DALAM MAHKAMAH RAYUAN MALAYSIA DI PUTRAJAYA
(BIDANG KUASA RAYUAN)
RAYUAN SIVIL NO: P-02(NCVC)(W)-2170-09/2012
REIGNMONT ESTATE SDN BHD
(No. Syarikat : 786703-D) … PERAYU
JAYA IKATAN PLANTATIONS SDN BHD
(No. Syarikat : 019878-W) … RESPONDEN
(Dalam Perkara Guaman Sivil No. 22-NCVC-289-2011 Dalam Mahkamah Tinggi Malaya di Pulau Pinang
Reignmont Estate Sdn Bhd
(No. Syarikat : 786703-D) … Plaintif
Jaya Ikatan Plantations Sdn Bhd
(No. Syarikat : 019878-W) … Defendan)
MOHD HISHAMUDIN YUNUS, JCA ABDUL AZIZ RAHIM, JCA MOHAMAD ARIFF MD YUSOF, JCA
GROUNDS OF JUDGMENT
 This was an appeal by the Plaintiff in the High Court after a full trial in a case where the subject matter of the claim was essentially for specific performance of the Sale and Purchase Agreement relating to a piece of land in Baling, Kedah, with a total area originally described as 117 ha. Being an Estate Land (an oil palm plantation), the sale of the land required the approval Estate Land Board under section 214A of the National Land Code. The dispute revolved around the legal effect of non-approval by the Estate Land Board within the stipulated contractual period, and whether the remedy of specific performance could lie where the Plaintiff could not be shown to be ready and willing to perform the Sale and Purchase Contract.
 The Defendant as Vendor issued a notice of termination of the Sale and Purchase Contract, purportedly because no approval was secured from the Estate Land Board within the contracted stipulated period. This was challenged by the Plaintiff as Purchaser and hence, the Plaintiff filed this claim seeking inter alia for specific performance of the Sale and Purchase Contract.
 The High Court dismissed the Plaintiff’s claim for specific performance, and allowed the Counterclaim by the Defendant for the removal of a caveat lodged against the land by the Plaintiff. The High Court also ordered a refund of the deposit paid by the Plaintiff to the Defendant and further that each party was to bear its own costs.
 We allowed the appeal by a unanimous decision. We were of the view that the termination of the Sale and Purchase Contract (more exactly, the Sale and Purchase Agreement dated 13.12.2007 and the Supplemental Agreement dated 16.8.2010) was premature since there was no rejection by the Estate Land Board at the time of the alleged termination. We were also of the view that there were no merits in the argument advanced by the Defendant (now the Respondent in this appeal) that the Plaintiff (now the Appellant) was not ready and willing to proceed with the Sale and Purchase Contract. We ordered agreed costs of RM25,000.00 for the appeal proper, and further ordered that the High Court order on costs was to remain. The order of the High Court was set aside and we entered judgment for the Plaintiff as per prayer 17(a) of the Statement of Claim for specific performance.
 We did not however allow the alternative claim for damages, since specific performance was allowed in the circumstances.
 At the outset of the hearing, the Respondent had raised a preliminary objection by letter, on the basis that the Appellant must be taken to have abandoned its right to appeal since it had chosen to accept the refund of the Deposit sum as ordered by the High Court. We found no merit in the preliminary objection; the Appellant was merely acting on the High Court order and therefore this fact could not be held against it.
