Page 1

Page 2

Malayan Law Journal Reports/1997/Volume 3/SEGAR OIL PALM ESTATE SDN BHD v TAY THO BOK &
ANOR - [1997] 3 MLJ 211 - 29 May 1997
12 pages
[1997] 3 MLJ 211

SEGAR OIL PALM ESTATE SDN BHD v TAY THO BOK & ANOR
COURT OF APPEAL (KUALA LUMPUR)
SHAIK DAUDSITI NORMA YAAKOB AND MAHADEV SHANKAR JJCA
CIVIL APPEAL NO J-02-508 1996
29 May 1997
Contract -- Rectification -- Sale and purchase of land -- Allegation of fraudulent misrepresentation -- Fraud
did not relate to identify of subject matter of the contract but only to apart of its character -- Whether court
could rectification of the agreement -- Specific Relief Act 1950 s 30
Rescission -- Partial rescission -- Whether attempted partial rescission of an invisible contract amounted to a
total repudiation of the contract -- Constracts Act 1950 s 56(1)
Deposit -- Recovery of -- Repudiation and termination of contract brought by misrepresentation of vendors -Application of doctrine of unjust enrichment -- Whether vendors should be allowed to retain the deposit in the
face of the finding of fraud
The appellants ('the vendors') were the registered proprietors of 65.325 acres of land ('the land'). Several
water pipelines and high tension cables ('the fixtures') tranversed the land ('the reserved land') and took up
17.68 acres of the land.
On 16 May 1988, the respondents ('the purchaser') entered into a sale and purchase agreement ('the
agreement') with the vendors to buy the land and paid a deposit. The agreement provided that the balance of
the purchase price ('the contractual purchase price') had to be paid on or before 16 August 1988. The
purchasers alleged they were fraudulently misrepresented by the vendors and their agents at the time of the
signing of the agreement that the fixtures were outside the land. Upon knowledge that the alleged
representation was untrue, the purchasers, in their letter to the vendors, took the view that they should only
pay a price representing the value of 47.645 acres ('the reduced purchase price') since the reserved land
was being used by third parties. The vendors replied on 9 August 1988 insisting that the land area to be
transferred was 65.325 acres and that if the purchasers did not complete on 16 August as provided by the
agreement, the vendors would exercise their rights under the agreement and forfeit the deposit. On 16
August 1988, the purchasers' solicitors tendered a cheque for the reduced purchase price and demanded
that the vendors transfer the land. The vendors refused. The cheque was returned the following day but the
deposit was forfeited. On 22 October 1988, the purchasers' solicitors unconditionally tendered the full
balance of the contractual purchase price and demanded that the land be transferred to them. The vendors
again refused. The purchasers claimed for the rectification of the agreement (under s 30 of the Specific
Relief Act 1950) to reflect the reduced
1997 3 MLJ 211 at 212
purchase price in order to express the real intention of the parties. The purchasers further claimed for a
decree of specific performance of the rectified contract and damages. However, no special damage was
alleged to have been suffered by the purchasers. The learned judge found as a fact that the vendors had
misrepresented the true location of the fixtures. He further found that this misrepresentation was made
fraudulently in that its objective was to induce the purchasers to enter into the agreement on the basis that
the fixtures were outside the land. However, the learned judge declined to order rectification but instead
ordered that the agreement be performed by the payment of the full balance of the purchase price within one
month from the date of the order. He further ordered the vendors to give the purchasers registrable transfers

Page 3

to the titles within one month from the date of the order. And he ordered that damages be assessed on a date
to be fixed by the deputy registrar. The vendors appealed. Counsel for the purchasers submitted that the
purchasers' avoidance of that part of the contract which could not be performed was in accordance with s
56(1) of the Contracts Act 1950. He argued that the reserved land should be regarded as land to which the
vendors could not make good title and should therefore be taken out of the contract.
Held, allowing the appeal:

1)

1)

It would be erroneous to suppose that, in the circumstances of this case, s 30 of the Specific
Relief Act 1950 had any application. A contract may only be rectified to express the intention of
both parties to the agreement. Illustration (a) to s 30 sets out the appropriate parallel. Here, the
contract was for the transfer of the titles containing 65.325 acres. Both parties intended to buy
the land. The purchasers' claim for rectification was that they should only buy and/or pay for
47.645 acres. In other words, 17.68 acres should be taken out of the agreement. However, the
vendors never intended to sell only 47.645 acres. Nor for that matter did the purchasers intend
originally to buy 47.645 acres. The fraud in this case did not relate to the identity of the subject
matter of the contract, but only to a part of its character. The reliance on s 30 of the Specific
Relief Act 1950 was therefore wholly misplaced (see pp 219I and 220A--B).
The attempt at partial rescission was also misconceived. In this case, the attempted partial
rescission on completion day amounted to a total repudiation of the contract. It was therefore
quite wrong to extend time as the learned judge did and order specific performance.

