1. ) QING YANYUN 2. ) ZENG SHUHUA 3. ) ZENG XIA 4. ) WANG YANG 5. ) LIU BEIBEI 6. ) WANG TAO v B&G TROPICAL SDN. BHD.

Case Significance

Confirms that a deferred-payment restructuring of a property SPA is an enforceable variation, and that a defaulting purchaser cannot annul the contract to escape the balance price where the default is the purchaser's own.

This High Court decision at Kuala Lumpur concerns an attempt by a group of apartment purchasers to unwind their property contracts and the developer's cross-claim to enforce them. The plaintiffs, six purchasers, had entered into a Sale and Purchase Agreement (SPA) for residential units in a development in Seri Kembangan, Selangor known as "Tropical Villa," built by the defendant, a licensed developer. When the purchasers could not complete payment because their bank loan applications for the balance sum were rejected, they faced forfeiture of the cash instalments already paid. To avoid that outcome the parties signed a Deferred Payment Plan Agreement (DPP), which extended the payment period through monthly instalments. After making a number of payments under the DPP the purchasers again defaulted, and they then sought a declaration annulling both the SPA and the DPP. The developer counterclaimed to enforce one or the other agreement.

The court framed the central issue as the validity of the DPP, which in turn governed the validity of the SPA, and placed the legal burden of proving the grounds for annulment on the purchasers under the Evidence Act 1950. On the evidence adduced at a full trial, including an agreed statement of facts and issues, the court found that the purchasers had themselves breached the very contracts they sought to set aside. It applied the equitable principle that a party cannot obtain relief while approaching the court with "dirty hands," holding that the purchasers could not use their own default to escape paying the full price of properties they had bought and used.

The court dismissed the purchasers' claim and allowed the developer's counterclaim for the balance purchase price under the SPA. It ordered that the balance be paid within six months of the judgment, failing which ownership of the properties would revert to the developer, and directed the purchasers to pay costs of RM100,000 within one month. The decision shows how a deferred-payment restructuring is treated as a binding variation whose breach the developer may enforce.