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CONTENT
Learning Outcomes Governing Laws Introduction Subject to Contract Sale & Purchase Agreements

Instances of Transfers Stakeholder Legal Issues Stages Option/Booking Proforma

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Learning Outcomes
At the end of the class students should acquire these abilities:
Discuss the procedure of sale and purchase of property in Malaysia; Discuss the liability of vendor and purchaser when the stakeholder disappears with the trust money; and Discuss the issues relating to sale and purchase agreement under Schedule G & H of the Housing Development (Control and Licensing) Act 1966
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Governing Laws
Contract Act 1950 National Land Code 1965

HD (C & l) Act 1966 Specific Relief Act

Statute of Frauds Strata Title Act 1985
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Legal Profession Act Law of Trust

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Introduction
The Malaysian land law is based on the Torrens System where the registration is everything (see Teh Bee v. Maruthamuthu & Papoo v Veeriah). In the case of sale and purchase of land, the purchaser only becomes the new owner of the land when his name is registered on the document of title.

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Introduction
Thus, in that situation, purchaser is not willing to pay the full price of the land to the vendor. Likewise, the vendor too is not willing to transfer the purchasers name on the title until he pays the full price to the vendor. Conveyancing is a legal mechanism that provides for a systematic procedure for a smooth transfer of title and payment of price in sale and purchase of immovable property.
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Instances of Transfer
1) Simple transfer of land/property Under will, law of inheritance, gift, love and affection between close relatives, etc.- no consideration 2) Simple sale and purchase That does not involve loan from bank

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Instances of Transfer
3) Sale and purchase of property Purchaser gets loan from bank. 4) Complex sale and purchase of property Purchaser intends to carry out development project and requires planning permission and other approvals.

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Instances of Transfer
5) Sale and purchase of property Purchaser gets loan from bank. 6) Development agreement Registered proprietor enters into development agreement or joint venture agreement with developer.

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Instances of Transfer
7) Purchase of property by foreigners or foreign investors That require approval from Foreign Investment Committee (FIC). 8) Sale and purchase of houses under Sell and Build or Build and Sell Schedule G or H, under HD (C & L) Act 1966.
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Instances of Transfer
9) Mergers When two or companies merged into one. 10) Sale by official assignee/receiver/liquidator 11) Sale by judgment creditor

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Stages
Identification of property Search Stakeholder HD (C & L) Act 1966

Option
Subject to Contract

Sale & Purchase Agreement

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Identification of Property

Discuss the methods used to identify property to purchase

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Search
Identify the lot and title numbers. Self/agent/solicitor NEOGH SOO OH & ORS v. G RETHINASAMY [1984] 1 MLJ 126

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Option In a sale and purchase of immovable property, the purchaser may require time to make the final decision whether or not to purchase the property. For this purpose, a vendor may grant a potential purchaser an option. Under the option the vendor agrees/promises to give purchaser time period to decide whether or not purchase the property This is illustrated in the case of Dickinson v. Dodds (1876).
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Option

An option is valid as a contract provided it fulfils the essentials of valid contract. Vendor grants purchaser option to purchase the property. Under the option the vendor agrees/promises to give purchaser time period to decide whether or not purchase the property. In the case of Sing Lian Express v. Soh Kim Tee [1974] 2 MLJ 24 the court held that an option holder had a caveatable interest with respect to the land.
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Option Other issues on Option CHENG CHUAN DEVELOPMENT SDN BHD v. NG AH HOCK [1982] 2 MLJ 222 (FC) Daiman Development Sdn Bhd v Mathew Lui Chin Teck & Anor Appeal [1981] 1 MLJ 56 (PC)

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Subject to Contract Most options/booking proformas require the parties to enter into written contracts within specified periods of time on the exercise of the option by the option holder. It means that the parties will enter into a written contract to finalise the transaction. It then becomes an issue whether or not there is a contract for the sale of the property when the parties fail to enter into a written contract.
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Subject to Contract On the one hand, purchasers contend that the written document is merely a formality. On the other hand, vendors argue that the written agreement is mandatory. The resolution of this issue requires the analysis of the Malaysian contract law. First, unlike the United Kingdom, the Contract Act 1950 does not require contract to be solely in writing. UK Law Statute of Frauds Winn v. Bull
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Subject to Contract The Statute provides that all agreements relating immovable properties must be in writing. In the case of Winn v. Bull the court held that the oral agreement relating lease of a building was void for not being in writing. It seems that by virtue of section 5 of the Civil Law Act 1956, the Statute of Frauds is applicable in Sabah and Sarawak but not in the Peninsular Malaysia.
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Subject to Contract In Peninsular Malaysia, the earliest case on this issue had first arose in the case on Low Kar Yit v. Mohamed Isa [1963] MLJ 165. It is noted that the court had based its decision on the case of Winn v Bull. In Peninsular Malaysia, it appears that, even if a sale and purchase agreement is not in writing, there can still nevertheless be a valid agreement. The proposition is based on the followings:
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Subject to Contract

Contract may generally be created orally, by conduct or in writing - see definitions of offer and acceptance in sections 2(a) and (b).
Exceptions: o Section 26(a)

o Required by statute
o Express provision in the offer
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Subject to Contract Chillimgworth v. Esche [1924] CH. 43 Von Hatzfeldt-Wildenburg v. Alexander [1912] 1 Ch 284