The words, '... the contract, or so much of it as has not been performed...' in s 56(1) of the Contracts Act
1950 refers to the contract to transfer the whole of the 65.325 acres of the land. In
1997 3 MLJ 211 at 213
the result, if the purchasers were purporting to act under this section, they had to avoid the whole of the
contract.
Therefore, it was a fallacy that the purchasers were legally entitled to a partial rescission of an indivisible
contract. What was totally overlooked was that if the contract was to be performed at all, it must result in the
transfer of the whole 65.325 acres (see pp 220I, 221I and 222D); Stickney v Keeble [1915] AC 386 followed;
Topfell Ltd v Galley Properties Ltd [1979] 2 All ER 388 and Yap Hong Too & Anor v Wong Ah Mei & Anor
[1977] 1 MLJ 545 distinguished.

1)

The purchasers' repudiation was accepted by the vendors when they terminated the contract
on 16 August 1988. This situation was brought about by the misrepresentation of the vendors.
For the vendors to retain the deposit in the face of the finding of fraud would be an unjust
enrichment which could not be permitted. In accordance with the purchasers' alternative prayer,
the deposit was ordered to be refunded with interest at 8%pa from date of filing of writ up to
realization.

No separate award for damages was made because none was pleaded or proven in the court below.
Rescission and damages for deceit for fraudulent misrepresentation may be cumulative remedies but
recovery under either head requires proper pleadings and proof. The purchasers' counsel closed his case
without providing either and it would not be right to reopen the issue of damages to be assessed as was
done here (see pp 222I and 223A--B).
Bahasa Malaysia summary
Perayu-perayu ('penjual') adalah pemilik berdaftar 65.325 ekar tanah ('tanah tersebut'). Beberapa talian paip
air dan kabel tegangan tinggi ('lekapan tersebut') merintangi tanah tersebut ('tanah rizab tersebut') dan
mengambil 17.68 ekar tanah tersebut.
Pada 16 Mei 1988, penentang-penentang ('pembeli') mengikat suatu perjanjian jual beli ('perjanjian tersebut')
dengan penjual untuk membeli tanah tersebut dan membayar deposit. Perjanjian tersebut memperuntukkan
bahawa baki harga beli ('harga beli kontraktual') hendaklah dibayar pada atau sebelum 16 Ogos 1988.

