SABNA DEVELOPMENT SDN BHD v HARTA KEMUNCHAK SDN BHD

Case Significance

Illustrates the enforcement of a development contract on its plain terms — where variation, estoppel and waiver are not made out the parties' obligations endure — and the exercise of specific-relief discretion to protect innocent third-party purchasers delayed in obtaining title.

This High Court decision at Shah Alam concerns the interpretation of a long-running land-development contract and the grant of specific relief to keep a stalled project moving. More than three decades earlier the plaintiff developer had purchased some 635 acres of land from the defendant vendor under a Sale and Purchase Agreement dated 2 April 1992, as amended by supplemental agreements in 1993, for a purchase price exceeding RM102 million that had since been fully paid. To enable the plaintiff to carry out the development the defendant had granted a power of attorney; the dispute arose because the power of attorney that was executed expired after thirty years and the defendant refused to renew it, while the plaintiff contended that the agreements required the vendor to provide a power of attorney enduring for the life of the project.

The court construed the contract according to the plain and ordinary meaning of its terms. It found that variation of the Sale and Purchase Agreement had not been proved, and that neither promissory estoppel nor waiver had been raised, so that the parties' respective obligations under the agreements remained in force. Turning to relief under the Specific Relief Act 1950, the court exercised its discretion with particular regard to affected third parties. It observed that the parties who had structured the transaction — apparently to save on the cost of multiple land transfers — should not be allowed to let their dispute prejudice the purchasers of units in the development, who were most affected because they were being delayed in obtaining title to their properties; that third-party interest should take precedence.

The court allowed the originating summons, granting the prayers sought (save one that had become unnecessary given the defendant's position that no agreement had been reached in recent negotiations for a fresh power of attorney), with no order as to costs. The judgment illustrates the court's willingness to enforce the plain terms of a development contract and to shape specific relief so as to protect innocent third-party purchasers.