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DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR (BAHAGIAN RAYUAN DAN KUASA-KUASA KHAS)

RAYUAN SIVIL NO. R1-12-1011-2004

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ANTARA KAN YOW KHEONG DAN PERAYU

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LIM SI SOON @ LIM SOO LOON

RESPONDEN

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[Dalam Mahkamah Sesyen Di Kuala Lumpur No. Saman S3-52-12363-2000

Antara Plaintif

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Lim Si Soon @ Lim Soo Loon

Dan Kan Yow Kheong Defendan]

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GROUNDS OF DECISION The Appellant/Defendant (the Defendant) has appealed against

I.

the decision of the learned Sessions Court Judge (the SCJ) in allowing the Respondent/Plaintiffs (the Plaintiff) claim with costs.
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After the Court has considered the Written Submissions made on behalf of the Defendant and Plaintiff (Encls.16 and 19 respectively),
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and the oral submissions thereto, the Court on 13.4.2009 allowed the appeal of the Defendant with costs. The Plaintiff has now appealed. Essentially the Plaintiffs claim against the Defendant is for

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earnest deposit in the sum of RM49,000.00 which is 2% of the

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purchase price of the Plaintiffs property at No.21, Jalan Penaga, Bukit Bandaraya, Bangsar, Kuala Lumpur which the Plaintiff alleged was payable by the Defendant based on a letter of offer dated 25.7.2000 (p.126 of the Appeal Record (AR)) which the Defendant had signed. Basically, the Defendants defence to the Plaintiffs claim is that

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3.

there is no acceptance of the letter of offer i.e. there is no concluded contract; but there was a counter-offer by the Defendant when he

refused to give the earnest deposit of RM49,000.00 directly to the Vendor as per item 5(a) of the letter of offer but instead agreed to leave
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the said amount with Rejey Properties as stakeholder while waiting for the approved plans for the renovations to the property be shown to him and the letter of offer was amended when item 12 was added Approved Building Plan should be given upon signing S&P. Thereafter the cheque of RM49,000.00 issued in the name of Rejey

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Properties was given by the Defendant to the real estate agent, Mr. Jayakumaran a/l Govindasamy before signing the amended letter of offer. These terms were not agreed by the Plaintiff and there was a rejection of the counter-offer, the Defendants cheque was returned and the deal was called off.

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4.

The Grounds of Judgment of the learned SCJ is found at pp.108-

114 AR.

5.

Based on the Memorandum of Appeal (pp.120-123 AR) the

Defendants appeal is primarily premised on the following grounds that the learned SCJ has erred on the law and facts namely (i)
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Perayu telah memasukkan syarat-syarat baru ke dalam tawaran

Responden iaitu meminta agensi perumahan, Rejey Properties bertindak sebagai pemegang amanah (stakeholder) sehingga Responden mengemukakan pelan yang diluluskan bagi harta berkenaan, yang merupakan syarat-syarat baru iaitu satu tawaranbalas yang tidak diterima oleh Responden;

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(ii)

Perayu telah menolak tawaran Responden dan Perayu gagal

mematuhi syarat-syarat Responden dalam tawaran Responden dan seterusnya tiada penerimaan atau kontrak yang disempurnakan di antara Perayu dan Responden;

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(iii)

Apabila agen Responden, Rejey Properties memulangkan cek Perayu ini adalah satu penolakan oleh Responden sendiri dan seterusnya tiada kontrak yang wujud di antara Perayu dan Responden;

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(iv)

Responden tidak mengalami kerugian dan gagal membuktikan apa

jua kerugian terutama sekali apabila harta Responden telah dijual kemudiannya kepada pembeli lain tanpa apa jua kekurangan dalam harga jualan;

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(v)

Langsung tiada balasan bagi tuntutan Responden di sini. Responden kini tidak boleh menjual harta tersebut kepada Perayu dan justeru itu tiada balasan untuk bayaran RM49,000.00 yang dituntut. Responden sedang memperolehi keuntungan dua kali melalui tuntutan di sini. Tuntutan Responden dalam kes ini sebenarnya adalah satu tuntutan specific performance ke atas surat tawaran Responden dan adalah di luar bidangkuasa Mahkamah Sesyen.

