Judgment

C.T. Gunn J

1. One Doctor DR Tweedie (hereinafter referred to as “the defendant”), a medical practitioner and owner of seventeen acres of vacant land at Telok Bahang held under Holding numbers 514, 521, 522 and 528 Mukim Two South West District, Penang, (hereinafter referred to as “the said land”) was making efforts to sell those 17 acres of land towards the end of 1977. One Tan Chong Keat, an architect, (hereinafter referred to as “Tan”) was desirous of purchasing the said land and according to him he made an appointment through the defendant’s caretaker to meet him one Sunday morning. But according to the defendant, Tan had no appointment to see him and arrived one Sunday morning at about 11.00am whilst he was staying at a week-end bungalow called “Boa Fe”, which is on a piece of land adjoining the said land. According to the defendant “Boa Fe” was sold by him to a Mr. Buchanan some years ago subject to the condition that he could use it for the rest of his life. Nevertheless it was a fact not disputed by the parties that Tan first met the defendant at “Boa Fe” on Sunday 11 December 1977. They had a discussion about the said land and came to what they called “an arrangement”. According to Tan the “arrangement” was that the price for the said land was $300,000 to be paid in ten instalments of $30,000 each; vacant possession would be given and the said land transferred to him on payment of the first instalment. The defendant admitted that they did talk about the 17 acres but said that he might have on 11 December 1977 discussed at about transfer of the said land and mortgage back to him but he could not remember. He further said that it was what he called “a ten-year contract” and he did not agree to give possession of the said land on payment of the first instalment. Their conversation lasted only about twenty minutes and they did not talk about other matters. However, as a result of their discussion on 11 December 1977 the defendant wrote the following letter to Tan on 12 December 1977:–

   Dear Mr. Tan, It was a great pleasure meeting you yesterday at Boa Fe (Portuguese for ‘Good Luck’) and I hope we meet many times in the future. The arrangement we came to was good if the present option holders – to sell the 17 acres for $340,000 do not succeed by the time the option expires, 31 January 1978 – you have the right to buy the land for $300,000 payable in $30,000 instalments over ten years starting on February 1978. I hope the deal comes off as I would like to have you and your medical relative as neighbours. With very best wishes, Yours sincerely, D Reid Tweedie

2. Nothing further happened until 30 January 1978 when the defendant wrote to Tan again as follows:–

   Dear Mr. Tan Chong Keat, Yesterday I rang your house number and a lady with a very charming voice said that you were outstation, I had not been to Penang for a month. I am writing to ask if you are still interested in buying the 17 acres, as per my letter of 12 December 1977. If so, would you please write to me by return, as there are other people wanting an option. As I said in my letter of 12 December 1977 I would prefer that you buy. Please show the enclosed items to your relatives. All best wishes for 1978. Yours sincerely. Tweedie

3. Tan explained in court that he did not reply to the defendant’s first letter dated 12 December 1977 because he had to wait for the option, which the defendant had granted to someone else, to expire. He did, however, on receipt of the defendant’s second letter dated 30 January 1978 write to him the following letter on 3 February 1978.

   Dear Dr Tweedie, Re: Land – Lot 514, 521, 522 & 538 Mk 2 SWD Penang We refer to your letters of 12 December 1977 and 30 January 1978 regarding the abovementioned property. We agreed to the terms and conditions of your offer and the manner of payment that is – (1) The price is $300,000 for all the abovementioned lots of approximately 17 acres of property at Telok Bahang. (2) Payments will be made in ten (10) instalments. Each instalment of $30,000 will be spread over a period of ten (10) years. (3) Transfer of the property to be made on payment of the first instalment, but let you have our mortgage in return for security. (4) Vacant possession to be given on the first payment of the property. Our lawyer is Lim Cheng Chuan & Co of 20-A, Beach Street, Penang. We will instruct him to write to you. We hope that the matter could be finalised soon. Yours faithfully, CHONG KEAT SDN BHD Sgd Director cc Mr. Lim Cheng Chuan

4. According to Tan the terms stated in his above letter dated 3 February 1978 set out the terms which he and the defendant had agreed on 11 December 1977. He also said that he had made a telephone call to the defendant at about the time he wrote his letter of 3 February 1978 to make sure that the defendant did not give an option to other people. It was admitted in paras 7 & 8 of the statement of defence that the defendant did receive a letter from Chong Keat Sdn Bhd dated 3 February 1978 and that he, the defendant, did write to Tan the following letter on 6 February 1978:

   Dear Mr. Tan Chong Keat, Thank you so much for your letter of 3 February 1978. As I said before, I am delighted that it is you who is buying the land. The site is exquisite. The PM’s daughter Hania Hussein, when she came to the place with her husband, said, ‘The beauty is breath-taking.’ The technical details I will leave to my lawyers, Lewis & Co Ipoh. The partner who kindly deals with my affairs is WSW Davidson (Bali) whose charming wife is the niece of the Tunku Abdul Rahman, who is a kind friend to me. I wish you all happiness in the New Year. Kong Hee Fatt Choy. Yours sincerely Tweedie

5. Tan was on his way from Penang to Kuala Lumpur on 9 February 1978 when he stopped at the defendant’s clinic in Sg Siput, Perak. As he was not able to meet the defendant that day, he wrote the following note in the defendant’s clinic because, as he said, he “wanted to make sure he got my letter of 3 February 1978:–