 As indicated earlier, the Sale and Purchase Agreement between the Respondent as Vendor and the Plaintiff as Purchaser in respect of
the Estate Land was entered into in 2007, the Agreement being dated 13.12.2007, and with the property described as that piece of land in Baling, Kedah, measuring approximately 408 Relongs 106 Jembas “together with all existing oil palm plants, building/fittings/fixtures erected thereon.” The total land area worked out to be approximately 117 ha. The parties had the understanding that the total land area could be less after taking into consideration any acquisition by the relevant authorities. The Purchase Price stipulated was RM12,648,000.00 with a Deposit sum of RM1,264,800.00 to be paid by the Purchaser to the Vendor’s solicitors to hold as stakeholders by way of “deposit and part payment towards the account of the Purchase Price.” This was made clear in Clause 1(a) of the Sale and Purchase Agreement. Clause 2 of the SPA provided for the manner of payment of the Balance Purchase Price which shall be paid in full in accordance with section 3(b) of the 2nd schedule which reads:
“The Balance Purchase Price shall be paid within four (4) months from the date of receipt by the Purchaser’s solicitors of a written confirmation from the Vendor’s solicitors that the Board’s approval has been obtained (hereinafter referred to as “the Completion Date”) with an extension of a further one (1) month (hereinafter referred to as “the Extended Completion Date”) subject to the payment of interest at the rate of 6.5% per annum on the unpaid balance of the Purchase Price calculated on daily basis until full payment of the Balance Purchase Price.”
 Thus, from the above provision the Balance Purchase Price was to be paid within four months (with an additional one month’s extension) from the date the Appellant’s solicitors received a written confirmation from the Respondent’s solicitors that the Board’s approval had been obtained.
 The SPA clearly obligated the Respondent as Vendor to apply to the Board for the approval, and that approval “must be granted” within 4 months from the date of the SPA, defined by the SPA as “the Application Time”. The relevant provisions in this connection were Clause 3(c) and Clause 4. Clause 3(c), for instance, made clear that the sale of the Land was subject to, inter alia, the term and condition that the “approval of the Estate Land Board being obtained by the Vendor at his own cost and expense.”
 Clause 4 then specified in greater detail what was required to be done by the Vendor and the legal effects of a rejection of the application for approval.
CLAUSE 4(a) – (e)
 Clause 4, headed “Approval of Estate Land Board”, specified the following:
(a) The Vendor was to apply to the Estate Land Board within 14 days from the date of the SPA, or where applicable, from the date when the Vendor received the necessary information and/or documents that were necessary for obtaining the approval (Clause 4(a)).
(b) The Vendor was to do all acts and furnish all information and/or documents that were necessary for obtaining the approval (Clause 4 (b)).
(c) The parties agreed that the Board’s approval must be granted within “the Application Time” i.e. within 4 months from the date of the SPA (Clause 4 (c)).
(d) In the event the Board’s approval was rejected, even though the Vendor had exhausted all avenues of appeal, the SPA was to be aborted and the Vendor was to refund the deposit sum together with interest thereon to the Purchaser within 7 days from the date of rejection (Clause 4 (d)). In this event, the Purchaser was also to return all documents executed by the Vendor to the Vendor’s solicitors for cancellation and thereafter the parties were not to have any claim against each other.
 The Appellant as Purchaser was nevertheless granted an “option”, spelt out in Clause 4(e), to elect whether to await further for the approval, even though approval was not obtained within the “Application Time”, or to terminate the Agreement. This provision was subsequently amended by agreement of the parties by an exchange of letters dated 13.1.2009 and 22.1.2009 (see pages 202 – 203, Appeal Record, Vol.2 (2), Parts B and C).
 Clause 4 (e), as it originally stood in the SPA, stated:
“In the event that the Board’s Approval is not obtained by the Application Time despite the best endeavour of the Vendor, then the Purchaser shall at any time thereafter have the option whether further await the said Approval or to terminate this Agreement. If the Purchaser shall exercise the option to terminate this Agreement the Vendor shall within seven (7) days from the termination refund to the Purchaser the Deposit sum together with
the interest incurred thereon from the fixed deposit account as mentioned in Clause 1(b) hereof and the Purchaser or his solicitors shall return all documents (if any) executed by the Vendor to the Vendor’s solicitors for cancellation and thereafter no parties shall have any claim against each other.”