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(vi)

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6.

In her Grounds of Judgment (pp.113-114 AR), the learned SCJ It was very clear that the Defendant had agreed to the terms in the letter of

stated offer, by signing his acceptance on the said letter of offer. The Defendant had told the agent that he would not sign the letter of offer until a copy of the approved plans were given. However the Defendant had proceeded on 14thAugust 2000 to sign the letter of offer dated 25th July 2000 signifying acceptance.
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The Defendant had stated clearly:

I Kan Yow Kheong hereby accept the offer for the sale of above property on
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the terms and conditions as contained in letter dated 25th July 2000. The Defendant had signed acceptance on 14th August 2000. Clearly the contract was concluded and the Defendant by signing the letter of offer had bound himself to pay the earnest deposit of RM49,000 to the vendor.

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7.

It is not disputed the letter of offer is in respect of the sale of the 4

storey bungalow by the Plaintiff for the purchase price of RM2,450 million. The letter of offer was prepared by DW2 on behalf of the Plaintiff (PW1). Amongst the terms and conditions of the offer included payment terms which in item 5(a) reads 20

a) 2% of the purchase price i.e. RM49,000.00 as earnest deposit to vendor on signing this letter of offer. 7.1 There was an additional item 12 in handwriting inserted by DW2

and initialed by him upon the request of the Defendant (DW1) which reads 25

12.

Others : Approved Building Plan should be given upon

signing S&P.

8.

The Plaintiff (PW1) in evidence in chief said the Defendant was

to confirm his acceptance of the terms of the offer by signing on the

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letter of offer and return it to Rejey Properties and make a payment of RM49,000.00 to the Plaintiff as vendor (p.29 AR). 8.1 DW1 in evidence in chief testified that when he viewed the said

house he noticed there were substantial renovations done to the said house (which was admitted by PW1) and he was concerned whether
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approvals had been obtained for the same. DW1 said that he would not consider purchasing the house if there were no approved plans for

the renovations. At an appointment with the Plaintiff and DW2, the Defendant stated the Plaintiff showed her some plans which he noticed were different from the existing building and did not have the DBKL approval endorsed and thus he requested the Plaintiff to furnish him with the approved plans. Towards the latter half of July 2000 when

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DW2 called him informing him that the Plaintiff was anxious to conclude the sale of the said house and if he was serious he should pay the earnest deposit to the Plaintiff, the Defendant still maintained the stand that he needed to have sight of the approved plans. DW2 told him that the plans were not available at that time and the Plaintiff

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had asked to assist to get copies of the same from DBKL. 8.2 Thereafter in early August 2000, DW2 showed him the letter of

offer and informed him that the Plaintiff wanted the earnest deposit. But he maintained the same position on the approved plans of which DW2 told him that he had applied to DBKL to search for the approved
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plans. After reading the letter of offer he informed DW2 he could not agree to item 5(a) (see paragraph 6 above) and the last paragraph of the letter of offer which reads If you are agreeable, kindly confirm acceptance on the duplicate of this
letter and returning the same to us together with earnest deposit equivalent to RM49,000.00 and payable to the vendor.

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DW1 said that he counter-proposed the following: (a)

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that I pay the earnest deposit to Mr. Jayakumarans real estate firm, Rejey Properties, as a stakeholder; and that the approved plans for the house are given to me at the time of execution of the Sale and Purchase Agreement.