   Dear Dr Tweedie, I called on you at 10am and wait for you to 11am. You are not in. Perhaps it is still a holiday for you. I have written to you to confirm the purchase of your land in Telok Bahang. I will be on the way back from Kuala Lumpur on Sunday and most properly will call on you again. With best regard. Sgd TAN CHONG KEAT Penang 9 February 1978

6. On the instructions of Tan, his solicitors Lim Cheng Chuan and Co wrote the following letter to the defendant on 18 February 1978: –

   Dear Sir, Lots 514, 421, 522 & 538 Mk 2, SWD Penang We are instructed by our client Mr. Tan Chong Keat the intending purchaser to forward herewith a copy of the Sale Agreement for your approval and early return. Our client has deposited the sum of $30,000 with us. We shall be obliged if you will send us the title deeds pertaining to the above lots to enable us to prepare the Transfer. Yours faithfully, LIM CHENG CHUAN & CO cc Mr. Tan Chong Keat

7. In reply the defendant’s solicitors, Lewis & Co, sent the following letter to Tan’s solicitors Lim Cheng Chuan and Co on 22 February 1978: –

   Dear Sirs, Re: Lots 514, 421, 522 & 538 Mk 2, SWD Penang We refer to your letter to Dr DR Tweedie dated 18 February 1978 and our telephone conversation this morning. Our client is agreeable in principle to the sale to your client on the terms of your draft subject however to the following points: – (a) Although you pointed out to us that cl 5 of your draft which provides for the first instalment (after the down payment) to be paid on 1 February 1978 was a mistake our client would like to insist on this so that effectively a down payment $60,000 will be received. The reason for this is as explained to you on the telephone that there is a sum of approximately $52,000 due by our client to the Hong Kong & Shanghai Banking Corp, Station Road, Ipoh who have a lien on the title deeds and it would of course be necessary for this amount to be paid for out of the down payment to ensure their agreement to the terms of sale. The balance of purchase price of $240,000 could then be paid by nine equal instalments the first instalment falling due on 1 February 1979 and with the amount of the real property gains tax being advanced by your client and repayable out of the instalment due on 1 February 1979. (b) As we have advised our client that a charge over the property might give him insufficient protection, our client would like to insist on the personal guarantees of the directors of your client company including specifically Mr. Tan Cheong Keat (whether or not he is a director of the company). Also, we would like to have the usual provision that on default of one instalment after perhaps a 14 day warning letter by registered post, the whole outstanding balance shall immediately become due. We would also be grateful if you could draft the terms of charge which could after agreement be attached as an annexure to the agreement. We would be grateful if you would take your client’s instructions on this point and could then prepare a fresh draft. In the meanwhile, we are forwarding herewith the title deeds to the above properties as per list attached, on your usual undertaking not to part with them until due execution of the agreement of the down payment. Yours faithfully, Sgd cc   Dr DR Tweedie White House, Sungei Siput.        Manager, The Hong Kong and Shanghai Banking Corp, Station Road, Ipoh.

8. Here it must be noted that the defendant himself had originally stated in his letter of 11 December 1977 that the instalments should be $30,000 paid over ten years. But it would appear that his solicitors’ letter of 22 February 1978 purported to vary the proposed instalments, after an initial payment of $60,000 to a rather odd figure to be arrived at by dividing the sum of $240,000 by the figure “9”. However Tan told the court that he agreed to pay the defendant the sum of $60,000 referred to in para (a) of the letter dated 22 February 1978 from Lewis and Co, although the defendant had never mentioned that there was a sum of approximately $52,000 due by him to the Hong Kong & Shanghai Banking Corp, Ipoh. There was also no previous mention of any requirement of personal guarantees as referred to in para (b) of that letter from the defendant’s solicitors. The defendant himself also wrote the following letter to Tan on 22 February 1978 after they had met again at “Boa Fe” the previous Sunday morning i.e. 19 February 1978: –

   Dear Mr. Chong Keat, It was a great pleasure to have the happy meeting with you on Sunday morning at Boa Fe. Thank your lawyer for his letter. I left it with Bill Davidson on the Tuesday evening. It arrived in the morning. I am leaving the technical matters to the two lawyers. Bill has a high opinion of your lawyer. I am desperately hoping that your uncle-in-law, Professor Khoo Ooi Teik, will try his stroke treatment. He could be the man to save the stroke cases (the thrombosis cases) of the world. There is too much talk in the UK instead of sitting down to work. Do try to persuade him. One has such thrill when one’s cases walk in, smiling and happy. See you Sunday morning. All best wishes. Yours sincerely, Tweedie

9. A meeting was arranged presumably by the defendant for Tan to meet the owner of “Boa Fe” that Sunday, that is 19 February 1978 because the former wanted to negotiate with Mr. Buchanan referred to above for access to the said land and also for water supply from a small stream in Buchanan’s land. The said Mr. Buchanan is now no longer in this country and neither party called him as a witness although it was alleged by Tan, and admitted by the defendant who claimed that it was a joke, that he was introduced to the said Mr. Buchanan as “the new owner of the said piece of land” so that he could discuss with him about access and water supply.

