these proceedings.

Held, allowing the plaintiffs' claims: (1) the issue was whether in making that demand the defendants were in breach of their contractual obligation to the plaintiffs under the sale contract; (2) pursuant to the contract, the defendants could exercise their right to call under the performance bond only if delivery of the goods was not in accordance with the sale contract. Under the sale contract, a breach of its terms was a prerequisite to a call on the performance bond. If the defendants called on the performance bond without there being any breach of the sale contract, such a call, although unimpeachable by the guarantor, would nevertheless be a breach of the defendants' obligation to the plaintiffs under the sale contract; (3) the onus was on the plaintiffs to bring themselves within the force majeure clause. The defendants were under no obligation, at that stage, to let the plaintiffs know what their position, vis-a-vis the claim of force majeure, was. The initial failure to reject the force majeure notice or to deny the claims of force majeure made by the plaintiffs could not, therefore, constitute an estoppel against the defendants. The failure by the defendants in their letter to the plaintiffs of 14 January 1992 to mention the absence of a valid force majeure certification as one of the grounds for calling on the performance bond also could not be construed against the defendants as an estoppel. There was no obligation on the defendants, at that stage, to give all the reasons that prompted them to call on the performance bond. In any event, by calling on the performance bond on the grounds that shipment had not been effected, the defendants were implicitly taking the position that the protection of the force majeure clause was not available to the plaintiffs; (4) the evidence indicated that in response to the requests by the plaintiffs to have the last shipment date stipulated in the LC extended, the defendants had agreed to extend the date to 3 January 1992 and committed themselves to making the necessary amendments to the LC upon the plaintiffs confirming that the shipment would be so effected. In the event, as there was no such confirmation, the defendants did not cause the LC to be amended. In those circumstances, when the plaintiffs failed to ship the cargo on 3 January 1992, the plaintiffs, barring the occurrence of a force majeure event, would have been in breach of their obligation to effect the shipment and the defendants would have been entitled to call on the performance bond. The defendants' call on the performance bond was not, per se, a breach of the sale contract. It was a breach only if the plaintiffs, at that time, enjoyed the protection of the force majeure clause in the sale contract; (5) what was referred to as force majeure in common law was no more than a convenient way of referring to contractual terms that the parties had agreed upon to deal with situations that might arise, over which the parties had little or no control, that might impede or obstruct the performance of the contract. There was, therefore, no general rule as to what constituted a situation of force majeure. Whether such a force majeure situation arose, and, where it did arise, the rights and obligations that followed, depended on what the parties had provided for in their contract; (6) in interpreting a contract, the court sought to ascertain what the true agreement of the parties as expressed in the contract was. In so doing, the court was entitled to look at the factual matrix in which the contract was concluded and was entitled to take into account each party's view as to what the words of the contract were intended to mean. Out of the eight examples of force majeure listed in cl 17A, only one, namely, storms, was an example of an act of God. All the other seven examples given could not be said to be acts of God if that phrase was given the narrow meaning preferred by the defendants. The presence of so many contrary examples indicated that the parties intended to give the phrases 'Act of God' and 'situation/condition not under human control' a meaning wide enough to encompass those examples. The force majeure clause in this case having been extended to situations such as war, military action, etc, envisaged in cl 17A, the struggle for sovereignty from Soviet rule and the resultant collapse of the USSR were events of such catastrophic and far-reaching proportions that it was at par with war. It was a situation which could clearly fall within the compass of the definition of force majeure in cl 17A; (7) the plaintiffs were not under a duty to mitigate their loss by attempting to obtain goods from another source before they could rely on the force majeure clause as arrangements by a supplier higher up the string to ship the goods had already been made when the delay by reason of force majeure happened. The contract was, furthermore, not one under which the sellers were at liberty to buy goods afloat; (8) it did not, however, follow from the mere fact that a situation falling within that definition had arisen that the plaintiffs would get the benefits arising from a force majeure situation. To obtain those benefits the plaintiffs had to come within the provision of cl 17B, which stated that the seller was not responsible for non-performance of this contract in case of force majeure. The question that had to be asked before the seller under this contract could get the benefit of this clause was whether the seller had proved that he was unable to ship the cargo in December 1991 because of the force majeure event that occurred (ie the collapse of the Soviet Union in December 1991). If the seller, on balance, could persuade the court that that was the reason the goods were not shipped, then he would have satisfied the burden on him. From the evidence adduced, the plaintiffs had discharged the burden on them to show that the failure to ship was because of the force majeure situation then prevailing in the USSR as a result of the disintegration of the USSR, even without their calling witnesses from the USSR to give direct evidence as to what happened to the particular cargo; (9) the notice, given by the plaintiffs on 13 December 1991, complied with the requirements of cl 17B. Because of the force majeure situation prevailing at that time it was not possible for the plaintiffs to obtain and serve on the defendants, within the time stipulated in cl 17B, a certificate of force majeure from a competent authority at the place where the force majeure occurred but the certificate issued by the Embassy of the USSR and served on the defendants by the plaintiffs was a sufficient compliance of cl 17B; (10) in the absence of fraud, whatever the underlying contract might have provided, the party providing the performance bond (the guarantor) was obliged to pay under the bond so long as the demand by the beneficiary conformed with the requirements of the bond. But the issue in this case was not the validity of the demand vis-a-vis the guarantor;as the plaintiffs had properly invoked the force majeure clause in the contract, the defendants were obliged by the force majeure clause to wait for a period of up to 120 days from the date notice of force majeure was given, for the shipment to be effected. In breach of this obligation, the defendants called on the performance bond on 14 January 1992 and in so doing the defendants were in repudiatory breach of the contract.