THE AMENDED CLAUSE 4 (e)
 The amended Clause 4(e) read:
“In the event that the Board’s Approval is not obtained by the Application Time despite the best endeavour of the Vendor, then the Purchaser shall at any time thereafter prior to the completion of the Agreement (whether the said Approval shall have subsequently obtained or not) have the option whether to terminate this Agreement. If the Purchaser shall exercise the option to terminate this Agreement the Vendor shall within seven (7) days from the termination refund to the Purchaser the Deposit sum together with the interest incurred thereon from the fixed deposit account as mentioned in Clause 1(b) hereof and the Purchaser or his solicitors shall return all documents (if any) executed by the Vendor to the Vendor’s solicitors for cancellation and thereafter no parties shall have any claim against each other.”
(The amended parts are underlined.)
 Whereas under the original clause the Appellant was given the option to elect whether to continue with the Agreement or to terminate it, if approval was not obtained within the Application Time, under the amended provision the Appellant was granted the option to terminate the Agreement if the approval was not obtained within the Application Time
“whether the said Approval shall have subsequently been obtained or not.”
 We noted that the amended option granted to the Appellant allowed it to elect to terminate at any time “thereafter prior to the completion of this Agreement”, which could only plausibly refer to the “Completion Date”, namely the four months after receipt of any approval for the Balance Purchase Price to be paid. Despite any latent ambiguity that might arise, it was nevertheless apparent on its wording that the option was granted to the Appellant as Purchaser, not the Respondent as Vendor.
 The amended Clause 4(e) did not appear in the Supplemental Agreement which the parties signed and dated 16.8.2010.
THE SUPPLEMENTAL AGREEMENT
 The Supplemental Agreement, although signed in May 2010, was dated 16.8.2010. It adjusted the Purchase Price from RM12,648,000.00 to RM12,591,881.08, with consequential amendment to the Balance Purchase Price which then became RM11,327,081.08. The adjustment took into account the acquisition by the State Authorities of 0.5212355 ha of the land earlier in 1999.
 Clause 4(e) was not amended through this Supplemental Agreement (as noted earlier, this amendment was effected by exchange of letters in January 2009), but there was a significant change to the Application Time which was shortened to 3 months. This was reflected in Clause 4 of the Supplemental Agreement:
“The Application Time pursuant to Clause 4 (c) of the SPA shall be amended to three (3) months from the date of this Supplemental Agreement.”
 It was evident, at least from the formal terms of the Supplemental Agreement, that the parties at that stage were still under the impression that no approval had been obtained from the Estate Land Board. Given the amended Application Time of three months calculated from the date of the Supplemental Agreement, and when no approval was conveyed to the Respondent within this time, the Respondent then issued its termination notice through its solicitors’ letter dated 3.12.2010. By this letter from Messrs Amir & Lee, the Respondent conveyed its position that the SPA and the Supplemental Agreement were therefore deemed to be void by operation of section 36(1) of the Contracts Act 1950 which covered the legal effects of a contingent contract in the event the contingent event (here, the Board approval) was not satisfied:
Contingent contracts to do or not to do anything if a specified uncertain event happens within a fixed time become void if, at the expiration of the time fixed, the event has not happened, or if, at the expiration of the time fixed, the event becomes impossible.”
 The Respondent argued it had the right to terminate in view of the amendment to Clause 4(e) which took away the option granted to the Appellant to elect to terminate “at any time thereafter”. The Appellant on the other hand argued Section4 (e) remained unaffected since it was not expressly amended in the Supplemental Agreement, maintaining its stand that only the Appellant had the right to elect for termination.
 In this matrix of facts and the competing arguments, one extraordinary event featured, and that was in relation to the earlier application for approval.
APPROVAL ON 28.9.2008
 The approval had in fact been given by the Estate Land Board much earlier on 28.9.2008, with the relevant certificate indorsing the sale issued on 9.10.2008, apparently without the knowledge of the parties. This was very obviously before the amendment to Clause 4(e) and the signing of the Supplemental Agreement.
 On the evidence, it appeared that the fact of approval having been given came to the Appellant’s knowledge when its solicitors wrote to the Pengarah Tanah dan Galian, Alor Setar on 5.7.2011 to inquire on the status of the application. It was then that it was informed approval had been given. The letter in response to the inquiry from the Pejabat Pengarah came on 14.7.2011, which also said:
“…Pentadbiran ini telah mengemukakan sijil tersebut kepada Peguambela dan Peguamcara Tetuan Amir & Lee [the Respondent’s solicitors] seperti di salinan berkelat.”