10. As indicated in the last line of the defendant’s letter of 22 February 1978 they i.e. Tan and the defendant, met again at “Boa Fe” on the Sunday morning of 26 February 1978 as a result of which the defendant sent Tan the following post-card dated 28 February 1978:–

    Thank you again for coming along to see Ronald Buchanan and me on Sunday. We greatly enjoyed your visit. I have told Bill Davidson to revert to our original scheme and he has agreed. It will take a few days to re-sort things out. Do write to the Professor about stroke. Looking forward to Dr Pauline and you coming Boa Fe on 11 March about 8.00pm All best wishes.

11. Tan explained in court that their “original scheme” referred to the terms contained in the draft agreement which was forwarded to the defendants’ solicitors with his solicitor’s letter of 18 February 1978. He spoke to his lawyer Mr. Lim Cheng Chuan about the post-card he had received from the defendant, and his solicitors therefore sent the defendant’s solicitors the following letter dated 13 March 1978:–

    Dear Sirs, Lots 514, 421, 522 and 538 Mukim 2 SWD Penang We refer to your letter dated 22 February 1978 and your Mr. Davidson’s telephone conversation with our Mr. Lim Cheng Chuan informing us that your client has agreed to accept $30,000 deposit instead of $60,000 as stated in your letter. We enclose herewith four copies of the agreement of sale, four copies of the transfer and four copies of the Charge for your client’s execution and return. We enclose herewith our cheque for $30,000 being the deposit and payment to account of the purchase price. The said sum is sent to you on your undertaking not to part with it until your client has signed the enclosed documents. The following are the directors of the purchaser company:– (1) Tan Chong Phok (IC No: 43xxxxx) No 65 Beach Street, Penang. (2) Tan Chong Kheng (IC No: 02xxxxx) No 65 Beach Street, Penang. (3) Tan Chong Keat (IC No: 36xxxxx) No 8-G, Bunga Pudak Road, Tanjung Bungah, Penang. Please send us the director’s guarantee for their execution. Please acknowledge receipt. Yours faithfully, encl.

12. Mr. Lim Cheng Chuan (PW2), an advocate and solicitor of Lim Cheng Chuan and Co, confirmed that Tan came to see him and told him that he and the defendant had come to a certain arrangement whereby the defendant was prepared to accept $30,000 instead of $60,000 and that additionally the three directors of his company i.e. Tan himself and his two brothers would be guarantors. Mr. Lim also told the court that he then spoke to Mr. Davidson of Lewis & Co and confirmed the said arrangement and he had also asked Mr. Davidson to confirm that his client would accept $30,000 instead of $60,000. He then forwarded four copies of an agreement of sale to the defendant’s solicitors with his firm’s above-quoted letter of 13 March 1978 because according to the letter from Lewis and Co dated 22 February 1978 only two points were raised therein and as both those points were settled, he assumed that all the other terms had been agreed upon. No other points were raised by Mr. Davidson in their telephone conversation referred to in the said letter dated 13 March 1978.

13. In the meantime Tan and his wife, Mrs. Pauline Tan (PW3) had accepted the defendant’s invitation to dinner at ‘Boa Fe’ on 11 March 1978. They were there for two or three hours and discussed about the said land and for the first time they learnt from the defendant that he had what he called “an alternative proposal” to make. That alternative proposal was that some people from the Urban Development Authority (UDA) were interested in the said land and wanted to buy it. The defendant told Tan and his wife that “UDA was a powerful group and he was afraid to offend them”. Apparently, UDA wanted the said land for a scheme and was offering, $480,000 for it. The defendant wanted to sell the said land to them and offered to pay Tan compensation of $75,000 which Tan refused to accept.

14. Subsequent to that turn of events, the defendant’s solicitors sent the following reply on 15 March 1978 to Tan’s solicitors’ letter of 13 March 1978:–

    Dear Sirs, Re: Lots 514, 421, 522 and 538 Mukim 2 SWD – Penang We are in receipt of your letter of 13 March 1978. With regard to the first paragraph of your letter, our instructions are that your client verbally informed our client that he preferred to ‘stick to the original arrangement’, which our client understood to be as in his letter of 12 December 1977. This letter only specifies the price ($300,000) and the fact that the payment is to be by ten yearly instalments. It does not specify that the titles are to be transferred upon payment of the deposit; our client has instructed us that he has never agreed to this unusual arrangement but on the contrary stressed to your client that the technical details should be left to the lawyers to work out. This condition of your client also involves our client’s bankers, who we understand would not be prepared to release their lien unless the full amount due to them is settled. We are taking up this matter further with our client, but in the meanwhile feel it right to place on record that our client does not agree to transfer title to your client, until full settlement is made. Unless and until the terms of the agreement have been finally settled, we are instructed not to accept your client’s deposit, and your cheque for $30,000 is returned herewith. Yours faithfully, cc  Dr DR Tweedie, White House, Sungei Siput.        Manager, Hong Kong and Shanghai Banking Corp Station Road, Ipoh.