(b)

8.3
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DW2 informed him he would enquire from the Plaintiff regarding

the counter-proposal and if the Plaintiff was not agreeable to the arrangement, the cheque, no. HLB 67621 and the offer letter would be returned to him. DW1 said based on the assurance he issued a cheque
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made out to Rejey Properties and item 12 was inserted by DW2 upon his request. DW2 told him a couple of days later the Plaintiff was not agreeable with his counter-proposal and that the Plaintiff insisted on the earnest deposit to be paid to her and he was unwilling to commit on the building plans. Hence the Defendant told DW2 he was not prepared

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to purchase the said house and requested for a return of the cheque and the letter of offer. DW2 returned the cheque on the same day but said that he would return the letter of offer later as it was kept at his office. However the Defendant said the original letter of offer was taken by the Plaintiff from his staff without his consent when she came to his

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office. According to the Defendant, the Plaintiff did not sign the letter of offer and neither was the copy tendered to Court by the Plaintiff (pp.126-128 AR). Further, DW2 did not ask for a replacement cheque in the Plaintiffs name as the Plaintiff did not agree to his counter proposal.

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9.

DW2 testified regarding the Defendants need for the approval

plans incorporating all the renovations in the house before he considered the purchase; the Plaintiff had been informed by DW2 regarding the Defendants position on the plans and the Plaintiffs
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request for DW2 to get a copy of the plans from DBKL. DW2 immediately informed the Plaintiff of the outcome of his search for the plans at DBKL where he was requested to pay RM40.00 for the plans (p.124 AR) and was told to return within one week for the plans wherein the Plaintiff informed him she was not prepared to wait for DBKLs reply and wanted the Defendant to pay the earnest money immediately, otherwise she would sell to other interested purchasers. DW2 also informed the Defendant of the Plaintiffs insistence on the payment of the earnest money to her and testified regarding the
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Defendants

refusal to pay directly to the Plaintiff pending the

procurement of the approved plans and the counter-proposal by the Defendant and the assurance given by him to the Defendant to return the cheque and letter of offer to the Defendant if the Plaintiff did not agree with the counter-proposal.
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9.1

According to DW2 in this transaction (i) he was the agent for the

Plaintiff; (ii) he had returned the cheque to the Defendant because the Plaintiff has rejected the counter-proposal as the Plaintiff refused to allow his agency to be a stakeholder; and (ii) he did not request the Defendant to replace the cheque in the name of the vendor as the
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issue of replacement did not arise since the parties could not agree on the terms. 9.2 Further, according to DW2 the next day the Plaintiff called at his

office when he was not in, and requested from his clerk a copy of the DBKL search receipt and was told by his clerk that when she opened
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the file, the Plaintiff took the original letter of offer from the file and refused to return it. DW2 informed the Defendant regarding this. 9.3 DW2 admitted receiving a faxed letter from the Plaintiff (p.130

AR) whereby the Plaintiff requested for a replacement cheque to be made in her favour and he did not receive the letter at p.129 AR from
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the Plaintiff. DW2 said that later he learnt that the Plaintiff sold the said house to another buyer on 25.10.2000 for RM2.45 million. DW2 said that he had gone to DBKL to check on the plans but was told that they could not find the file or trace any of the approved plans for the said house.

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10.

DW2 was the Plaintiffs agent in this transaction. The Plaintiff

herself in cross-examination confirmed that she was not aware of the negotiations between her agent and the Defendant (p.53 AR). But the
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Plaintiff was certainly aware that the Defendant required the approved plans at all times.

11.
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S.6 of the Contracts Act 1950 states A proposal is revoked - (c) by the failure of the acceptor to fulfill a condition precedent to acceptance.

11.1 Whilst s.7 of the Contracts Act states Acceptance must be absolute.
In order to convert a proposal into a promise the acceptance must 15

(a) be absolute and unqualified.

11.2 Hence the signing of the letter of offer and the giving of the earnest deposit in the name of the Plaintiff were conditions precedent as to the prescribed manner of the acceptance of the Plaintiffs offer. The Defendant refused to sign the un-amended original letter of offer
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and to pay directly to the vendor (Plaintiff) which means that the Defendant has rejected the Plaintiffs offer and there was no acceptance of the same.