 According to the Respondent’s solicitors, they did not receive this letter since it was apparently sent to the old address of the solicitors. This explanation can be found in the letter from Amir & Lee dated 16.8.2011. By letter dated 18.8.2011, the same solicitors wrote:
“Tujuan kami menulis ialah untuk memohon pihak tuan agar salinan “Certified True Copy” untuk surat-surat bertarikh 1.2.2010, 13.10.2008 bersama-sama dengan Sijil Kebenaran Pindah Milik bertarikh 9.10.2008.
Pihak kami berharap agar tuan dapat menyediakan salinan-salinan dokumen seperti yang diminta di atas pada kadar segera dan “despatch rider” pihak kami senantiasa bersedia untuk hadir di pejabat tuan bersama-sama dengan fee bagi mengutip dokumen-dokumen tersebut.”
 The Respondent thus acknowledged the approval had been procured in 2008, albeit without its knowledge. However, the responsibility to obtain this approval was spelt out in the SPA as reposed in the Respondent, and by this token the Respondent must surely have the duty to inquire as to the status of the application, and to follow-up on it. In fairness to the Respondent, there was a follow-up before the Supplemental Agreement was signed in the form of a letter written by Amir & Lee dated 13.5.2009 to the Menteri Besar, Kedah, to inquire on the status. This letter was copied to the solicitors for the Appellant. According to the witness from Amir & Lee (DW2), they were informed by the “land authority’s staff” that the actual net land area had to be ascertained first before approval could be given. The solicitors then proceeded to prepare the Supplemental Agreement to reflect the actual land area and made the necessary adjustment to the Purchase Price. The evidence did not disclose any immediate follow-up after the signing of the Supplemental Agreement although they had been allegedly informed approval would be decided when the net land area was determined.
 There were some unsupported allegations made by the Respondent in its submission that the Appellant had earlier knowledge of the approval and that prompted it to request for the amendment to Clause 4(e) which allowed it to still elect to terminate although approval was obtained. With respect, this argument was far-fetched and flew against the available evidence. Why would the Appellant proceed to sign the Supplemental Agreement with a shorter Application Time if it had known approval had been given?
 In the same light, the insinuation by the Respondent that the Appellant had not acted on the approval having been given and complete the sale according to the SPA because it was still securing a third party to purchase the land from it, was without plausible basis.
LEGAL EFFECTS OF SECTION 33 AND 36 OF CONTRACTS ACT
 Given these circumstances, we were of the opinion that the SPA and the Supplemental Agreement could not have been found to be void. The fact of the matter was, approval had been secured and therefore this was not a case of the contingent event becoming impossible of performance, much less not secured within the contracted time. Approval was given and at that point of time, the contingent contract could then be enforced by law, in keeping with the underlying rationale in Section 33(a) and (b):
“(a) Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened.
(b) If the event becomes impossible, such contracts become void.”
 The Supreme Court’s decision in National Land Finance Cooperative Society Ltd v Sharidal Sdn Bhd  2 MLJ 211, which discussed and decided on the legal effects of a contingent condition under Section 33, Contracts Act, supported this legal position. The relevant passage in the judgment of the Supreme Court was cited to us and we reproduce the same (the contingent there was approval from the FIC):
“Until the FIC approval was given liability for further performance remained unenforceable i.e. suspended although neither the Respondents nor the Appellants could resile from it until it could be definitely ascertained that the condition could not be fulfilled.
This is in effect laid down by section 33(a) of the Contracts Act…
As the approval in this case was refused it means that contingent event becomes impossible of performance and the Agreement therefore becomes void in accordance with section 33(b).”