15. The defendant’s solicitors wrote to Tan’s solicitors again the following letters dated 21 April 1978 and 2 May 1978 respectively: –

    Dear Sirs, Re: Lots 514, 421, 522 and 538 Mukim 2 SWD – Penang We observe that we have had no reply to our letter of 15 March 1978. We have however discussed the matter further with our client and he confirms that until the full purchase price has been paid the titles will not be transferred into the names of the purchasers. Our instructions are that unless your clients can suggest some definite terms which are acceptable to our client, our client has no alternative but to withdraw the offer made to your clients. Please therefore be informed that if we fail to hear from you within one (1) week from date hereof our client shall no longer be bound by his letter of 12 December 1977 to your client or any subsequent arrangements between the parties and the offer to sell the property to your client shall be treated as having been withdrawn. Yours faithfully, Sgd.

     

    Dear Sirs, Re: Lots 514, 421, 522 and 538 Mukim 2 SWD – Penang We refer to our letter dated 21 April 1978. Since we have not received any reply from you, we have been instructed to treat all negotiations as having been terminated between our respective clients, and we would be grateful if you would return immediately the title deeds forwarded to you with our letter of 22 February 1978. Yours faithfully, Sgd.

16. On 5 May 1978 Tan’s solicitors sent the defendant’s solicitors the following reply:–

    Dear Sirs, Re: Lots 514, 421, 522 and 538 Mukim 2 SWD – Penang We acknowledge receipt of your letter dated 21 April 1978 and 2 May 1978. We were unable to reply to your letter earlier as Mr. Tan Chong Keat was away for several days and our Mr. Lim Cheng Chuan was on leave. We are instructed by our clients to inform you that they agree to vary the terms of the sale by amending cl 4 of the agreement to the effect that the vendor will transfer the property to our clients upon receipt of the full purchase price. Please amend the agreement accordingly and return them to us duly executed by your client. Yours faithfully, LIM CHENG CHUAN & CO

17. Correspondence between the parties’ solicitors finally ended on 16 May 1978 after the exchange of two more letters which need not be referred to for the issues raised in this case and in the circumstances which have been set out above, the plaintiffs filed an action in the High Court for specific performance against the defendant on 27 June 1978 for the following claims as shown in para 13 of the amended statement of claim:–

    The plaintiffs claim :– (1) The plaintiffs claim specific performance of the oral agreement made between the second plaintiff and the defendant and described in paras 2, 3, 4 and 5 thereof. (2) Alternatively specific performance of the agreement embodied in the letters exchanged between the first plaintiff and the defendant on 3 February 1978 and 6 February 1978. (3) In the alternative specific performance of the said agreements as varied by subsequent letters ending with the second plaintiff’s solicitors’ letter of 5 May 1978. (3a) In the alternative specific performance of the agreement as set out in the draft sent by the plaintiffs’ solicitors to the defendant’s solicitors on 13 March 1978. (4) Further and in the alternative damages for breach of contract. (5) Further or other relief. (6) Costs.

18. Tan appeared to be one whom we in this country call “a Chinese-educated person” and although he elected to give his evidence in English yet his spoken English was rather poor as can be seen from his written English in the above-quoted note which he himself wrote at the defendant’s clinic at Sungei Siput on 9 February 1978. Nevertheless, I gained the impression and found that he was speaking the truth when he told the court, after he was referred to his letter dated 3 February 1978, that items three and four in that letter were matters which he and the defendant had discussed on 11 December 1977. He told the court that he and the defendant had already settled what he called the “vital terms” and frankly admitted during cross-examination that they did not discuss about the money which the defendant owed to his own bank or about the real property gains tax which the defendant had to pay to revenue. He also admitted that they did not discuss details of the mortgage of the said land back to the defendant nor did he and the defendant think about the adequacy of the security, although in his opinion the defendant would be protected because he had sold the said land, which was zoned in 1977 for conservation land and on which one was not allowed to build houses and which was then only worth about $10,000 per acre, at an inflated price of $18,000 per acre.

19. The defendant was 79 years of age and hard of hearing but looked fairly active and mentally alert. He said that he could not remember whether he did discuss with Tan about the transfer of the said land and mortgage back to him on 11 December 1977 but I considered and found on the balance of probabilities that the parties concerned did talk about those matters because although it was expressly denied in the statement of defence that there was any mention at the meeting on 11 December 1977 of transfer or possession of the said land on payment of the first instalment, yet after the defendant had received Tan’s letter of 3 February 1978 he did not in his reply of 6 February 1978 deny any of those matters referred to by Tan in his said letter of 3 February 1978. I therefore did not believe the defendant when he told the court in answer to questions by his own counsel during his examination-in-chief that he only agreed to the first and second term but not to the third and fourth term in that letter of 3 February 1978. When he was referred by his own counsel to his letter of 6 February 1978 and asked what he meant by “technical details” he said that he meant that he “was not going to draw up mortgages”. I considered and found that it was improbable that the parties concerned did not on 11 December 1977 talk about the transfer of the said land and mortgage back to the vendor as security if the defendant then already had in mind that one of the technical details to be left to the lawyers was the preparation of a charge or what he called a “mortgage”. He also said that as he was not a lawyer he preferred the experts “to attend to and prepare the instalments and the transfer” about which the parties must, I find on the balance of probabilities, have already discussed.