Magenta Resources (S) Pte Ltd v China Resources (S) Pte Ltd [1996] 3 SLR 62 High Court, Singapore (S Rajendran J).

Magenta Resources (S) Pte Ltd v China Resources (S) Pte Ltd [1996] 3 SLR 62 High Court, Singapore (S Rajendran J).

See CONTRACT, Vol 3, para 2150.

See sale of goods, para V [90].

China Resources (S) Pte Ltd v Magenta Resources (S) Pte Ltd [1997] 2 SLR 707 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu And LP Thean JJA).

When the parties contemplate the use of the post the exercise of an option is complete when it is posted by registered letter although the letter is delayed in the post: s 4, Contract Enactment 1899. Although payment by a specified date is provided the intention of the parties may be that time was not of the essence, s 55, Contract Enactment 1899, but delay in tendering may justify the vendor in regarding the bargain at an end.

Ignatius v Bell [1913] 2 FMSLR 115 Court of Appeal, Federated Malay States (Woodward and Sproule JJC).

[Annotation: As to the post as a means of communication, see also Lee Seng Heng v Guardian Assurance Co Ltd [1932] MLJ 17.]

The plaintiffs claimed against the defendants for S$254,779.32 for the balance of the price of goods sold and delivered by them. In the alternative, they pleaded that the defendants owed them RM406,506.00 on an account stated. The plaintiffs, a Singapore company carrying on business in Singapore filed their action here against the defendants, a Malaysian company carrying on business in Kuala Lumpur. The plaintiffs applied for and obtained an order on 17 February 1995 under O 11 r 1 of the Rules of the Supreme Court for leave to serve it outside Singapore. Two affidavits were filed in support of the application. In the first affidavit, the director of the plaintiff company stated her belief that the contracts for sale were all made within Singapore and that the facts in support of that were set out in the statement of claim. In her second affidavit, she elaborated that the application was made pursuant to O 11 r 1(d)(i) without disclosing any grounds. After the writ was served on them, the defendants applied to set aside the service, or, in the alternative, to stay the proceedings on the ground of forum non conveniens. The affidavits filed by the plaintiffs and defendants in the course of the application to set aside the order revealed that the contracts were made in two ways. In the first case orders were made on the telephone by the defendants in Malaysia and confirmed by the plaintiffs in Singapore. In the second situation, orders were sent by telefax from Malaysia and the plaintiffs responded by despatching the goods from Singapore to the defendants. The defendants' application was dismissed by the assistant registrar. The matter went on appeal to the High Court.

Held, allowing the appeal: (1) O 11 r 2(1) obliged an applicant to state more than the limb of r 1 that he relied on, and Form 12 required him to specify the sub-rule under which the application was made and the facts in support of that; (2) the plaintiff, for the purpose of establishing jurisdiction in the case of O 11 r 1(d)(i), had to show not merely that, if the contract existed, it was made within the jurisdiction but that (a) there was a contract, and (b) such a contract was made within the jurisdiction; (3) in an ex parte application for leave to serve a writ out of jurisdiction, the applicant was under a duty to make full and frank disclosure of all matters material to the application. The duty on the applicant was onerous and if he failed to discharge it, leave granted may be set aside even if the non-disclosure was innocent; (4) when an offer was made and accepted over the telephone, the contract was formed at the time and place where acceptance was received by the offeror. Accordingly, the first category of contracts was made in Malaysia, and not Singapored; (5) the second category of contracts were written offers to purchase but there was no written or oral acceptances. The plaintiffs had accepted by conduct by sending the goods to the defendants. The second category of contracts was, therefore, made in Singapore; (6) the plaintiffs did not disclose that some of the contracts were not made in Singapore but were made in Malaysia. They did not say on what portion the first category of contracts form of the contracts that they were suing on, and what portion of the sum claimed were founded on the Malaysian contracts. They had not satisfied O 11 r 1, and they had not complied with O 11 r 2. Those facts, if disclosed, would have been taken into account by the assistant registrar when he decided whether leave should be granted for service outside of the jurisdiction. Instead, he was left with a bare and incorrect assertion that all the contracts were made in Singapore. Therefore, there had been a failure to make full and frank disclosure of facts material to the plaintiffs' application; (7) the order obtained as a result of these failures could not, therefore, be allowed to stand.

Transniko Pte Ltd v Communication Technology Sdn Bhd [1996] 1 SLR 580 High Court, Singapore (Kan Ting Chiu J).

Transniko Pte Ltd v Communication Technology Sdn Bhd [1996] 1 SLR 580 High Court, Singapore (Kan Ting Chiu J).

See CONTRACT, Vol 3, para 2162.