Page 4

Pembeli mendakwa bahawa mereka telah disalah nyata secara fraud oleh penjual dan ejen mereka pada
masa menandatangani perjanjian tersebut bahawa lekapan tersebut berada di luar tanah tersebut. Apabila
mengetahui bahawa representasi yang dikatakan itu adalah tidak benar, pembeli, dalam surat mereka
kepada penjual, berpendapat bahawa mereka hanya perlu membayar harga yang mewakili nilai 47.645 ekar
('harga beli yang dikurangkan') kerana tanah rizab tersebut sedang digunakan oleh pihak ketiga. Penjual
menjawab pada 9 Ogos 1988 menegaskan bahawa kawasan tanah yang akan dipindahmilik adalah 65.325
ekar dan bahawa jika pembeli tidak menyempurnakan pada 16 Ogos seperti yang diperuntukkan oleh
1997 3 MLJ 211 at 214
perjanjian tersebut, penjual akan melaksanakan hak mereka di bawah perjanjian tersebut dan melucuthak
deposit itu. Pada 16 Ogos 1988, peguamcara pembeli menyerahkan cek bagi harga beli yang dikurangkan
dan menuntut bahawa penjual memindahmilik tanah tersebut. Penjual menolak. Cek tersebut dikembalikan
pada hari berikutnya tetapi deposit itu dilucuthak. Pada 22 Oktober 1988, peguamcara pembeli menyerahkan
tanpa syarat baki penuh harga beli kontraktual dan menuntut bahawa tanah tersebut dipindahmilik kepada
mereka. Penjual sekali lagi menolak.
Pembeli menuntut pembetulan perjanjian tersebut (di bawah s 30 Akta Relief Spesifik 1950) untuk
memasukkan harga beli yang dikurangkan demi untuk menyatakan niat sebenar pihak-pihak. Pembeli
selanjutnya menuntut dekri pelaksanaan spesifik kontrak yang dibetulkan dan ganti rugi. Bagaimana pun,
tiada ganti rugi khas dikatakan telah dialami oleh pembeli.
Hakim yang bijaksana mendapati sebagai suatu fakta bahawa penjual telah menyalah nyata lokasi sebenar
lekapan tersebut. Beliau selanjutnya mendapati bahawa salah nyata ini dibuat secara fraud dalam mana
objektifnya adalah untuk mendorong pembeli untuk mengikat perjanjian atas dasar bahawa lekapan tersebut
berada di luar tanah tersebut. Bagaimana pun, hakim yang bijaksana menolak untuk memerintahkan
pembetulan tetapi sebaliknya memerintahkan bahawa perjanjian tersebut dilaksanakan dengan pembayaran
penuh baki harga beli dalam masa sebulan dari tarikh perintah tersebut. Dan beliau memerintahkan bahawa
ganti rugi ditaksirkan pada suatu tarikh yang akan ditetapkan oleh timbalan pendaftar. Penjual membuat
rayuan.
Peguam bagi pihak pembeli menghujahkan bahawa pengelakan pembeli daripada bahagian kontrak itu yang
tidak boleh dilaksanakan adalah selaras dengan s 56(1) Akta Kontrak 1950. Beliau menghujahkan bahawa
tanah rizab tersebut sepatutnya dianggap sebagai tanah yang mana penjual tidak mempunyai hakmilik yang
baik dan oleh itu patut dikeluarkan daripada kontrak itu.
Diputuskan, membenarkan rayuan:

2)

2)

Adalah salah untuk menganggap bahawa, dalam keadaan kes ini, s 30 Akta Relief Spesifik
1950 adalah terpakai. Sesuatu kontrak hanya boleh dibetulkan untuk menjelaskan niat keduadua pihak kepada perjanjian tersebut. Penjelasan (a) kepada s 30 menyatakan persamaan
yang sesuai. Di sini, kontrak adalah untuk pemindahan hakmilik yang mengandungi 65.325
ekar. Kedua-dua pihak berniat untuk membeli tanah tersebut. Tuntutan pembeli untuk
pembetulan adalah bahawa mereka sepatutnya membeli dan/atau membayar untuk 47.645
ekar. Dengan lain perkataan, 17.68 ekar patut dikeluarkan daripada perjanjian tersebut.
Bagaimana pun, penjual tidak pernah berniat untuk menjual hanya 47.645 ekar. Begitu juga
pembeli tidak berniat pada asalnya untuk membeli 47.645 ekar. Fraud dalam kes ini tidak ada
1997 3 MLJ 211 at 215
kaitan dengan identiti perkara subjek kontrak, tetapi hanya kepada sebahagian sifatnya. Oleh
itu, penggunaan s 30 Akta Relief Spesifik 1950 adalah sama sekali tidak kena pada tempatnya
(lihat ms 219I dan 220A--B).
Cubaan untuk pembatalan sebahagian adalah juga satu tanggapan salah. Dalam kes ini,
cubaan untuk pembatalan sebahagian pada hari penyempurnaan sama seperti penolakan
sepenuhnya kontrak tersebut. Oleh itu adalah agak salah untuk melanjutkan masa seperti yang
dilakukan oleh hakim yang bijaksana dan memerintahkan pelaksanaan spesifik.