20. As regards the plaintiffs’ claim in para 13(2) of the amended statement of claim, it was the contention of Mr. Davidson, counsel for the defendant, that the two letters referred to in that paragraph could not constitute a binding contract for various reasons. Firstly, he argued that the letter of 6 February 1978 was not an acceptance and that there could not be a binding contract without an unqualified acceptance. He considered that the only words in the letter of 6 February 1978 which could conceivably be construed as an acceptance were the words “I am delighted it is you who is buying the land” but he argued that those words were only evidence of an expectation that the addressee would be buying the said land and that the use of the present tense (“buying”) implied that the process of sale and purchase had not been completed which was reinforced by the words “the technical details I leave to my lawyers”. Counsel also stated that in deciding whether the said letter was intended as a formal acceptance, one might look at the degree of formality in the words used. He pointed out that the letter of 6 February 1978 like all the other letters of the defendant were friendly letters containing material extraneous to the matter in hand and that reinforced a conclusion that the defendant regarded legal matters as being the province of lawyers and would not have contemplated a formal binding acceptance particularly in view of the unusual nature of the proposals contained in the letter of 3 February 1978. Counsel also argued that this was not a usual type of transaction and that such an arrangement required more detailed terms and conditions on which the letters concerned are silent in order to protect the vendor. He cited the cases of Hussey v Horne-Payne (1878–9) AC 311, May v Thomson (1882) 20 Ch D 705 and Bristol, etc. Aerated Bread Co v Maggs (1890) 44 Ch D 616 and contended that in any case it was necessary to look at the whole of the correspondence between the parties which continued after the letter of 6 February 1978 and that if the letter of 6 February 1978 was at all an acceptance it was a conditional acceptance subject to contract. He also cited the cases of Clifton v Palumbo [1944] 2 All ER 497 and Lockett v Norman Wright [1925] 1 Ch 56, 62 and contended that the intention of the words “the technical details I leave to my lawyers” are clear that there was to be no binding agreement between the parties unless and until the arrangements agreed upon are embodied and executed in a formal contract settled by the lawyers.

21. Counsel also stated that the plaintiffs’ claim in para 13(3) of the amended statement of claim could be easily disposed of. He referred to the defendant’s solicitors’ letter of 15 March 1978 in which he claimed that an important point was raised i.e. that there was to be no transfer of title until final payment. More than five weeks later and having had no response to the earlier letter the defendant’s solicitors sent another letter to the plaintiffs’ solicitors on 21 April 1978 intimating that after one more week the defendant would no longer be bound by his letter of 12 December 1977 i.e. the original offer of the defendant. Counsel contended that the plaintiffs were given a full and fair opportunity to conclude the negotiations and only after a further eleven days i.e. on 2 May 1978 did Lewis & Co the defendant’s solicitors, terminate all negotiations. Counsel argued that the plaintiffs’ acceptance of the new term on 5 May 1978 had come too late and in any case their letter of 5 May 1978 was only sent after receipt by the plaintiffs’ solicitors of the letter of 2 May 1978.

22. With regard to the plaintiffs’ claim in para 13(1) of their amended statement of claim counsel for the defendant contended that it was significant that the plaintiffs did not when they filed their writ in June 1978 rely on the oral agreement. It was never relied on in correspondence and was only relied on when the statement of claim was filed on 24 January 1980. He argued that this alternative claim involved the veracity of the witnesses as the failure to rely on the oral agreement casts some doubt on the truth of Tan’s evidence. Counsel conceded that it was possible that a binding contract could be made verbally but that the likelihood of this decreased proportionately to the value of the subject matter and the complexity and unusual features of the deal. He contended that the court should consider the inherent unlikelihood of the second plaintiff whom the defendant had never met before, simply turning up and in a short meeting concluding a detailed sale transaction involving transfer on first payment and mortgage back to the vendor. He also stated that there was no corroboration of Tan’s evidence with those important terms verbally agreed on at the meeting on 11 December 1977. The defence admitted that the defendant was at that stage envisaging and even hoped that Tan would buy the land but contemplated that legal or technical matters should be worked out by the lawyers before there was a binding contract.

23. As regards para 13(3a) of the amended statement of claim, it was the contention of counsel for the defendant that taking the correspondence as a whole, any agreement between the parties or their solicitors was subject to signature of a formal contract i.e. was “subject to contract”. He cited the well-known cases of Winn v Bull (1877–78) 7 Ch D 29, 32; Eccles v Bryant [1948] Ch 93, 97 and Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284, 288–289 and said that the normal effect of making the agreement “subject to contract” was that the defendant was not bound until he had signed a formal Contract. After referring to the various letters in the bundle of documents marked “A” it was the submission of counsel that those letters show that the parties intended that there should be a written agreement. In conclusion counsel submitted that the principles in the authorities cited by him and applied to this case was a complete answer to the plaintiffs’ contention that the draft contract submitted with the letter of 13 March 1978 could be taken to reflect the terms already agreed between the parties. He also pointed out that as the “conditions of charge” were only forwarded for the first time with the plaintiffs’ solicitors’ letter of 13 March 1978 it was difficult to see how it could be said that all the terms have been agreed at that stage or how the defendant’s solicitors could be said to have satisfied themselves as to the technical details.