The applicant sought to amend an order of court granted on 6 October 1978 which allowed the respondents as administrators of the estate of one C to sell certain lands and hereditaments at the price of $1,458,616 and not less. The said order also cited the applicant and one Lee as representatives of the estate. When granting the order, the court had before it the consent of all the beneficiaries including that of the applicant. The court was also given the valuation report showing that the market value of the lands as at August 1977 was $1,458,616 or $1 per sq ft. The respondents forwarded to the applicant for his approval a draft agreement for the sale of the lands. The draft agreement named the purchaser of the lands as one Kamdar. The applicant also applied ex parte for an interim injunction to restrain the respondents from selling the land. The said injunction was granted on 27 December 1978. The applicant subsequently abandoned the amendments. Instead, he sought to so vary the order and proposed, inter alia, that the lands be sold by public tender at a minimum price of $2,188,040.58, being their market value as of May 1979, assessed by an independent valuer, and that the applicant's solicitors be given the conduct of the sale of the lands. The purchaser applied and was on 24 March 1980 granted leave to intervene. A number of the beneficiaries who had previously filed their consent to the making of the order had since withdrawn their consent. They preferred to support the applicant's proposal to have the property sold by public tender at the increased price.

Held, dismissing the application: (1) the court, however, has power to correct any clerical mistakes caused by accidental slips or omissions, and to vary the order for the purpose of giving effect to its meaning and intention; (2) the interlocutory injunction was consequently dissolved; (3) no court or judge has power to alter or vary such order either in an application in the original action or matter, or in a fresh action brought to review it. The object of such a rule is to ensure that those who are affected by the order can with certainty conduct themselves in relation to that order;a binding contract was created between the intervener and the respondents as soon as the intervener exercised his option to purchase;the applicant had held up the completion of the sale and had caused the beneficiaries to the estate to wait unnecessarily for their share of the proceeds of sale. Costs awarded to the respondents should therefore be paid personally by the applicant.

Khoo Cheng Tat v Lim Soon Teik & Anor; BM Kamdar (Intervener) [1982] 1 MLJ 289 High Court, Penang (Raja Abdul Aziz Addruse JC).

The plaintiff (respondent) and his first wife, then poor, went to live in a house and farm in Singapore in about 1916. In the course of time, two daughters were born and five sons adopted, and most of the family (including all the adopted sons and numerous grandchildren) lived together on the premises. All those old enough to do so worked on the farm, which was enlarged, and in various other business enterprises which the expanding prosperity of the family made possible. In 1955, as a result of family quarrels which ensued after the respondent's remarriage following the death in 1953 of his first wife, the respondent left the family home. He then brought actions against three of his adopted sons and two of his grandsons, claiming possession of the farm and family house and damages for trespass, a declaration that he was the beneficial owner of a petrol filling station erected by him on land adjacent to the farm, and the return of two lorries used on the farm. The defendants (appellants) alleged, inter alia, that there were contracts between the respondent and the adopted sons whereby the latter agreed to be adopted and to work with the respondent for the acquisition of wealth to be administered by him, and that, having been adopted and having held to acquire wealth, they were entitled equally with the respondent to possession of the farm and the other property and to equal shares in it when the respondent died.

Held, affirming the decision of Tan Ah Tah J: (1) the agreements alleged by the appellants, even if proved, were not intended to create legal relations, and were therefore not binding in law as contracts.

Choo Tiong Hin & Ors v Choo Hock Swee [1959] MLJ 67 Court of Appeal, Singapore (Whyatt CJ, Wee Chong Jin and Chua JJ).

[Annotation: See also Re Tan Soh Sim, deceased [1951] MLJ 21; 2 MLR 21, CA.]

In this case, the respondent was a licenced housing developer and was involved in the construction and development of a housing estate. The official booking for the shophouses had not commenced but a clerk accepted cheques for $5,000 from each of the appellants and issued type written receipts acknowledging the payments. The clerk kept the cheques which were not credited to the respondent's bank account until the date of the trial. The learned trial judge was satisfied that the respondent had not represented to the appellants that the clerk was authorized to accept bookings on its behalf. He therefore dismissed their claims for specific performance of the purported sale agreements in which they alleged they had paid a booking fee of $5,000 each to the respondent's clerk. The appellants appealed.

Held, dismissing the appeal: this was a case where it would not normally be expected to be within the authority of the clerk to act as he did in the circumstances and any holding out by the clerk at the material time was done without the knowledge and consent of the respondent. There was no representation that the clerk was authorized to accept bookings on its behalf.

Chew Hock San & Ors v Connaught Housing Development Sdn Bhd [1985] 1 MLJ 350 Federal Court, Kuala Lumpur (Seah, Mohamed Azmi and Syed Barakbah FJJ).

The appellant was a company incorporated on 9 March 1979. On 24 August 1982, the appellant disposed of certain assets (the assets) to several persons. On 28 September 1992, the Special Commissioners for Income Tax made a decision regarding the acquisition date of the assets and held it to be on 8 November 1980. The appellant being unhappy with the decision applied for the case to be reviewed. The appellant contended that the proper acquisition date of the said assets was on 2 April 1977 (the 1977 agreement) - based on an agreement on the same date in writing among family members, to incorporate a family company to manage and control the assets. The respondent, on the other hand, alleged that the proper acquisition date was 8 November 1980 (the 1980 agreement) - on the basis of a subsequent written agreement executed after the family company's incorporation on 9 March 1979. The appellant submitted that the 1980 agreement was a ratification of the 1977 agreement. The issue for determination was what was the true and proper date of acquisition of the said assets and whether the 1980 agreement was a ratification of the 1977 agreement.

