1. ) PEMBINAAN LERCAST SDN. BHD 2. ) LERCAST ALDEWAY SDN. BHD. v CHEK SAM BINTI SALLEH

Case Significance

Illustrates the Court of Appeal's power under section 69(4) of the Courts of Judicature Act 1964 to unwind a failed joint-venture development where the relationship has irretrievably broken down, even after finding that no repudiatory breach was established and the purported termination was wrongful.

This Court of Appeal decision concerns the termination of a joint-venture agreement for the development of land occupied by squatters. The respondent, an elderly landowner with limited formal education, was the registered proprietor of a parcel of land in Teluk Kumbar, Penang, which she had originally intended to endow as waqf but was advised instead to develop. She entered into a suite of agreements with the appellants, two private companies — a joint-venture agreement and power of attorney in 2015, a consultant agreement between the two companies, and a manager agreement in 2016. When development stalled for more than two years without meaningful progress, the landowner terminated the joint-venture and manager agreements; the parties then executed a supplementary agreement in 2018, but the lack of progress continued and she terminated again.

The High Court held that the developer's prolonged delay was a fundamental breach justifying termination and found for the landowner. On appeal, the Court of Appeal took a different view: it held that no repudiatory breach had been established and that the landowner's unilateral termination was wrongful, because the supplementary agreement required termination to be effected by mutual agreement, and because the delays had been contributed to by both sides.

Notwithstanding that conclusion, the Court of Appeal recognised that the relationship between the parties had completely broken down, so that continuation of the agreements served no purpose. Exercising its powers under section 69(4) of the Courts of Judicature Act 1964, the court ordered that all the agreements, including the supplementary agreement, be terminated. It directed the first appellant to return the original land title and to remove its private caveat, ordered the refund of the RM500,000 refundable deposit to the appellants, made no award of damages to either side, and directed the parties to bear their own costs. The judgment illustrates the appellate court's remedial power to unwind a failed development venture even where the alleged breach is not made out.