24. Mr. KC Lim, counsel for the plaintiffs, agreed that the doctrine laid down by House of Lords in Hussey v Horne-Payne (1878–9) AC 311 applied in this case, but he referred to a passage in the judgment of Kekewich J in Bolton Partners v Lambert (1889) 41 Ch D 295, 298 where his Lordship cited Hussey v Horne-Payne (1878–9) AC 311 and said as follows:–

    Where you have a contract in letters or other such like documents, that is to say, not reduced into a document of legal form; you are bound to look, not only at what occurred before – what led up to the contract – but also at what occurred afterwards, with regard to the contract, in order to determine the question whether there was completed contract, or whether the parties were in truth only negotiating,

    and stated that the reason for the change in attitude of the defendant was because he had received an offer of $480,000 for the said land from a third party (UDA). Counsel pointed out that following the two cases cited by him such evidence of what occurred after the contract should therefore be taken into account. He argued that the defendant would not have offered the plaintiffs compensation of $70,000 or $75,000 if he had not thought that he was bound by a contract to sell the said land. Counsel also reminded the court to bear in mind when considering Hussey v Horne-Payne (1878–9) AC 311 as well as the other cases cited that the Statute of Frauds was an important element in all those cases. He pointed out that the said statute did not apply in Malaysia and that oral contracts here could be binding. Mr. Lim then submitted that when the evidence of the defendant under cross-examination was considered together with the other evidence there was an oral contract in this case.

25. Counsel then referred to the following passage on contracts by correspondence appearing on page 140 of vol 9 of Halsbury’s Laws of England (4th Ed):–

    262.

    Contracts by correspondence. If a contract depends on a series of letters or other documents, and it appears from them the drawing up of a formal instrument is contemplated, it is a question of construction whether the letters or other documents constitute a binding agreement or whether there is no binding agreement until the instrument has been drawn up. The whole of the correspondence or documents must be considered; and a document which, taken alone, appears to be an absolute acceptance of a previous offer does not make the contract binding if, in fact, it does not extend to all the terms under negotiation, including matters appearing from oral communication. Moreover two letters which at first sight appear to be an offer and an acceptance will not constitute a contract if it appears from subsequent negotiations that important terms forming part of the contract were omitted from these letters; and the mere fact that the parties think there is a binding contract is not conclusive. But once there has been a definite acceptance of all the terms of an offer and the acceptance was without qualification, further negotiations between the parties cannot, without the consent of both, get rid of the contract which has been made,

    and submitted that the law contained in the above passage was applicable in this case.

26. On the essential point of the intention of the parties, counsel cited the case of Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293 and urged the court to consider what was the intention of the parties as manifested by the construction of the documents in this case as well as the conduct of the parties which must be taken into account. He stated that if it was considered that the defendant wanted a contract and had in his mind made a contract with the Plaintiffs, then the rest were “technical details” and only concerned the manner of carrying out the contract. He contended that the stipulation by the defendant’s solicitors that a proper contract must be made was isolated from the other stipulations in point of sequence and referred to the following passage in the judgment of Sir William Erle in the Privy Council case of Oxford v Provand (1867–9) 2 PC 135, 147 in support of his contention that it was only for the defendant’s solicitors in this case to express in detail what are the legal and usual provisions:

    The stipulation for a proper contract is usual where the parties make the agreement in their own language for a transfer of an interest in land in the performance of which technical skill is wanted. The legal adviser chosen by the parties (or in case of suit, the Registrar) has to express in detail what are the legal and usual provisions in such a case in respect of repairs and rates and taxes, and to settle whether the mode of transfer shall be by assignment or underlease.

27. He also referred to the following passage in the judgment of the High Court of Australia in the case of Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20, 25:–

    .... while the due course of completion of a contract for the sale of land is a matter of some complexity, involving the doing of a number of things by both parties, it is very well settled that an informal or ‘open’ contract, not dealing expressly with any of these matters of detail, may be made and be binding. In such a case law and equity fill in the details, so to speak, providing by way of implication for whatever is necessary to effectuate due performance.

28. As for the question of the charge Mr. Lim quoted the case of Eadie v Addison (1883) 52 LJ Ch 80, 82 and submitted that here a contract had already been formed and that solicitors were only to carry out details and that what were proper clauses for the proposed charge “would be subject to the jurisdiction of this court as to whether or not the clause objected to was proper or improper”. He also pointed out that in fact Messrs Lewis and Co, the defendant’s solicitors, did not in their letter of 15 March 1978 quibble over the terms of the charge at all and that that was never a matter in dispute.

29. Counsel then submitted that the defendant’s subsequent actions were an attempt to vary the contract which he could not do without the consent of the plaintiffs and cited the case of Perry v Suffields [1916] 2 Ch 187 as well as the judgment of North J in Bellamy v Debenham (1890) 45 Ch D 481, 493–495 in support of his submission, and he also contended, citing the case of Cayley v Walpole (1870) 39 LJ Ch 609, 617–18 that there was in this case not only an oral contract but also a written contract in which the cardinal points had already been agreed to between the parties.

30. Mr. Lim also contended that even asking a solicitor to “prepare a contract” might not prevent a contract having already been formed. To support his contention he referred to the case of Bonnewell v Jenkins (1878) 8 Ch D 70 and Rossiter v Miller (1878) 3 App Cases 1124, 1151, 1152 which were followed in the recent English Court of Appeal case of Ives Investments Ltd v High [1967] 1 All ER 504, 509 and to the judgment of Kekewich J in North v Percival [1898] 2 Ch 128, 132–33.