12.
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Pollock & Mulla on Indian Contract & Specific Relief Acts, Twelfth Section 7 requires that an acceptance must be absolute and unqualified. If
it is not, it is a mere counter-offer, and unless accepted in turn by the original proposer, has the effect of terminating the original proposal.

Edition Vol-I at 189 states -

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12.1 At pp.191-192, the learned authors state the acceptance must match with the terms of the offer. When there is a
variation between the offer and acceptance even in respect of any material term, acceptance cannot be said to be absolute and it does not result in the formation of a legal contract.

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12.2 At p.199 the learned authors further state A valid acceptance of proposal must be absolute and unconditional. It must
extend to all the terms of a proposal.
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If the purported acceptance is

conditional or qualified, it does not create contractual relationship. It becomes a counter-proposal, which may become a contract on the terms offered by the offeree if the proposer accepts it.

12.3 At p.202 the learned authors also state 10

An acceptance with a variation in terms of the proposal or with a

qualification is a counter-proposal, which must be accepted by the original offerer before a contract is made. It is a counter-proposal where the acceptance contains conditions, or refers to future negotiations for finalization of more terms.

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13.

Learned Counsel for the Plaintiff submitted there was no clause

inserted in the letter of offer to indicate the appointment of DW2 as stakeholder and the evidence of the Defendant (DW1) and DW2 on the appointment of DW2 as the stakeholder is a fabrication.
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13.1 With respect I cannot agree with the Plaintiffs submission. I find notwithstanding the absence of the word per se stakeholder in the letter of offer, the Defendants intention for DW2 to be his stakeholder in the sense of DW2 holding on to the cheque payment of the earnest money pending him having sight of the approved plans is expressed

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when by conduct, the Defendant deposited the cheque with DW2 and was accepted by DW2 under the circumstances explained by the Defendant. This payment of the cheque was not challenged by the Plaintiff. 13.2 Since DW2 was the Plaintiffs agent in this transaction, by

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returning the cheque to the Defendant, it means that the Plaintiff has rejected the Defendants counter-offer. The evidence showed the Plaintiff did not accept the Defendants counter-offer of Rejey Properties acting as a stakeholder in the sense of DW2 holding on to the cheque payment of the earnest money when Plaintiff wanted DW2 to encash the Defendants cheque and for DW2 to issue a cheque in her favour.

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14.

With respect to the issue on the approved building plans, learned At Q11 DW-1 claimed that he was prepared to pay the earnest deposit

Counsel for the Plaintiff submitted upon sight of the approved plans. At Q12, DW-1 said that he would not sign the letter until a copy of the approved plans were given to him. But at Q13 he said that he had given the cheque for RM49,000.00 and he wanted the approved building plans to be given upon signing the sale and purchase agreement. He had already signed the letter of offer and he had admitted during cross-examination that the approved plans were to be given to him at the time of the execution of the sale and purchase agreement. The sale and purchase agreement was not executed on 14-8-2000. On 14-8-2000, DW-1 signed the letter of offer. Therefore on that date plaintiff was not under any obligation to hand over the approved building plans to DW-1.

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14.1 Further, the learned Counsel for the Plaintiff submitted the
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evidence of the Plaintiff in examination in chief in Q&A 20, 21, 22 and 23 (pp.23-24 AR) was not rebutted by the Defendant. completeness the said evidence is reproduced 20.
Question: Did you have the plans for the renovations done to the property? Answer: No. I did not have the approved plans. Question: Did you tell G. Jayakumaran where you could get the plans from? Answer: Yes. I told him that I could get the approved plans from the Engineers and Architect concerned. I also told G. Jayakumaran that I have the plans given to me by the developer.

For

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21.

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22.

Question: What did G. Jayakumaran tell you? Answer: He told me that he would go to DBKL personally and secure the approved plans. Question: Why did he say he wanted to do that? Answer: He told me that he has many friends in DBKL and that he was formerly a land valuer before taking optional retirement and starting a real estate agency.