Held, dismissing the appeal: (1) the 1977 agreement was essentially an agreement among family members to incorporate a family company specifically to manage and control family property. The agreement lacked seriousness as it remained unstamped and was hidden away in the home of the witnesses thus making the full realization of the intention of the parties near abortive; (2) the 1980 agreement, on the other hand, had all the hallmarks of a complete and well executed agreement and no reference had been made to the 1977 agreement; (3) not all the conditions of the 1977 agreement were fulfilled and ratified. The 1977 agreement was only fulfilled only in so far as the formation of the company was concerned but never to the issue of the acquisition of those properties. Therefore, there was only part ratification of the 1977 agreement.

Thai Hwa Realty Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri (1996) CSLR III[255] High Court, Malacca (Suriyadi J).

The questions raised in this action were whether the defendant firm in Kuala Lumpur was an agent del credere of the plaintiff company in London, and if not, whether the agreement entered into by them without consideration was a contract under the Contracts (Malay States) Ordinance 1950.

Held: (1) as the Contracts (Malay States) Ordinance is silent on the subject of del credere agency, by virtue of s 5(1) of the Civil Law Ordinance 1956 the law applicable in England is applicable in the Federation; (2) to prove a del credere agency it is necessary to show not only that a commission was paid to the person alleged to be the del credere agent by the party claiming to be principal, but it must also be shown that an additional commission - del credere commission - was paid. As no payment of any commission was proved, the defendant was not liable as a del credere agent; (3) an agreement made without consideration becomes a binding contract if in the words of s 26(b) of the Contracts (Malay States) Ordinance, 'it is a promise to compensate wholly or in part a person who has already voluntarily done something for the promisor'. An act done at the suggestion of another party is not done voluntarily and as the plaintiff in this case had acted on the suggestion of the defendant it followed that the plaintiff's act was not voluntary and therefore there was no binding contract under s 26(b) of the Contracts (Malay States) Ordinance.

JM Wotherspoon & Co Ltd v Henry Agency House [1962] MLJ 86 High Court, Kuala Lumpur (Suffian J).

The appellant had claimed commission against the respondents under an agreement by which the respondents agreed to pay the appellant commission, entertainment and service fees if the appellant was successful in getting a Korean concern, Shin Fung (Borneo) Co, to enter into a contract to extract and purchase timber from a concession area. The respondent firm had become defunct and the partners of the firm incorporated a limited company, the Lian Fatt Sawmill Co Ltd, to work in the concession area. Forest licences which had been issued to the firm were renewed in the name of the company. The company entered into the agreement with the Korean concern for the extraction and sale of timber in the concession area. The appellant claimed commission under the agreement with the firm. His claim was dismissed in the High Court and he appealed to the Federal Court.

Held, allowing the appeal: (1) once the appellant had brought the parties together he was entitled to his commission and it did not matter that in fact the Korean concern made the contract with the limited company and not the firm as the persons in control of the partnership and the limited company were the same; (2) the respondents were taking advantage of a device to try to evade payment of commission. Such a device should not be allowed to defeat the claim of an innocent party. Under the circumstances, it would be inequitable for the partnership to refuse to pay the commission.

Tang Chiok Sing v Lian Fatt Sawmill Co [1976] 2 MLJ 241 Federal Court, Kuching (Suffian LP, Lee Hun Hoe CJ (Borneo).

The plaintiff obtained a judgment in default against the defendant in respect of an outstanding loan granted by the plaintiff to the defendant. The loan was secured by a charge. The defendant filed the present application by way of summons-in-chambers to set aside the judgment. The defendant contended that the judgment entered was irregular in that no leave had been obtained under O 83 r 4(1) of the Rules of the High Court 1980.

Held, dismissing the application: the letter of offer in which the plaintiff agreed to grant the defendant a loan forms the basis of the contract between the plaintiff and the defendant. The plaintiff's action is therefore a simple claim to recover a debt. The claim is not a charge action and therefore O 83 r 4(1) of the Rules of the High Court 1980 does not apply.

Public Finance Bhd v Soo Hock Siong [1988] 3 MLJ 352 High Court, Ipoh (Anuar J).

In this case, the defendants were one of the main contractors in the Penang Bridge project. The plaintiffs were one of the sub-contractors engaged by the defendants. Universal Life General Insurance Sdn Bhd gave a performance guarantee to the defendants regarding the work of the plaintiffs. Subsequently, the defendants repudiated the contract with the plaintiffs. The plaintiffs then caused a writ to issue and obtained ex parte an interlocutory injunction restraining the defendants from seeking payment from the guarantor (insurance company) under the performance bond. The plaintiffs also contested the validity of the guarantee bond on the ground that it was not signed by the defendants and it was also wanting in particulars and as such was defective and invalid. The plaintiffs also alleged that it was wrongful repudiation of the contract by the defendants that had resulted in the non-performance of the contract by the plaintiffs.

Held: (1) the plaintiffs cannot challenge the validity of the guarantee bond. Its validity is a matter between the main contractor and the insurance company; (2) the insurance company will have to pay out the amount guaranteed unless as provided in the agreement the sub-contractor was relieved from performance by any clause of the contract or by statute or decision of a tribunal which is not the case here; (3) if the main contractor acted unreasonably or was responsible for forcing the sub-contractor not to perform, the sub-contractor's remedy is to sue the main contractor for damages which he has already done.

Hemis Interco BV Sdn Bhd v Syarikat Pembenaan Hashbudin (M) Sdn Bhd [1985] 1 MLJ 245 High Court, Kuala Lumpur (George J).