31. When parties negotiate with a view to contracting, as in this case, it could be hard to tell when an offer has been made and accepted. Although counsel for the defendant referred to the defendant’s letter of 11 December 1977 as an original offer which he claimed had been withdrawn before final acceptance by the plaintiffs, yet, with respect, I did not consider that letter to be a firm offer on the part of the defendant to sell the said land. It was not, in my view, until a month later when the defendant wrote his letter of 30 January 1978 to Tan that he made what I considered to be an offer to which Tan replied by his letter of 3 February 1978. However, apart from the correspondence between the parties and their solicitors, having seen and heard the parties give their evidence from the witness box, I believed Tan and found on the balance of probabilities that he had at about the time he wrote his letter of 3 February 1978 to the defendant also telephoned him and had made an oral agreement to buy the said land from him on the terms stated in that letter. Under our law, as in India, an oral contract for the sale of immovable property is valid and enforceable. The mere fact that the parties desired to have that agreement put in writing and drawn up in proper form does not affect validity (see Shanker Lal Narayan Das v The New Mofussil Co Ltd AIR 1946 PC 97). I therefore ordered specific performance of the oral agreement made between Tan and the defendant as prayed for in para 13(1) of the amended statement of claim.

32. Even if it is considered that there was no oral agreement between Tan and the defendant and that the court should not have made the order for specific performance of the oral agreement in favour of Tan, I also considered the other evidence, both oral and documentary, in order to determine whether there was a concluded written agreement between the parties. Firstly, I agreed that in this case it was necessary following the House of Lords’ decision in Hussey v Horne-Payne (1878–9) AC 311 which was quoted by both counsel, as well as May v Thomson (1882) 20 Ch D 705 and Bristol etc. Aerated Bread Co v Maggs (1890) 44 Ch D 616 to look at the whole of the correspondence between the parties after the letter of 6 February 1978 as well as the course of negotiations in order to determine whether the parties did reach an agreement at any point of time. It was for that reason that I declined to make any order in terms of para 13(2) of the amended statement of claim referred to above.

33. However, looking at the correspondence between the parties and their solicitors which took place after 6 February 1978 as well as the evidence of what occurred before as well as after 13 March 1978 I considered and found that there was a completed agreement set out in the four copies of the agreement of sale which were sent by the plaintiffs’ solicitors to the defendant’s solicitors with their letter of 13 March 1978. The parties would appear on the evidence adduced to have continued their negotiations after that point had been reached; but as in the case of Perry v Suffields [1916] 2 Ch 187 and Cranleigh etc. v Bryant [1965] 1 WLR 1293 the fact that there was a revival of negotiations between the parties did not, except with the consent of both the parties, affect the existence of the contract so made between them. I agreed with counsel for the plaintiffs that where there is an informal or “open” contract, as in this case, which envisages the subsequent execution of a formal document the legal effect of that prior informal agreement depends on the intention of the parties which the court may, on the authority of cases such as Rossiter v Miller (1878) 3 App Cases 1124, 1151, 1152, Branca v Cobarro [1947] KB 854 and the classic statement of law by Parker J in Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284, 288–289 etc., find on the construction of the documents as well as on the evidence relating to the conduct of the parties.

34. I could not agree with the contention of counsel for the defendant that the use of the words “the technical details I leave to my lawyers” are by themselves clear that the intention was that there was to be no binding agreement between the parties unless and until a formal contract had been executed. I also did not agree with Mr. Davidson, counsel for the defendant, and did not find this case to be or similar to one of the “subject to contract” agreements for the sale of a piece of land. With respect, therefore, I did not think that any of the “subject to contract” cases such as Winn v Bull (1877–78) 7 Ch D 29, 32 and Eccles v Bryant [1948] Ch 93, 97 which were cited by him were applicable to the facts of this case. It is indisputable here that the parties did not indicate their intention not to be bound until a formal agreement had been drawn up by their solicitors by expressly making their agreement “subject to contract”. It is true, as also contended by counsel for the defendant, that even where the phrase “subject to contract” is not used, similar expressions may be used and inference may be drawn from the whole of the correspondence and conduct of the parties that it was intended that an agreement should come within the “subject to contract” principle. Thus in Clifton v Palumbo [1944] 2 All ER 497 which was relied on by Mr. Davidson, the plaintiff and the defendant were negotiating for the sale of a larger scattered estate. The plaintiff wrote to the defendant as follows:–

    I .... am prepared to offer you or your nominee my Lytham estate for £600;000 .... I also agree that a reasonable and sufficient time shall be granted to you for the examination and consideration of all the data and details necessary for the preparation of the Schedule of Completion

    and the UK Court of Appeal held that in the circumstances of that case that letter was not a definite offer to sell, but a preliminary statement as to price, which especially in a transaction of such magnitude was but one of the many questions to be considered. It also held that the words or expression “the Schedule of Completion” referred to a purchase contract by which the parties were, for the first time, to become bound. Nevertheless it would not be out of place here to quote the following words of Lord Greene MR. in that case:–

    There is nothing in the world to prevent an owner of an estate of this kind contracting to sell it to a purchaser, who is prepared to spend so large a sum of money, on terms written out on a half sheet of note paper of the most informal description and even, if he likes, on unfavourable conditions. But I think it is legitimate, in approaching the construction of a document of this kind, containing phrases and expressions of doubtful significance, to bear in mind that the probability of parties entering into so large a transaction, and finally binding themselves to a contract of this description couched in such terms, is remote. If they have done it, they have done it, however unwise and however unbusinesslike it may be. The question is, Have they done it?