23.
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14.2 I find the Plaintiffs submission cannot be sustained because as alluded to before there is rebuttal evidence from the Defendant as it is my finding there was a counter-offer made by the Defendant which was
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not accepted by the Plaintiff. There is unchallenged evidence from DW 2 that the approved plans were not available. In fact in crossexamination the Plaintiff admitted (i) she did a lot of renovation to the said house; (ii) she did not have the approved plans stamped by DBKL except for the copies of the plans submitted for DBKL approval; and (iii)

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she did not have the approved plans till to date. 14.3 At the end of the day regardless of whether there were variations in the evidence of the Defendant as to when the approved building plans were to be given to the Defendant, in truth and in fact the approved building plans were a material requirement by the Defendant

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which the Plaintiff could not produce in any event be it on 14.8.2000 or any time later (upon signing the sale and purchase agreement). Thus I agreed with the Defendants Counsel that the Plaintiff could never agree to item 12 in the amended letter of offer. 14.4 In support I relied on the persuasive authorities cited on the Defendants behalf namely Seah Kiat Seng v Amtel Exports Pte Ltd [1997] 1 SLR 311, Tan Chee Hoe & Anor. v. Ram Jethmal Punjabi [1983] 2 MLJ 31 and Choo Si Seng v. Lee Boon Sai [1986] 1 MLJ 466. For example, in Tan Chee Hoe (supra) the respondent sought to sell his apartment through a real estate agent wherein he gave an

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option to the applicants. The applicants purported to accept the offer contained in the option by signing the Acceptance Copy and through their solicitors delivered the same together with a cheque for $44,000 to the respondents named solicitors. However, on the advice of their solicitors the words who will then hold the same as stakeholders were added after the words Advani Hoo Morris & Kumar (the name of the solicitors firm) on the signed Acceptance Copy. The respondent

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contended that there was no binding contract as the applicants had varied their offer by the addition of the words who will then hold the
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same as stakeholders. Accordingly they sought to forfeit the option money paid by the applicants. The sole issue to be determined by the Court is whether or not there was an unqualified acceptance by the applicants of the respondents offer to sell the apartment. The Court answered in the negative concluding at p.32 B-D right column as

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follows:
In point of legal analysis, the grant of an option in such cases is an irrevocable offer (being supported by consideration so that it cannot be revoked). In order to be turned into a binding contract, the offer must be accepted in exact compliance with its terms. The acceptance must correspond with the offer. It is plain that the addition of the words who will hold the same as stakeholders introduced a fresh term by the applicants, the grantees of the option. It was a material variation of the offer and it amounted to a counter offer on the part of the applicants which was not accepted by the respondent. As is said in Vol.8 Halsburys Laws of England, 3 rd Ed. at page 75:In order to constitute acceptance the assent to the terms of an offer must be absolute and unqualified If the acceptance is conditional, or any fresh term is introduced by the person to whom the offer is made, his expression of assent amounts to a counter-offer, which in turn requires to be accepted by the person who made the original offer.

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14.5

Similarly in this instant appeal where

it involved a sale of the

said house through a real estate agent, in my opinion the ratio of the Tan Chee Hoes case (supra) is equally applicable in that the variations requested by the Defendant constituted a material variation of the Plaintiffs offer which amounted to a counter-offer from the
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Defendant which was not accepted by the Plaintiff whereby the cheque was returned to the Defendant by DW2. 14.6 The cases cited by the Plaintiff were Daiman Development Sdn. Bhd. v. Mathew Lui Chin Teck & Anor. Appeal [1981] 1 MLJ 56, Karuppiah v. Petaling Garden Co. Sdn. Bhd. [1972] 1 MLJ 11,