The appellant ('Matang') was the owner of a machine ('the machine') which it leased out under a credit finance agreement to another company ('the lessee'). The lessee's performance of the agreement was guaranteed by one Teh. The lessee defaulted in paying the instalments due and Matang wanted to repossess the machine. On 3 February 1986, the respondent ('Metalco') entered into an oral agreement with Matang whereby Matang agreed to sell the machine to Metalco for RM65,000. The managing director of Metalco later signed an undated standard form supplied by Matang entitled 'sale and purchase agreement' which was however not signed by Matang. The agreement, inter alia, provided that the purchase price was RM65,000 and that the sale was subject to the lessee's right to redeem the machine within 14 days ('the first condition'). With the authority of Matang, Metalco then repossessed and transported the machine back to its premises. Matang later sold the machine to a third party for RM85,000 and removed the machine from Metalco's premises. Metalco alleged that Matang was in breach of the oral agreement and claimed special damages. It was contended that the machine had been sold for RM65,000 subject only to the right of the lessee to redeem the machine within 14 days, which the lessee did not exercise. Matang, however, argued that the sale was subject to a further condition that no higher prices were offered by other interested purchasers ('the second condition'). Matang submitted that as it had received a higher offer of RM85,000, and Metalco refused to increase its offer, it was under no obligation to sell the machine to Metalco for RM65,000. The sessions court, relying heavily on the evidence of the guarantor, accepted the existence of the second condition and decided in favour of Matang. At the High Court, however, the judge reversed the sessions court's decision and awarded damages to Metalco. Matang then appealed to the Court of Appeal. The main issue to be decided was whether the High Court judge was right in finding, contrary to the finding of the sessions court, that the agreement was only subject to the first condition and not the second.

Held, by a majority, dismissing the appeal (Zakaria Yatim JCA dissenting): (1) (per Mahadev Shankar JCA) where a question of fact has been tried by a judge, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion; (2) (per Mahadev Shankar JCA) the appellate court, either because the reasons given by the trial judge are not satisfactory or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court; (3) (per Mahadev Shankar JCA) the witnesses were testifying to events which occurred three or more years before the giving of testimony. Therefore, whether or not there was a second condition had to be determined on the totality of the evidence with particular reference to the contemporaneous documents; (4) (per Mahadev Shankar JCA) the fact that the appellant had not dated or signed the sale and purchase agreement did not mean that there could be no concluded contract. Where a contract had been signed by one party only, it could be enforced where there was evidence, such as part performance by one party and acceptance by the other, that the other party had elected to be bound by it; (5) and (c) Matang failed to satisfactorily explain why a standard sale and purchase agreement form, which it normally used when a sale was intended, was used instead of a standard offer to purchase form. Furthermore, the alleged second condition was not stated therein whereas it could easily have been typed in; (6) (per Mahadev Shankar JCA) the machine was not a standard item which was readily available in the market in terms of specification or price. The proper measure of damages to be awarded to Metalco was a sum of money which would restore Metalco to its status before the seizure of the machine by Matang, ie the difference in the price at which the machine was bought by Metalco and the price at which it was later resold by Matang plus all the abortive expenditure which Metalco had incurred in transporting and installing the machine in its premises; (7) (per Abu Mansor JCA) an appellate court should not lightly reverse the finding of a trial court. However, on the facts of the case, the High Court judge had acted correctly, having considered the evidence before him, to reverse the finding of the sessions court judge. There was a concluded agreement of sale of the machine and the appellant's subsequent action of repossession of the machine from the respondent was a breach of contract for which the respondent was entitled to damages; (8) (per Zakaria Yatim JCA, dissenting) the sessions court judge clearly understood the difficult facts before him and made his findings based on those facts. There was no justification whatsoever for the High Court judge to arrive at a different conclusion and he had therefore erred in interfering with the decision of the trial judge; (9) (per Zakaria Yatim JCA) the trial judge had taken into consideration the credibility and demeanour of the guarantor whose testimony in cross-examination he heavily relied upon to support Matang's case that the second condition existed. The High Court judge, however, did not question the credibility or demeanour of the guarantor whose evidence in re-examination he strongly relied on. The High Court judge was thus in error when he interfered with the decision of the trial judge; (10) (per Zakaria Yatim JCA) the second condition was vague and ambiguous and thus void for uncertainty. The oral agreement was thus also void for uncertainty. Even if the second condition were valid, the oral agreement was merely a conditional agreement. Since the second condition had not been fulfilled, there was no sale at all; (11) (per Zakaria Yatim JCA) even if the oral agreement was subject to only the first condition, Metalco had failed to make payment after the expiry of the redemption period given to the lessee. Matang was therefore at liberty to sell the machine to a third party; (12) (per Zakaria Yatim JCA) the written agreement was only signed by Metalco. This act of Metalco only constituted an offer to enter into a sale and purchase agreement in respect of the machine. As Matang had not signed the agreement, there was no sale and purchase agreement in writing between the parties; (13) (per Mahadev Shankar JCA) on the facts of the case, the sessions court judge, even though enjoying the benefit of seeing the witnesses, had reached a decision which could not be sustained and the High Court judge was correct in interfering with the decision. Inter alia: (a) the testimony of the guarantor about the existence of the second condition was given undue weight by the sessions court judge; (b) the guarantor, though a witness for Metalco, was not Metalco's servant or agent and his admission could not bind Metalco;(per Mahadev Shankar JCA) (obiter) the facts proved gave rise not only to a cause of action for breach of contract on Matang's part but also established that it had committed conversion.