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Von Hatzfeldt-Wildenburg v. Alexander Where the option is subject to contract and the parties do not finalise their transaction in written form, the issue whether there is a binding contract is a matter of construction;

The question is to be asked is whether it is a condition of the bargain; or

Whether it is merely an expression of the desire of the parties as to the manner in which the transaction will in fact go through.
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Von Hatzfeldt-Wildenburg v. Alexander If the answer is the former, then no contract is created if no written contract is signed. If the answer is the latter, there still be a contract if the oral agreement contains all the terms necessary for the effective performance of the oral agreement. Thus in the case of Diamond Peak Sdn. Bhd. v. Tweedie [1982] 1 MLJ 97 Gun Chit Tuan J. said that:
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Diamond Peak Sdn. Bhd. v. Tweedie 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 its validity. Per Gunn Chit Tuan J. at p. 104

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Diamond Peak Sdn. Bhd. v. Tweedie The Federal Court had, in the case of Lim Keng Siong & Anor v. Yeo Ah Tee [1983] 2 MLJ 39 affirmed that statement: it was the intention of the parties to come to a definite and complete agreement on the subject of the sale and the mere fact that a written contract had not been drawn up and executed by them does not necessarily mean that there was no legally binding and enforceable agreement.
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Subject to Contract In Peninsular Malaysia, it appears that, even if a sale and purchase agreement is not in writing, there can still nevertheless be a valid agreement. This is illustrated in the case of Daiman Development Sdn Bhd v Mathew Lui Chin Teck & Anor Appeal [1981] 1 MLJ 56
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Position in the Peninsular Low Kar Yit & Ors. v. Mohd Isa & Anor [1963] MLJ 165 Esso Standard Malaya Bhd. v. Southern Cross Airways (M) Bhd. [1972] 1 MLJ 168 Lim Keng Siong & Anor v. Yeo Ah Tee [1983] 2 MLJ 39

Daiman Development v. Mathew Lui Chin Teck & Anor [1981] 1 MLJ 56
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Sale & Purchase Agreement Normal sale and purchase agreements. HD (C & L) Act 1966 o Schedule G o Schedule H Standard terms:

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Standard Terms Purchaser pays 10% of sale price on signing of sale and purchase agreement. Balance 90% will be paid according to the terms: o Lump sum amount within a specified period.

o By instalments within specified periods.

Stakeholder

Transfer of title
Free from encumbrances
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Stakeholder Definition General Duty Stakeholder Absconds

Duty to Invest
Duty as Trustee
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Stakeholder-Definition

Vernon Ong J. in Tay Hup Lian v Histyle Sdn Bhd & Anor [2010] 9 MLJ 569 explains:
The word stake is generally used to apply to any money to be disposed of in accordance with the occurrence of a future event; and the party in possession of the money is often described as a stakeholder. at p. 579

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Stakeholder The judge in Kuldip Singh & Anor v Lembaga Letrik Negara & Anor [1983] 1 MLJ 256) defines a stakeholder as a person who receives money and holds it in medio pending the outcome of a future event.
Hashim Yeop Sani J. in Toh Theam Hock v Kemajuan Perwira Management Corps Sdn Bhd [1988] 1 MLJ 116 (SC) explains the essence of stakeholding as:
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Stakeholder
What is in essence stakeholding? The word stake is in common parlance used to apply to any money to be disposed of in accordance with what may happen in future; and whoever is in possession of the money is often described as a stakeholder. The manner in which money is disposed of depends on the terms on which it is held.
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Stakeholder-Duty General Duty:

The stakeholders general duty is, as decided in Hampden v Walsh [1876] 1 QBD 189 is to hold the money as trustee for both parties to await that event and until that event is known, it is his duty to keep it in his own hands.

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Stakeholder-Duty In Burt v Claude Cousins & Co Ltd [1971] 2 QB 426 Lord Denning MR in his dissenting judgment explained the liability of an estate agent or solicitor receiving a deposit as a stakeholder which statement of the law was accepted by the House of Lords in Sorrell v Finch [1976] 2 All ER 371.
He said:

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Stakeholder-Duty Burt v Claude Cousins & Co Ltd

Lord Denning MR: (dissenting judgment) If an estate agent or solicitor, being duly authorised in that behalf, receives a deposit as stakeholder, he is under a duty to hold it in medio pending the outcome of a future event. He does not hold it as agent for the vendor, nor as agent for the purchaser.
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Stakeholder-Duty If the purchaser should become entitled to the return of his deposit, he must sue the estate agent or solicitor for it:
see Eltham v Kingsman (1818) 1 B & Ad 683 and Hampton v Walsh [1976] 1 QBD 189.

He cannot sue the vendor, because the vendor has never received it, or becomes entitled to receive it.
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Stakeholder as Trustee Skinner v Trustee of Property of Reed [1967] 2 All ER 1286

He holds it as trustee for both to await the event. Per Cross J at page 1289

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Stakeholder & Interest Harrington v Hogart (1830) 1 B & Ad 577

Until the event is known, it is his duty to keep it in his own hands; or to put it on deposit at the bank; in which case he is entitled to keep for himself any interest that accrues to it.

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Stakeholder Absconds Kuldip Singh & Anor v. Lembaga Letrik Negara & Anor [1983] 1 MLJ 256 CONTRAST
OCBC Bank (M) Bhd v Lee Lee Fah & Ors And Another Appeal [2000] 1 MLJ 134

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HD (C & L) Act 1966 See Cases

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