The case above involves a claim for specific performance made by the Plaintiff against the Defendants. In essence, the Plaintiff commenced a legal action for an order of specific performance against the developer (1st Defendant) to pay RM 2,050,000.00 being the balance purchase price due under the SPA.
In a gist, the Plaintiff and the 1st Defendant had entered into a SPA where the Plaintiff agreed to sell and the 1st Defendant agreed to purchase the subject land for a purchase price of RM4,500,000.00. The 1st Defendant then put down the deposit for the subject land and the Plaintiff admitted to receiving the same.
The final date for the 1st Defendant to furnish the balance purchase price fell on 6.11.2016 taking into account a 30-day automatic extension as provided for in the SPA. The 1st Defendant however failed to make payment of the balance purchase price by this date.
Some 3 years later, the 2nd Defendant (a former director of the 1st Defendant), served a letter to the Plaintiff enclosing 2 post-dated cheques for the sum of RM4,000,000.00 in total. One of the cheques cleared, while the other one did not.
The Plaintiff claimed that the 2 post-dated cheques for the sum of RM4,000,000.00 were payments for the balance purchase price due under the SPA. The 2nd Defendant on the other hand contended that the payments were for a different subject property which the 1st Defendant was not privy to.
The 1st Defendant took the position that the 2nd Defendant was never authorized to make payments on behalf of the 1st Defendant in so far as the SPA in question was in concern. Furthermore, the 2 cheques were not issued in the name of the 1st Defendant. It was also the 1st Defendant’s position that the SPA had naturally lapsed after 6.11.2016 and in light of the conduct of the parties, the SPA had been abandoned and had come to an end.
The 1st Defendant relied on clause 8 of the SPA and contended that in the event of default (failure to furnish balance purchase price within time), the Plaintiff is only entitled to terminate the SPA as well as to forfeit the deposit paid.
There were various issues that required the court’s determination in the above suit and this included the following:
(i) Whether the SPA was still enforceable?
(ii) Whether the 1st Defendant had breached the SPA?
(iii) Whether the cheques were issued as payment for the balance purchase price of the subject property under the SPA?
(iv) Whether the 2nd Defendant is liable for the alleged dishonoured cheque pursuant to s. 47 of the Bills of Exchange Act 1949?
(v) Whether the Plaintiff was entitled to an order of specific performance against the 1st Defendant to complete the SPA?
Our partner, Ankit R Sanghvi successfully represented and defended the 1st Defendant in the above proceedings. The High Court dismissed the Plaintiff’s claim with costs of RM40,000.00 ordered to be paid by the Plaintiff to the 1st Defendant.
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This Case Update is intended to be informative & is not intended to be nor should be relied upon as a substitute for legal or any other professional advice.