35. In this case the same question could also be asked and I would answer it in the affirmative. Unlike the case of Clifton v Palumbo [1944] 2 All ER 497 the parties did not use the phrase “subject to contract” or other similar expression and I found that there was here an offer by the defendant in his letter of 30 January 1978 to sell the said land which was accepted by Tan. The evidence of what transpired before and after the letter of 6 February 1978 showed that the parties had agreed, amongst other things, on the price and had by 13 March 1978 made a contract set out in the agreement of sale sent by the plaintiffs’ solicitors to the defendant’s solicitors that day. Indeed, by that date all the material terms of the contract had been agreed upon and the case of Clifton v Palumbo [1944] 2 All ER 497 where even the price had not yet been determined by the parties, can on that ground alone be distinguished.

36. The facts of this case are therefore different from those in Clifton v Palumbo [1944] 2 All ER 497 and are rather more similar to another recent UK Court of Appeal case of Bigg v Boyd Gibbins Ltd [1971] 2 All ER 183. In that case the plaintiffs and defendants were negotiating for the sale of certain property belonging to the plaintiffs. The plaintiffs wrote to the defendants stating: ‘As you are aware that I paid £25,000 for this property, your offer of £20,000 would appear to be at least a little optimistic. For a quick sale I would accept £26,000...’. In reply the defendants wrote: ‘.... I accept your offer ....’ and asked the plaintiffs to contact the defendants’ solicitors. In their final letter the plaintiffs said: ‘I am putting the matter in the hands of my solicitors .... My wife and I are both pleased that you are purchasing the property.’ The plaintiffs alleged that this exchange of letters constituted an agreement for the sale of the property and brought an action for specific performance. The UK Court of Appeal, distinguishing Clifton v Palumbo [1944] 2 All ER 497 held in that case that although an agreement on price did not necessarily mean an agreement for sale and purchase, and the word ‘offer’ did not always mean offer in the sense of offer for actual sale but might be related to a particular term of the agreement whilst other negotiations in respect of the agreement continued, it was clear from the terms of the letters that the plaintiffs’ first letter constituted an offer the acceptance of which by the defendants constituted a binding agreement; accordingly the plaintiffs in that case were entitled to specific performance. 

37. Similarly, in this case, I found on the evidence, both oral and documentary, that there was an offer by the defendant and a definite acceptance by the plaintiffs constituting a binding agreement. Therefore, also bearing in mind the warnings of Lord Greene MR. in Clifton v Palumbo [1944] 2 All ER 497 and having read all the letters between the parties and their solicitors I too, like Russell LJ in Bigg v Boyd Gibbons Ltd [1971] 2 All ER 183 could not “escape the view that the parties would regard themselves .... as having struck a bargain for the sale and purchase of the property”. The facts of this case also did not support any inference that the parties intended to be bound only when a formal agreement had been executed, and the use of the words “the technical details I leave to my lawyers” were in my judgment and I so found, to use the oft-quoted words of Parker J in Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284, 288–289 “a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through”.

38. In all the circumstances of this case, I therefore made a further order in favour of the first plaintiff for specific performance of the agreement as set out in the draft sent by the plaintiffs’ solicitors to the defendant’s solicitors on 13 March 1978. Costs were also ordered by me in favour of both plaintiffs.

Cases

Hussey v Horne-Payne (1878-9) AC 311; May v Thomson (1882) 20 Ch D 705; Bristol etc Aerated Bread Co v Maggs (1890) 44 Ch D 616; Clifton v Palumbo [1944] 2 All ER 497; Lockett v Norman Wright [1925] 1 Ch 56; Winn v Bull (1877-78) 7 Ch D 29; Eccles v Bryant [1948] Ch 93; Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284; Bolton Partners v Lambert (1889) 41 Ch D 295; Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293; Oxford v Provand [1867-9] 2 PC 135; Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20; Eadie v Addison (1883) 52 LJ Ch 80; Perry v Suffields [1916] 2 Ch 187; Bellamy v Debenham (1890) 45 Ch D 481; Cayley v Walpole (1870) 39 LJ Ch 609; Bonnewell v Jenkins (1878) 8 Ch D 70; Rossiter v Miller (1878) 3 App Cases 1124; Ives Investments Ltd v High [1967] 1 All ER 504; North v Percival [1898] 2 Ch 128; Shankar Lal Narayan Das v The New Mofussil Co Ltd AIR [1946] PC 97; Branca v Cobarro [1947] KB 854; Bigg v Boyd Gibbins Ltd [1971] 2 All ER 183

Authors and other references

Halsbury’s Laws of England (4th Ed), vol 9

Representations

KC Lim for the plaintiffs.

WSW Davidson for the defendants.