GANAESH RAU A/L B.A.RAMARAU v 1. ) BHASKAR A/L NADARAJAN 2. ) PERBADANAN KEMAJUAN NEGERI SELANGOR

Case Significance

Illustrates the operation of the maxim nemo dat quod non habet and of restitution where a sale of land is unenforceable — the seller having had only an offer and no title, and the buyer having been ineligible for the scheme — so that the price paid must be returned even though specific performance is refused.

This High Court decision at Shah Alam concerns a claim for specific performance of a sale of land arising out of a state resettlement scheme, and the application of the maxim nemo dat quod non habet (no one can give what he does not have). Some twenty years earlier, the state government had embarked on the redevelopment of an area occupied by squatters, under which occupants were offered plots of land with houses. The first defendant, one such occupant, had been offered a plot, and he then entered into a sale and purchase agreement to sell that plot to the plaintiff's late predecessor, who paid the purchase price in full. The plot was later renumbered, and the first defendant subsequently contracted with the state development corporation to purchase the renumbered plot, paying only a deposit. On learning of that later agreement, the deceased lodged a caveat, and the plaintiff, as executor of his estate, sued for specific performance of the earlier sale and for an order that the plot be sold to him. The court held that the claim could not succeed. At the material time the first defendant had no title, interest or right in the plot capable of being sold — he had merely received an offer — so that under the nemo dat principle he could pass nothing to the deceased, and the arrangement was in any event tainted because the deceased had not been eligible for the resettlement scheme, engaging the public-policy provision in section 24 of the Contracts Act 1950. The court dismissed the plaintiff's claim against both defendants. It nonetheless held that it would be unconscionable for the first defendant to retain the price paid, and ordered him to return RM40,000 to the estate with interest at 5 percent from the date of the original agreement. The plaintiff was ordered to pay costs of RM10,000 to the development corporation, the plaintiff and the first defendant otherwise bearing their own. The judgment illustrates the operation of nemo dat and restitution where a contract to sell land is unenforceable.