(per Salleh Abas CJ (Malaya) (as he then was) at pg. 218)
 What this passage laid down was clear: until the condition was fulfilled, future performance under the contract remained unenforceable; when that condition was fulfilled, the contract became complete and effective. The Privy Council in Reginald Ernest Vere Denning v David Geoffrey Edwardes  AC 248 (also cited before us) categorised such a contract as “inchoate” until the condition was fulfilled. These statements of the law were of high authority, and they were applicable to the facts of this present appeal.
 With respect, the same underlying principles applied in the context of section 36, which is concerned within “a specified uncertain event” happening “within a specified time”.
 These are general principles of contract law, which had to be read against the express Agreement of the parties. It seemed clear to us that the option to terminate lay with the Appellant, whether under the original Clause 4(e) or the amended Clause. Quite apart from the undisputed fact that approval had been secured even before the Supplemental Agreement was signed, the Respondent could not arrogate to itself to terminate for the perceived failure of the contingent condition. No doubt the option gave an advantage to the Appellant, but where parties have agreed to such terms, however onerous they might be to one party, the parties have to be held bound by these terms.
 We carefully considered the judgment of the learned High Court Judge on this aspect of the appeal, but could not agree with the reasoning which led the High Court to come to a finding that the contract was lawfully terminated and there was no breach of contract by the Respondent. The High Court Judge held in paragraph 56 of the Judgment as follows:
“I had adverted to this earlier and held that the Defendant’s action pursuant to section 36(2) of the Contracts Act, 1950 to terminate the contract was lawful considering that the deadline for the obtaining of the ELB approval or the validity of the SPA as reset in the Supplementary Agreement had expired.
It must be repeated that it was my conclusion that there was no breach of contract by the Defendant in the circumstances.”
 Appellant’s counsel submitted that the learned High Court Judge had not fully considered the effect of Clause 4(e) in reaching this finding. We found merit in this argument. This Clause was a fundamental term in the contract and it directly related to the right of termination. A failure to
consider this Clause would lead to a fundamental misdirection by the High Court on the law and the facts. With respect, we found the High Court had adopted a purely textual approach to Clause 4 of the Supplemental Agreement. The Application Time was found to have been simply “re-set” by the Supplemental Agreement, and since no approval was purportedly obtained within the “re-set” 3 months from the date of the Supplemental Agreement, section 36(2) operated to invalidate the SPA and the Supplemental Agreement. The High Court should have properly considered the effect of the approval and the Certificate of Approval in these circumstances. The High Court failed also to consider even the amended Clause 4(e) which allowed the Appellant as Purchaser to elect to terminate the contract “at any time thereafter prior to the completion of the Agreement (whether the said Approval shall have subsequently obtained or not)”. The SPA, in defining the time for completion, gave the Purchaser 4+1 months from the date of approval to pay the Balance Purchase Price. We did consider the ambiguity in the phraseology of the amended Clause 4 (e) but there was one constant factor: whether under the original or amended Clause 4 (e), the option to terminate was granted to the Appellant as Purchaser.
 In any event, if the Application Time had been re-set by the Supplemental Agreement, surely it would have been incumbent on the Respondent as Vendor to submit a fresh application for approval, or at least to have formally contacted the Pengarah for the Department to reconsider the earlier application for approval. Had the solicitors for the Respondent done so, they would have most probably found out much earlier that approval had indeed been given in 2008.
WHETHER APPELLANT WAS READY AND WILLING TO PERFORM
 We accepted the legal position that “readiness” to perform would refer to “financial capacity”, while “willingness” referred to “conduct wanting performance” or “disposition”. In Goh Hooi Yin v Lim Teong Ghee  3 MLJ 23, it was held that “readiness” consisted of “having access to funds”, and this requirement was not defeated merely because the party was depending on a loan to be advanced. On the facts of this present appeal, there was no dispute that the Appellant was depending on a bank loan to complete its performance, i.e. to pay the Balance Purchase Price. Counsel for the Appellant impressed upon this Court that the Appellant had applied for a loan from OCBC Bank even before signing the SPA. As for “willingness”, the Appellant had by its conduct consistently maintained it was willing to proceed with the transaction. It made its position expressly clear in the letter from its solicitors to the Respondent’s solicitors in which it questioned the termination by the Respondent, adding that it was “well within your client’s knowledge at all material times, our client agrees to await the approval of Estate Land”, and “our client is at all times able, ready and willing to complete the purchase of the said property.”
