Damansara Realty Berhad v Bungsar Hill Holdings Sdn Bhd appeal dismissed by Federal Court

The Federal Court has dismissed an appeal lodged against the earlier findings of the Court of Appeal in respect of the Damansara Realty Berhad and Bungsar Hill Holding Sdn Bhd dispute in respect of the development rights over a 15.5 acre plot of land.

Damansara Realty had sought leave on the following questions:

(1) Where interlocking agreements are contemporaneously executed, can the termination clause in one of them be invoked without regard to performance under the other agreements, where each was executed on the faith of the others being executed, and was a consideration for the same?

The Court determined that the agreements were not interlocking and that the Property Development Agreement could be treated as a standalone document and that accordingly there was nothing preventing the termination clause in the agreement from being exercised.

(2) Whether by reason of the limitation under Section 56(2) of the Contracts Act 1950, a contracting party could terminate a contract during the life of the contract for alleged delay where time is not made of the essence?

The court determined that time was of the essence in the Property Development Agreement as development should have been commenced and completed in the fifteen year period and although no stages were provided for in the agreement the fact development failed to commence and were unable to be completed there was an entitlement to terminate.

(3) Whether by reason of Section 47 of the Contracts Act, the common law rule that performance under a contract must be undertaken within a reasonable time is ousted where the parties have themselves specified time for performance?

The court determined that the delay of 13.5 years in the commencement of any development entitled the termination of the property development agreement.

(4) Whether a notice to terminate a contract issued by one party to a contract pursuant to a clause that entitles the other party to the contract an opportunity to rectify the breaches complained of is valid in law when no such opportunity is afforded to the other party?

The court determined there was no obligation of Bungsar Hill Holdings Sdn Bhd to state in their termination notice a 30 day period for rectification of any material breach and that the notice gave a 30 day notice period and that the termination notice was valid in law.

(5) Whether on a true construction of Section 47 and 56 of the Contracts Act 1950, the Court may imply a term making time for performance of the contract of the essence where the contract does not expressly make time of the essence and the duration for the contract is expressly stipulated?

The court determined that this question had been answered in the courts response to questions two and three.

(6) Whether reliance on an implied term as to time of performance should be specifically pleaded where it is raised as a defence to a claim for specific performance?

The court determined that whether the view was taken that Damansara Realty Berhad unreasonably delayed development or refused to commence the development, being either repudiation or a fundamental breach the contract was indeed breached.

A full text of the Judgment may be viewed in our Malaysian Case Law Section.


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