Ching Yik Development Sdn Bhd - vs Setapak Heights Development Sdn Bhd

FACTS OF THE CASE The parties to this appeal entered into an agreement dated 13 October 1991 (the first agreement), for the sale and purchase of a certain piece of property. The respondent, as owner of the property, was the vendor and the appellant was the purchaser. The agreement recites the purchase price to be RM4,990,000 . The agreement requires the respondent to deliver up duly executed memorandum of transfer to the appellants solicitors to be held by them pending the conclusion of the sale. Such a provision is commonplace in the context of our conveyancing practice. It is merely to ensure that there is no undue delay in having the transfer adjudicated by the collector of stamp duty to ascertain the amount of duty payable, so that the instrument may be properly stamped and in readiness for presentation to the registering authority when the time for completion arrives. On 12 December 1991 the parties entered into a second agreement (the second agreement) which stipulated for an increase in the purchase price of RM3m. In consequence of the second agreement, the appellant was obliged to pay a total purchase price of RM7,990,000. However, the appellant contended that although the second agreement was voluntarily entered into and executed, the additional sum of RM3m was never meant to be paid. The appellant had, on 7 June 1991, that is to say, even before the first agreement had been executed, paid the respondent a sum of RM250,000 as a deposit for the purchase of the property in question. The appellant also entered a private caveat pending the completion of the sale to it. The balance of the purchase price was due and payable not later than 30 July 1991. The first agreement provides that the balance is to be paid by the appellant within four months from the date of the notification of the development order for the said project. COURT HELD According to the facts of the present appeal, it is not difficult to recognize that, having regard to the terms of the first agreement as a whole, the stipulation as to the payment of the purchase price is a fundamental term. Equally, it is plain that the obligation to deliver the executed instrument of transfer is merely a subsidiary term, the non-performance of which does not relieve the appellant from his obligations under the contract. The learned judicial

commissioner, therefore, rightly gave effect to the principles that govern this case and held the appellants failure to pay the purchase price to be fatal to its case.

LEGAL OPINION The legal principles laid down in the case is first, where the term breach is fundamental to the contract, the innocent party is entitled to treat himself as discharged from further obligations under it. Second, where the term breached is only subsidiary or minor in nature, the innocent party may not treat himself as discharged under the contract but may recover damages for non-performance of the subsidiary term.