 There was no credible evidence upon which the High Court could conclude that the Appellant, through its conduct, manifested an unwillingness to perform its side of the bargain. The Respondent in its Written Submission spent some time emphasising how it was difficult to get the directors of the Appellant to execute the Supplemental Agreement as a matter of priority, even to the point of showing the Appellant’s registered address was in a locked low-cost flat, and how PW2, one of its directors, had been a bankrupt from 2001 to 2005. The
Appellant itself was a RM2.00 Company with negative reserves and had failed to submit its yearly accounts. The Respondent concluded by stating “it was quite impossible that OCBC Bank would approve the Plaintiff’s application for the said loan.” What was conveyed by OCBC Bank was merely “Indicative Terms for Credit Facilities” which was still subject to approval by the Bank’s management. See pages 366 to 368 of Appeal Record, Vol 2(3), Parts B & C. On page 368, the part pertaining to the acceptance of the offer, was not signed and acknowledged by the Appellant’s authorised signatories.
 The Appellant replied to these arguments by stating that it was normal banking arrangement to merely offer indicative terms since the SPA was dependent on approval being given by the Board. Reference was made to a letter from its advisers, Kevin Hill Advisory(M) Sdn Bhd, dated 16.4.2008, addressed to Amir & Lee, in which the Respondent was informed the Appellant had “arranged with RHB Islamic Bank” for a loan of RM10 million to finance the purchase of the Estate. See page 364 of Appeal Record, Vol. 2(3).
 There was no dispute that the Deposit sum of RM1,264,800.00 was paid, and that was not a small sum to be dismissed as not supporting an inference of a readiness and willingness to perform the contract.
 The Appellant also referred to Clause 8 of the SPA which in fact contemplated and allowed the Appellant to apply to any financial institution for a loan to complete the transaction, as would be usual for a transaction of this magnitude.
 The Respondent relied on the Indian Supreme Court case of Thirugnanam v Dr R. Jagan Mohan Rao AIR 1996 SC 116, and the following passage:
“..To adjudge whether the Plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the Plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the Defendant must of necessity be proved to be available… the factum of his readiness is to be adjudged with reference to the conduct of the party and attending circumstances. The court may infer from the facts and circumstances whether the Plaintiff was ready and always ready and willing to perform his part of the contract.”
 In our view, these same principles when applied to the particular facts and circumstances of the case here, provided sufficient evidence of readiness and willingness on the part of the Appellant to perform its part of the bargain. We also considered the effect of Section 11(2) of the Specific Relief Act that there was a presumption that a breach of a contract to transfer immovable property could not be adequately compensated in money terms. The facts and circumstances of this appeal could not, on an objective view, be said to be sufficient to rebut this presumption.
 In the totality of the case, we agreed with the general argument advanced by the Appellant that it would be clearly unconscionable and wrong in law to allow the Respondent to resist the Appellant’s claim for specific performance against the clear evidence that approval had in fact been given by the Board in 2008 which at once made the contract
unconditional and capable of specific performance. The purported termination by the Respondent was therefore unlawful.
 In the above premises and as earlier indicated, we unanimously allowed the appeal with agreed costs of RM25,000.00 for the appeal proper. We further ordered that the High Court order on costs was to remain. The High Court had made no order as to costs. The order of the High Court was set aside with judgment for the Plaintiff entered as per prayer 17(a) of the Statement of Claim for specific performance.
(DATO’ MOHAMAD ARIFF BIN MD YUSOF)
Court of Appeal Malaysia
Dated: 24th October 2013
for the appellant: Dato’ Mahinder Singh Dulku
Messrs Mahinder Singh Dulku & Co 25, Green Hall 10200 Pulau Pinang
for the respondent: Wong Yee Chue
Messrs Y.C. Wong No. 2 (1st & 2nd Floor) Lorong Abu Siti 10400 Penang