Perkataan-perkataan, '... kontrak itu, atau sebanyak mana daripadanya yang belum dilaksanakan ... ' dalam
s 56(1) Akta Kontrak 1950 merujuk kepada kontrak untuk memindahmilik keseluruhan 65.325 ekar tanah

Page 5

tersebut. Oleh yang demikian, sekiranya pembeli bertujuan untuk bertindak di bawah seksyen ini, mereka
perlu mengelak daripada keseluruhan kontrak itu.
Oleh itu, adalah suatu falasi bahawa pembeli adalah berhak di sisi undang-undang kepada pembatalan
sebahagian daripada kontrak yang tidak boleh dibahagikan itu. Apa yang tidak diambil kira langsung adalah
bahawa jika kontrak itu hendak dilaksanakan, ianya mesti berakhir dengan pemindahan keseluruhan 65.325
ekar (lihat ms 220I, 221I dan 222D); Stickney v Keeble [1915] AC 386 diikut; Topfell Ltd v Galley Properties
Ltd [1979] 2 All ER 388 dan Yap Hong Too & Anor v Wong Ah Mei & Anor [1977] 1 MLJ 545 dibeza.

2)

Penolakan pembeli telah diterima oleh penjual apabila mereka menamatkan kontrak itu pada
16 Ogos 1988. Situasi ini timbul oleh kerana salah nyata penjual. Berhadapan dengan
penemuan fraud, adalah suatu pengayaan tidak adil jika penjual menyimpan deposit itu dan ini
tidak boleh dibenarkan. Selaras dengan tuntutan alternatif pembeli, deposit diperintahkan
dikembalikan dengan faedah 8% setahun daripada tarikh pemfailan writ sehingga realisasi.

Tiada award berasingan untuk ganti rugi dibuat kerana tidak satu pun diplid atau dibuktikan di mahkamah
bawah. Pembatalan dan ganti rugi untuk penipuan bagi salah nyata fraud mungkin merupakan remedi
kumulatif tetapi mendapat kembali di bawah mana-mana tajuk memerlukan pliding dan bukti yang wajar.
Peguam pembeli menutup kesnya tanpa memperuntukkan yang mana satu dan adalah tidak betul untuk
membuka kembali isu ganti rugi untuk ditaksirkan seperti yang dilakukan di sini (lihat ms 222I dan 223A-B).).]
Notes
For cases on rectification, see 3 Mallal's Digest (4th Ed, 1994 Reissue) paras 2009-2011.
For cases on rescission, see 3 Mallal's Digest (4th Ed, 1994 Reissue) paras 2017-2047.
1997 3 MLJ 211 at 216
For cases on deposit, see 3 Mallal's Digest (4th Ed, 1994 Reissue) paras 1496-1506.
Cases referred to
Stickney v Keeble 1915 386 AC (folld)
Topfell Ltd v Galley Properties Ltd 1979 2 All ER 388 (distd)
Yap Hong Too & Anor v Wong Ah Mei & Anor 1977 1 MLJ 545 (distd)
Legislation referred to
Contracts Act 1950 s 56(1)
Specific Relief Act 1950

ss 30,

32

Appeal from
Civil Suit No 22-417 of 1988 (High Court, Johor Bahru)
Pushpa Menon and A Nawamani (TS Chong & Co) for the appellants.
M Pathmanathan, Gan Techiong and Shanti Pathmanathan (Gan & Lim) for the respondent.
Gan Huey Piin (Gulam & Wong) watching brief for the Public Utilities Board, Singapore.
MAHADEV SHANKAR JCA
The appellants ('the vendors') were the registered proprietors of 65.325 acres of land ('the land') comprised
in 11 separate titles, all in the Mukim of Kota Tinggi, Johor. On 16 May 1988, the respondents ('the