Heller Factoring Sdn Bhd (previously known as Matang Factoring Sdn Bhd) v Metalco Industries (M) Sdn Bhd [1995] 2 MLJ 153 Court of Appeal, Kuala Lumpur (Zakaraia Yatim, Mahadev Shankar and Abu Mansor JJCA).

At issue was whether there was a concluded contract between the parties for the sale of the flat and if there was a concluded contract, what the appropriate remedy was for breach by the defendants. The plaintiffs had agreed to purchase the flat and negotiated on the price through an agent with the defendants. A cash deposit of S$1000 was paid and both plaintiffs signed the agreement. Four copies of the agreement were made, all of which contained the names of the parties, the description of the property and the price. The second defendant alleged that the blanks in the printed agreement had not been filled in when she signed it and they remained blank when her mother, the joint owner of the flat, signed. The cheque for the deposit was given to the second defendant and was later paid into her account. The second defendant contacted the plaintiffs and advised them that she was not going to proceed with the sale. The plaintiffs' solicitors wrote calling on her to complete the contract. The second defendant responded that there was no concluded contract as the plaintiffs had not signed the agreement and there were parts referring to the names of the parties and the purchase price left blank. The second defendant offered the plaintiffs 10% of the purchase price by way of compensation.

Held, ordering specific performance of the contract and ordering the flat be transferred to the plaintiffs upon payment of the purchase price less the deposit: (1) the evidence of the second defendant as to there being parts of the contract left blank was rejected. On the balance of probabilities, when the second defendant signed the agreement, all the details except those of her mother's identity card had been filled in. The copy of the agreement which the second defendant obtained from the agent when she decided not to proceed showed that all the particulars were there except for the identity card number of her mother; (2) cl 7 of the sale and purchase agreement could not be used to limit the defendants' liability in the event that the court found that there was a concluded contract. Govindaraju v Ganasen [1995] 1 SLR 365 shows that the option to annul the agreement which brings cl 7 into effect once the vendor defaults with the agreement lies with the purchaser. The vendor will then refund all deposit money and pay 10% of the purchase price as liquidated damages. However, this does not confer a right on the vendor to back out of a contract on the payment of liquidated damages. The decision to repudiate was the purchasers and if they did not repudiate, then, the contract will have to be carried out; (3) Govindaraju shows that the remedies available to the plaintiffs were not confined to damages and that there was a discretion with the court to order specific performance. Clause 7 did not, expressly or by necessary implication, exclude other remedies; (4) the plaintiffs had made it clear that they wished to have the contract performed from the time the second defendant indicated that she did not intend proceeding with the sale. The second defendant's point about the plaintiffs' mitigation of their damages by finding an alternative flat, even for a higher price, was limited by the fact that they were the innocent party. The second defendant could not ask to keep the flat merely because it had appreciated in value; (5) the plaintiffs were entitled to have the contract specifically performed. Their claim for rental of an alternative flat was disallowed as the loss did not flow from the breach and it was not within the contemplation of the parties as it had not been brought to the attention of the defendants at the time of the contract.

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

The plaintiff from time to time employed K & Co as his agents for the purpose of purchasing forward tin on the London tin market. K & Co executed these commissions through the defendants who had offices in Penang and London and who dealt in the London market. The defendants were aware that K & Co acted for an undisclosed principal. They dealt with K & Co on terms that they were to be paid a brokerage or commission and in their letters spoke of buying on K & Co's account. On 18 June 1931, K & Co, on the plaintiff's behalf, telephoned an order to the defendants in Penang to buy 50 tons of forward tin. The defendants in Penang accepted the order and in a letter of confirmation wrote that 'we confirm having today cabled London on your instructions to buy a further 50 tons three months tin'. On the following day the defendants in Penang, on cabled instructions from London, informed K & Co that they had not bought the tin and proposed different terms for future dealings.

Held: a contract had been concluded between the plaintiff and the defendants for breach of which the defendants were liable in damages. On appeal, Held: (1) the contract was one of agency by which the defendants had agreed to buy on behalf of the plaintiff and the question as to whether there was a sufficient memorandum in writing within s 4 of the Sale of Goods Act 1893, did not arise; (2) the plaintiff could sue in his own name as privity existed between him and the defendants. The relation of principal and agent may be established by an agent between his principal and a third person, if the agent is expressly or impliedly authorized to constitute such relation and it is the intention of the agent and such third person that such relation should be constituted. Per Thorne J: The right and liability of a principal whether disclosed or undisclosed, to sue and be sued in his own name on a contract made on his behalf, is not affected by the circumstances that the contract is to be partly performed by the agent, and from the terms thereof the consideration appears to move from the agent alone, nor by the circumstance that the agent was acting as a del credere agent; (3) on the question of damages, as the defendants had repudiated their contract, the damages should be assessed upon the basis of the price of tin on the date fixed for delivery.

Miles v Sandilands Buttery & Co [1932] SSLR 49 Court of Appeal, Straits Settlements (Murison CJ, Thorne and Terrell JJ).