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Linggi Plantations Ltd. v. Jagatheesan [1972] 1 MLJ 89 and Morello Sdn Bhd v Jaques (International) Sdn Bhd [1995] 1 MLJ
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577. In my view Daimans case assists the Defendant as the Privy Council has opined at p.58 The question whether parties have entered into contractual relationships
with each other essentially depends upon the proper understanding of the expressions they have employed in communicating with each other considered against the background of the circumstances in which they have been negotiating, including in those circumstances the provisions of any applicable law. Where they have expressed themselves in writing the proper construction of the writing against that background will answer the question. The purpose of the construction is to determine whether the parties intend presently to be bound to each other or whether, no matter how complete their arrangements might appear to be, they do not so intend until the occurrence of some further event, including the signature of some further document or the making of some further arrangement. The question is one as to expressed intention and is not to be answered by the presence or absence of any particular form of words

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Thus in this case I find the learned SCJ erred when she merely focused on the Defendant signing on the letter of offer on 14.8.2000 which the learned SCJ held signified acceptance without considering
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the circumstances in which they were negotiating, including in those circumstances, the provisions of any applicable law. 14.7 In Karuppiah (supra), the plaintiff had paid RM4,000.00 as deposit for the plot of land but refused to sign the agreement for sale requested by the defendants. The Court held the plaintiff was not

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entitled to the refund of the earnest money because he was unwilling to enter into the main contract to complete the bargain. Unlike Karuppiah (supra), where the money was paid by the plaintiff and the payment was accepted, the factual matrix of the instant case is different as there has been a variation of the Plaintiffs offer and the acceptance of the

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Defendant is not absolute and unqualified. 14.8 The case of Linggi Plantations Ltd. (supra) at p.89 of the report is not relevant as it relates to the question whether a vendor was entitled to forfeit a deposit paid on a contract for sale of real property following its non-completion by the purchaser, though the vendor was
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not in a position to prove actual damage flowing from the purchasers breach of contract. The factual circumstances of this instant appeal are entirely different. 14.9 Again the case of Morello (supra) involved different

circumstances where the appellant/buyer entered into an agreement

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with the respondent/seller to purchase a crushing plant where it was stipulated that the buyer was to pay the seller 10% of the purchase price of RM116,700.00 as a deposit upon signing the agreement and the balance in 4 subsequent payments. The buyer requested for a few days to pay the deposit but asked the seller, in view of the urgency of

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commencement, to proceed with the contract, which it did. When the buyer failed to pay the deposit, the seller terminated the agreement and sued the buyer for the purchase price as damages for repudiation and consequential reliefs. The Federal Court in a majority decision held, inter alia, at p.578 and p.596: The right to recover an unpaid deposit or to forfeit a deposit which has
been paid, allows a vendor to obtain compensation without proving his damage and so there is no duty to mitigate. Therefore, the fact that a vendor might resell at a profit does not preclude him from exercising his right of forfeiture or of recovery of an unpaid deposit. Secondly, the right to recover an unpaid deposit or to forfeit a deposit which has been paid, puts the vendor in the position of being able to obtain compensation without having to prove his damage and so there is no duty on his part to mitigate.

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14.10

In this instant proceedings the Court is concerned with the

issue of whether there is a concluded contract and thereby entitling the Plaintiff to the forfeiture of the earnest deposit and not the nature of the payment of the money, whether by way of deposit or by way of part
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payment.

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15.

For the reasons given, I am of the view that the learned SCJ

has erred as it is my finding there is no concluded contract and consequently, the question of whether the Plaintiff can claim the refund of RM49,000.00 as earnest deposit does not arise. Following this

finding of the Court, I am of the opinion that the other grounds of

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appeal are rendered irrelevant. Accordingly, the Court allowed the appeal of the Defendant with costs.

Dated: 18.8.2011

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SGD.

(DATUK LAU BEE LAN) Judge

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Counsel for the Appellant: Encik K. Jeyaraj Messrs K. Jeyaraj Fadhli Sin Advocates & Solicitors No.168 (Second Floor) Main Road Salak South 57100 Kuala Lumpur Counsel for the Respondent:

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Encik N. Subramaniyan Messrs Subramaniyan Advocates & Solicitors Tingkat 6, Wisma Harwant 106, Jalan Tuanku Abdul Rahman 50100 Kuala Lumpur

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