Page 6

purchasers') entered into a sale and purchase agreement ('the agreement') with the vendors to buy the land.
The price agreed was RM7,000 per acre. The total purchase price was RM457,275. As agreed, the
purchasers paid a 10% deposit amounting to RM45,727.50. The completion date was fixed for 16 August
1988. Clause 16 of the agreement provided that time was to be of the essence of the agreement. Therefore,
the balance purchase price of RM411,547.50 had to be paid on or before 16 August 1988.
Before the purchasers executed the agreement, they were taken to see the land by two persons said to be
the vendors' agents. A pipeline reserve to facilitate the passage of three very large water pipes belonging to
the Public Utilities Board Singapore ('the PUB') traversed seven out of the eleven titles. These pipes carried
water from Kota Tinggi reservoirs to Singapore. Alongside this reserve but affecting all 11 titles was a
transmission cable reserve of the Tenaga Nasional Bhd ('the TNB') (formerly the Lembaga Letrik Negara ('the
LLN')). This reserve was utilized for high tension cables and the pylons ('the fixtures') used to carry them.
Both the water pipes and the fixtures were so visible that it was impossible for anybody in the vicinity not to
notice them.
However, at the time of the visit, the vendors' agents are said to have actively represented to the purchasers
that the fixtures were in fact outside the land. At or about the time the agreement was executed, this
1997 3 MLJ 211 at 217
representation was repeated by the vendors' agents in the presence of the parties and the vendors did not
do anything to correct the representation.
The titles to the 11 lots comprising the land did not show any memorial registered thereon relating to these
reserves.
The purchasers only took steps to check out the location of the fixtures after they executed the agreement.
Their surveyor advised them that contrary to the representation, the reserves and the fixtures thereon did in
fact traverse the land. The pipeline reserves took up 4.08 acres. The TNB's reserve took up a further 13.60
acres, making 17.68 acres in all.
The purchasers therefore took the view that they should only pay a price representing the value of 47.645
acres, since in their view, the 17.68 acres were being used by the PUB and the TNB. On 4 August 1988, the
purchasers' solicitors wrote to the vendors' solicitors that the actual area of the land was less than 65.325
acres and requested that the completion date be postponed until a meeting had been held to resolve the
discrepancy. The vendors replied on 9 August 1988 insisting that the land area to be transferred was 65.325
acres and that if the purchasers did not complete on 16 August as provided by the agreement, the vendors
would exercise their rights under cl 10 of the agreement and forfeit the deposit.
On 13 August 1988, the purchasers' solicitors replied insisting that the purchasers were only prepared to pay
for 47.645 acres which works out to RM333,515. After deducting the deposit of 10%, they contended that
completion should take place on the payment of the nett balance of RM287,787.50. The vendors' solicitors
did not respond.
On 16 August 1988, the purchasers' solicitors tendered a cheque for RM287,787.50 and demanded that the
vendors transfer the 11 titles. The vendors refused. The cheque was returned the following day but the 10%
deposit was forfeited.
Nothing happened after this until 22 October 1988 when the purchasers' solicitors unconditionally tendered
the full balance of the contractual purchase price of RM411,547.50 and demanded that the land be
transferred to them. The vendors refused.
After another delay of more than two months, the purchasers filed this writ on 28 December 1988.
The facts hereinbefore set out were pleaded in the amended statement of claim and buttressed by an
allegation that the vendors by their servants or agents had dishonestly concealed from the purchasers before
the agreement was executed that the water pipes and the transmission lines aforesaid were in fact on the
land and that the PUB and the LLN had legally installed them there in circumstances of which the vendors
had actual knowledge. In a nutshell, the purchasers were alleging that the agreement was induced by
fraudulent misrepresentation.

Page 7

The relief prayed for however was that the agreement should be rectified so that the total purchase price
should read RM333,515 'to express the real intention of the parties' and that the court should decree specific
performance of the contract rectified as prayed for. Damages were also prayed for. There was an alternative
prayer reading as follows:
1997 3 MLJ 211 at 218

(iv) Alternatively, a declaration that the agreement dated 16 May 1988 may be rescinded and the
defendant refund the deposit plus damages: ....