The plaintiffs brought an action to recover from the defendant, a sum of RM500,000 being the balance of the purchase price for the sale of the plaintiffs' businesses allegedly sold to the defendant. The plaintiffs' claim against the defendant was founded on a letter dated 25 September 1990 (`AB1'), written by the defendant to them, which contained terms and conditions of the sale of their businesses to the defendant. In consequence of AB1, the plaintiffs had received from the defendant cheques totalling RM500,000, and handed over their businesses to the defendant. The plaintiffs alleged that despite demand being made, the defendant had failed to pay the balance sum of RM500,000. The defendant denied that AB1 constituted a valid contract made between the plaintiffs and him. He contended that AB1 was merely a letter expressing an intention and desire of the parties that a formal agreement would be executed between the plaintiffs as vendors of one part, and Wonson Garment Sdn Bhd (`wonson') as purchasers of the other part, of which the defendant was at the material time a shareholder and director. In AB1, the defendant, inter alia, enclosed a cheque for RM5,000 being earnest moneys and part payment for the purchase of the businesses for a total consideration of RM1m. Paragraph 2 of AB1 provided for a formal agreement to be executed between them within four weeks from the date thereof and should the agreement not be finalized by 23 October 1990, the sum of RM5,000 shall be forfeited by the plaintiff. Paragraph 3 contained eight conditions, which were referred to in AB1 as `the main terms of this agreement'. Thus, in compliance with the terms in AB1, two formal sale and purchase agreements, AB3-12 and AB14-31, were prepared which the plaintiffs executed on 22 October 1990. These agreements were, however, not executed by Wonson. After hearing evidence and submissions of counsel, the learned trial judge gave judgment to the plaintiffs primarily on the ground that upon its true construction, his Lordship found AB1 to be the only concluded contract for the sale and purchase of the plaintiffs' businesses and therefore binding on the defendant. The primary issue in this appeal was whether, on its true construction, AB1 constituted a concluded contract between the plaintiffs and the defendant.

Held, allowing the appeal: (1) when parties `proposed that a formal agreement would be prepared and executed', they had to mean what they said. In the instant case, para 2 clearly provided that a formal agreement was to be executed within four weeks from the date of AB1 and should the formal agreement not be finalized by 23 October 1990, the sum of RM5,000 would be forfeited to the vendors. It was quite absurd to construe AB1 as a formal agreement which would mean that under para 2, it had to be executed again within four weeks from the date in AB1; (2) on its true construction, in particular para 2 thereof, AB1 did not constitute a legally binding contract between the parties, but merely a letter written by the defendant to the plaintiffs expressing a willingness to purchase the latter's businesses and a basis for, and subject to the preparation and execution of a formal agreement containing elaborate terms and conditions.

Lim Chia Min v Cheah Sang Ngeow & Anor [1997] 1 MLJ 127 Federal Court, Kuala Lumpur (Lamin PCA, Edgar Joseph Jr and Mohd Dzaiddin FCJJ).

The plaintiff applied for summary judgment against the defendant for damages and interest arising from the termination of an agreement to purchase and develop two lots in a complex as a cinema. The parties entered into a series of negotiations by correspondence and a sale and purchase agreement was sent by the plaintiff's solicitors to the defendant to be signed. The defendants solicitors returned the agreement with a cheque for 10% of the purchase price, RM136,736. In the meantime, the plaintiff's solicitors forwarded the agreement to the defendants' solicitors again, after the plaintiff had signed it. The cheque was dishonored and once the plaintiff's solicitors became aware of the dishonor, they informed the defendant's solicitors that the agreement was terminated for breach of the conditions of the contract and sought the 10% deposit, damages to be assessed, interest and costs. At issue was whether a valid and binding contract had been concluded.

Held, granting the plaintiff's application: (1) on the facts, it was clear that a contract had been concluded between the parties even though the written agreement had yet to be signed by the defen-dants; (2) the acceptance by the defendant of the plaintiff's letter of offer had resulted in a legally binding and enforceable contract between the parties; (3) as there was a legally enforceable agreement between the parties, the defendant was liable for the breach by failing to continue with the agreement.

Syarikat Desa Perami Sdn Bhd v Melor Screenvision (M) Sdn Bhd No D5-22-865-92 Kuala Lumpur (Abdul Malek J).

A gave a paper promising and agreeing to pay a sum of money by instalment to B or his order in consideration of B discontinuing certain actions which he then had against A.

Held: as it was necessary to show that the action had been discontinued, the document obliged any intending holder to inquire whether that event had occurred; it was, therefore, encumbered with a condition and was not a promissory note but an agreement only.

Haji Shaik Abdul Cader v Mohamed Cader Hussain [1886] 4 Ky 181 High Court, Straits Settlements (Sheriff J).

An ordinary form of promissory note is used but with a condition as to the payment indorsed at the head of the note: 'BATU GAJAH, PERAK, FEDERATED MALAY STATES Out of $330, $150 (dollars one hundred and fifty) to be paid on 24 April 1929, and in default of payment on due date $350 to be paid just on demand. I, the undersigned Boor Singh son of Jagat Singh caste Sikh of village Skherai district, Amritsar at present residing at Menglembu occupation bullock carter jointly and severally promise to pay to Jawala Singh son of Jeon Singh caste Sikh village Boliwal district, Gurudapur at present residing at Batu Gajah occupation cattle-owner or order the sum of dollars three hundred and thirty ($330) only for the value received in cash with interest at the rate of 2% per mensem from today.'

Held: the effect of imposing this condition is that the document is not a promissory note, but merely evidence of an agreement between the parties.

Boor Singh v Jawala Singh 1933 High Court, Federated Malay States (Mudie J).