The amended statement of claim does not allege any special damage suffered by the purchasers. Nor does
the body of the statement of claim allege that by reason of the vendors' conduct complained of, the
purchasers suffered any damage, and if so what that damage was. The claim for 'damages' thus stands
alone and isolated in the prayer.
The entire evidence of the purchasers was directed to show that the vendors had fraudulently
misrepresented the location of the water pipes and the transmission lines as being outside the boundary of
the land. No evidence whatsoever was led to show that the purchasers had suffered any actual damage
either special or general and if so what the monetary value of that damage was. This was the position when
the purchasers' counsel closed the purchasers' case on 29 March 1996.
Consequently, the vendors' evidence was also directed to rebutting the allegation of fraudulent
misrepresentation and asserting that having put the purchasers on written notice on 9 August 1988 that the
vendors insisted on completion taking place on 16 August and that forfeiture would follow failure to complete,
the vendors were entitled to act has they had done.
In his final submission in the court below, counsel for the purchasers said nothing about any claim for
damages. He confined himself to claiming that the agreement be rectified so that the area to be paid for
should be 61.245 acres.
The rationale for the reduction was that the evidence suggested that the PUB had acquired the 4.08 acres
comprised in their reserve from the vendors' predecessors in title, Messrs Sin Hoa Realty Co Ltd, and had
paid the purchase price through the collector of land revenue. Notwithstanding that there was nothing on the
original or duplicate titles to show this acquisition, it was submitted that the PUB should be regarded as the
legal owners of their reserve. We would prefer to express no opinion on this aspect of the matter. As for the
LLN reserve, there was no suggestion that title to the land comprised therein had passed to the LLN. This
portion was 13.60 acres. In effect, therefore, the purchasers' contention in their final submission was that the
contract should be rectified so that the area purchased should be 61.245 acres at RM7,000 per acre making
RM428,715.
These submissions were made in the face of an insurmountable obstacle. The register documents of title
(each of which is indivisible in the absence of sub-division) was for 65.325 acres in total. Any conveyance of
these 11 titles would have resulted in the purchasers becoming the registered proprietors of 65.325 acres of
land as per the titles. The purchasers at the end of the day, were asking the court to legitimize a transaction
whereby they would pay for 61.245 acres but would acquire legal title to 65.325 acres as per the agreement.
1997 3 MLJ 211 at 219
In a long and careful judgment, the learned judge found as a fact that the vendors had misrepresented the
true location of the PUB and the LLN fixtures. He further found that this misrepresentation was made
fraudulently in that its objective was to induce the purchasers to enter into the agreement on the basis that
the fixtures were outside the land. On the available material, we are not disposed to disturb this finding.
However, in deciding what the proper remedy was, the trial judge's difficulties may well have been
precipitated by the manner in which the case was presented and argued in the court below.
He declined to order rectification but instead ordered that the agreement be performed by the payment of the
full balance of the purchase price within one month from the date of the order. He further ordered the vendors
to give the purchasers registrable transfers to all 11 titles within one month from the date of the order. And he

Page 8

ordered that damages be assessed on a date to be fixed by the deputy registrar. Upon completion of the
transfers, he suggested that the purchasers could take up matters with the relevant land authorities to make
the relevant entries on the titles to reflect the existence of the PUB and LLN reserves.
These orders are not precisely worded but in effect the learned trial judge ordered specific performance of
the agreement in spite of the fact that the purchasers had elected to refuse to perform the agreement in
accordance with its terms. Furthermore by inference, the judge had literally rewritten the contract by
overriding its specific term that time was of the essence. Damages were ordered to be assessed although no
evidence had been led of any damages before the purchasers closed their case, and no issue as to
damages had been raised in the purchasers' counsel's final submission. Neither the PUB nor the LLN were
parties to the action and their rights, if any, to be put on the title was not a matter to be taken for granted. The
registered owners may well have been entitled to resist such a move, inter alia, because of the long delay
and the court should not have pre-empted their rights.
The vendors appealed to us. There was no cross-appeal by the purchasers. So they have elected to have
the High Court order left as it is.
After raising the question as to the circumstances in which a court can order rectification of a contract, the
learned trial judge set out ss 30 and 32 of the Specific Relief Act 1950. He then went to analyse the
evidence, rule out the need to entertain any suggestion of mutual mistake but found that the contract was
induced by fraudulent misrepresentation. Unfortunately, he did not then go on to consider whether
rectification could be ordered. All he said after ordering specific performance of the agreement was:
I do not think under the circumstances that I should order rectification of the agreement.

With respect, it would be erroneous to suppose that, in the circumstances of this case, s 30 of the Specific
Relief Act 1950 had any application. A contract may only be rectified to express the intention of both parties
to
1997 3 MLJ 211 at 220
the agreement. Illustration (a) to s 30 sets out the appropriate parallel. Here, the contract was for the transfer
of the 11 titles containing 65.325 acres. Both parties intended to buy the land. The purchasers' claim for
rectification was that they should only buy and/or pay for 47.645 acres. In other words, 17.68 acres should be
taken out of the agreement. However, the vendors never intended to sell only 47.645 acres. Nor for that
matter did the purchasers intend originally to buy 47.645 acres. The fraud in this case did not relate to the
identity of the subject matter of the contract, but only to a part of its character. The reliance on s 30 of the
Specific Relief Act 1950 was therefore wholly misplaced. Unfortunately, neither counsel nor indeed the trial
judge went into the real significance of the passage cited from Chesire, Fifoot and Furmston's Law of
Contract at p 430. We will repeat it here with the necessary emphasis:
It is a fundamental principle that the effect of a misrepresentation is to make the contract voidable and not void. This
means that the contract is valid unless and until it is set aside by the representee. On discovering the
misrepresentation, the representee may elect to affirm or rescind the contract. (Emphasis added.)

It is elementary law that a party to a contract, who alleges fraud, cannot avoid one part of the contract and
affirm another, unless the parts are so severable as to be independent contracts. This proposition can be
found in Kerr on Fraud and Mistake (7th Ed) pp 515 and 517 where the cases are set out. See also Vendor
and Purchaser by RM Stoneham (1994) at p 815. The same proposition is repeated on The Indian Contract
and Specific Relief Acts (9th Ed) by Pollock and Mulla at p 458 which reads:
... a man cannot rescind a contract in part only, when he decides to repudiate it, he must repudiate it altogether.

Having been put on notice on 9 August 1988 in no uncertain terms, the only option the purchasers had was
either to perform the agreement according to its terms, or repudiate it altogether and sue for damages for
fraud.
The purchasers' attempt in October 1988 to revive the agreement by tendering the full purchase price in
return for transfer was a vain attempt to turn the clock back. We have noted that this tender was unqualified,
and had it been so made on 16 August 1988, it may well have resulted in a waiver of the claim for damages.

Page 9

However, the respective rights and liabilities of the parties in the circumstances of this case must be
determined by what happened on completion day.
The purchasers' refusal on that day to perform the contract in part, was effectively a partial rescission of the
contract by taking out 17.68 acres. The subsequent concession in the purchasers' closing submission to
taking out only 4.08 acres sought to perpetuate the fallacy that the purchasers were legally entitled to a
partial rescission of an indivisible contract. What it totally overlooked was that if the contract was to be
performed at all, it must result in the transfer of the whole of the 65.325 acres.
1997 3 MLJ 211 at 221
In this context, the relevant part of the judgment in the court below reads:
It would seem that failure to observe time fixed by the contract for completion will be looked at upon a different light in
equity if to do so would cause injustice, ie the time fixed by the parties for completion will not be observed if to do so
would cause injustice. The evidence in the instant case shows that the plaintiffs have decided to affirm the agreement
when they decided to complete the purchase of the land by proffering the full balance of the purchase price as agreed
with full knowledge of the facts and misrepresentation. The evidence show that they have paid a deposit of
RM45,725.50 to the defendant which was subsequently forfeited by the latter and that they have incurred further
expenses when they engaged the services of PW3 to survey the land. (Emphasis added.)

This is an error because far from affirming the contract on completion day, the purchasers repudiated it. The
vendors' acceptance of this repudiation brought the contract to an end. The cheque for the reduced amount
was returned the very next day and the deposit was forfeited. The purported affirmation in October 1988
could not revive the agreement.
Neither party cited Stickney v Keeble [1915] AC 386 in the court below. Indeed, it was never the purchasers'
claim or submission that time should be extended because the agreement should be specifically performed
in accordance with its terms. The trial judge's reliance on this case was, with respect, misplaced because in
that case there was no express provision that time should be of the essence. Nor was that case an action for
specific performance or rectification. It concerned a purchaser who was claiming for the return of his deposit
where the vendor was guilty of unnecessary delay (see the headnote to the case). We think we should set
out here the passages from the judgment of Lord Parker of Waddington which immediately follows the two
paragraphs set out in the judgment of the trial judge, where Lord Parker said (see [1915] AC 386 at pp 415416):
This is really all that is meant by and involved in the maxim that in equity the time fixed for completion is not of the
essence of the contract, but this maxim never had any application to cases in which the stipulation as to time could not
be disregarded without injustice to the parties, when, for example, the parties, for reasons best known to themselves,
had stipulated that the time fixed should be essential, or where there was something in the nature of the property or the
surrounding circumstances which would render it inequitable to treat it as a non-essential term of the contract.
It should be observed, too, that it was only for the purposes of granting specific performance that equity in this class of
case interfered with the remedy at law. A vendor who had put it out of his power to complete the contract, or had by his
conduct lost the right to specific performance, had no equity to restrain proceedings at law based on the nonobservance of the stipulation as to time. (Emphasis added.)