The plaintiffs brought an action against all six defendants for specific performance of a sale and purchase agreement entered into between the first plaintiff and the first defendant in respect of a piece of land ('the land'). The defendant applied to strike out the proceedings under O 18 r 19(1)(a) of the Rules of the High Court 1980. The first defendant was the registered proprietor of the land. A charge ('the charge') was executed over the land by the first defendant to the second defendant as security for loan, inter alia, to the third defendant. Under a sale and purchase agreement ('the agreement'), the first plaintiff agreed to buy and the first defendant agreed to sell the land free from the charges on the land and upon, inter alia, the following terms: the second defendant must consent to the sale and that a further sum of RM4m had to be paid by the first plaintiff in addition to the purchase price and the first payment RM100,000 'shall be paid É upon the execution of the Supplemental Agreement and subject to the CCB Redemption Confirmation'. The defendants submitted in the pleadings that these conditions were not fulfilled (ie no consent was given by the second defendant and no additional payment of RM100,000 had yet been made) at the time the writ was filed by the plaintiff and therefore until the conditions were fulfilled, there could be no contract. The plaintiff urged the court not to go behind the pleadings but to presume all the allegations in the pleadings to be true.

Held, setting aside the statement of claim: (1) there was no cause of action and the whole case collapses, not only against the first defendant but against all the defendants; (2) even if there was an extant contract between the first plaintiff and the first defendant, the five other defendants could not be dragged in as defendants when they were not even parties to the agreement entered into between the first plaintiff and the first defendant. Although a prayer was requested for the removal of caveats lodged against and by the fifth and sixth defendants, no nexus was shown between these two defendants and the agreement. The second defendant also could not be a figure in the litigation since he too was not a party to the contract; (3) until the conditions were fulfilled, there could not be a contract;it was clear that so long as the statement of claim disclosed some ground of action, the mere fact that the plaintiff is not likely to succeed on it at the trial is no ground for it to be struck out. However, the statement of claim in this case did not disclose any ground of action. The pleadings themselves showed that two of the conditions of the agreement had not been fulfilled and there was therefore no cause of action disclosed.

Arah Cipta Sdn Bhd & Anor v Kian Kee Sawmills (M) Sdn Bhd Civil Suit No S1 22-101-95 High Court, Kuala Lumpur (KC Vohrah J).

P purchased equipment from X Sdn Bhd which was installed on its land. To finance the purchase of the equipment, P approached D1, a finance company. D1 then, inter alia, paid X Sdn Bhd for the equipment and entered into a lease agreement with P whereby the equipment was leased by D1 to P. P applied to the High Court for a declaration that the lease agreement was null and void firstly on the ground that the transaction was a sham and was actually a moneylending transaction. P also argued that D1 had agreed to a separate oral agreement whereby once P had paid the purchase price of the equipment together with interest, the equipment would belong to P. P therefore alleged that the oral agreement was a condition precedent to the lease agreement. P then argued that D1 was precluded by s 4 of the Finance Companies Act 1969 from doing equipment leasing as a business. P also contended that since the equipment had been affixed to the land so as to become fixtures, P became their owner by virtue of being the owner of the land. P lastly argued that the equipment was installed for the purpose of extracting rock material and such a purpose was illegal because P's land was agricultural land.

Held, dismissing P's application: (1) the court will penetrate the disguise or cosmetic camouflage to call the transaction by its real name if it is an attempt to avoid the provisions of the law or public policy. In this case there was nothing to show that the lease agreement was to avoid the provisions of the law or public policy. In any event a finance company such as D1 was exempted from being affected by the Moneylenders Act 1951; (2) the fact that one contracting party has bargained for certain terms but executed the final agreement in which all these terms are not reflected does not per se make the terms not included in the agreement conditions precedent to the agreement. The oral agreement alleged by P was thus not a condition precedent to the lease agreement; (3) since the alleged oral agreement contradicted the terms of the lease agreement and therefore ran foul of s 92 of the Evidence Act 1950, the alleged oral agreement could not be admitted; (4) D1 entered into the lease agreement to accommodate P's need to raise funds for the equipment and not to carry on the business of equipment leasing. P's contention based on s 4 of the 1969 Act therefore failed; (5) although the equipment may become fixtures, the land owner can contractually provide for them not to be regarded as such. It was therefore not open to P as a party to the lease agreement to raise the 'fixtures' argument; (6) what was relevant was whether P had the requisite permit to extract and remove rock material. The fact that P's land was agricultural land was irrelevant. P had represented to D1 that all necessary permits had been obtained. There was accordingly no merit in P's last argument.

Sri Kajang Rock Products Sdn Bhd v Mayban Finance Bhd & Ors Originating Summons No D3-31-35-87 High Court, Kuala Lumpur (VC George J).

Where the validity of an agreement depends on natural love and affection between near relations, relationship and nearness depend on the mores of the group to which the parties belong and the circumstances of the family concerned. A Chinese adopted son is related to the family of his adoptive father but a son, whether natural or adopted, is not 'nearly related', within the scope of the Contract Ordinance 1950, to the family of his adoptive mother.

Re Tan Soh Sim, deceased [1951] MLJ 21 Court of Appeal, Federation of Malaya (Taylor, Abbott and Briggs JJ).

When an ascertained sum is already due under a contract, payment of a lesser sum is no consideration for a promise to forego the remainder. However, where there is some independent benefit, actual or contingent, of a kind which might in law be a good and valuable consideration, such a negotiable instrument given by a third party, as in the instant case, payment of a lesser sum in satisfaction of a debt may afford a complete accord and satisfaction.