What is said in this case about the vendor applies equally to the purchaser. In our case, the attempted partial
rescission on completion day amounted to a total repudiation of the contract. It was therefore quite wrong to
extend time and order specific performance.
1997 3 MLJ 211 at 222
Before us En Pathmanathan, counsel for the purchasers submitted that the purchasers' avoidance of that
part of the contract which could not be performed was in accordance with s 56(1) of the Contracts Act 1950.
He strenuously argued that the PUB reserve and the LLN reserve should be regarded as land to which the
vendors could not make good title and should therefore be taken out of the contract. With respect, we think
this attempt at partial rescission was misconceived. Section 56(1) reads:
56(1) When a party to a contract promises to do a certain thing at or before a specified time, or certain
things at or before specified times, and fails to do any such thing at or before the specified time, the
contract, or so much of it as has not been performed, becomes voidable at the option of the promisee,

Page 10

if the intention of the parties was that time should be of the essence of the contract. (Emphasis
added.)

The words, '... the contract, or so much of it as has not been performed ...' refers to the contract to transfer
the whole of the 65.325 acres of the land. In the result, if the purchasers were purporting to act under this
section, they had to avoid the whole of the contract. In the circumstances of this case, 'avoidance' is
indistinguishable from 'repudiation' or 'rescission'.
The purchasers' counsel relied very heavily on Topfell Ltd v Galley Properties Ltd [1979] 2 All ER 388. This
decision which is at best of persuasive value is readily distinguishable. A man bought a house in an auction
for 3,850. In doing so, he relied on the auctioneer's representation that he would be given vacant possession
of the ground floor. In fact, there was a statutory notice which the defendant knew about prohibiting
occupation of the ground floor because the upstairs was already occupied. So he sued for specific
performance with an abatement of the purchase price, and succeeded. This case was not cited in the court
below. Whereas Topfell Ltd affirmed the entire contract and insisted it be performed, our purchasers
repudiated the contract. Besides, there was no provision in that contract that time was to be of the essence.
The purchasers' counsel belatedly also handed us Yap Hong Too & Anor v Wong Ah Mei & Anor [1997] 1
MLJ 545. He must have thought it would support the action of the trial judge in overriding the 'time of the
essence' clause. This case is also readily distinguishable both on the facts and the law. The vendors by their
own default made it impossible for the purchasers to pay the full balance of the purchase price until the lapse
of two days from completion day. There was no question of repudiation by the purchasers. The court was
giving relief against forfeiture.
Very different principles of law are at work in our case. Had the trial judge been properly addressed on the
law, he would not have ordered specific performance of the agreement because this remedy was no longer
open to the purchasers and in any case there was no such relief requested in the pleadings. Consequently,
the question of extending time for completion also did not arise.
Finally, there is the question of the deposit. The purchasers' repudiation was accepted by the vendors when
they terminated the contract on 16 August 1988. This situation was brought about by the
1997 3 MLJ 211 at 223
misrepresentation of the vendors. For the vendors to retain the deposit in the face of the finding of fraud
would be an unjust enrichment which we cannot permit. In accordance with the purchasers' alternative
prayer, we therefore ordered it be refunded with interest at 8%pa from date of filing of writ on 28 December
1988 up to realization. We did not make any separate award for damages because none was pleaded or
proven in the court below. Rescission and damages for deceit for fraudulent misrepresentation may be
cumulative remedies but recovery under either head requires proper pleadings and proof. The purchasers'
counsel closed his case without providing either and we do not think it right to reopen the issue of damages
to be assessed as was done here.
The purchasers' caveats had to go. In allowing this appeal, we did not order costs because we disapproved
the vendors' manner of inducing the purchasers to enter into this contract. If they were going to rely upon the
rule of caveat emptor, they should have made that clear to the purchasers - as is where is - instead of
making positive assertions which they ought to have known were false. However, we directed the security
deposit for costs paid into court to be refunded to the vendors. We hope that the measure of interest we have
ordered will go some way to assuaging any sense of grievance the purchasers may feel about how all this
has ultimately turned out.
Appeal allowed.

Reported by Loo Lai Mee