DAVIS CONTRACTORS LTD V FAREHAM UDC ( 1956 ) 2 ALL ER 145

1) FACTS

a) The appellants tendered for a contract with the respondents to build 28

houses for 8 months. The tender was accompanied by a letter which stated
that the tender was subject to adequate supplies of materials and labour when
required to carry out the work within the time specified. Later, the appellants
entered into a contract with the respondents to build the houses at a fixed
price, subject to certain adjustments.
b) The contract incorporated a number of preliminary documents, listed in a
clause. The tender was specified to be one of them, but the letter was not.
c) Due mainly to the lack of skilled labour, the work took 22, instead of 8
months. The appellants were paid the fixed price, plus the stipulated
increases and adjustments. However, they claimed that they were entitled to
more money on the basis of quantum meruit.
d) The appellants also argued that the price in the contract was not binding
either because it was subject to an overriding condition contained in the
letter, or due to the delay in the performance of the contract due to the
shortage of labour which frustrated the contract.

2) ISSUE

a) Are the appellants entitled to more money on the basis of quantum meruit?
b) Was the contract overridden by the letter in the tender?
c) Was the contract frustrated due the shortage of labour that caused a long
delay in the performance of the contract?

3) HELD

a) The appeal was dismissed.

b) The appellants are not entitled to be paid more money on the basis
of quantum meruit as:
c) The letter in the tender and the condition which it stipulated were not
incorporated in the contract.
d) The fact that the two parties expected that the work could be finished within
eight months did not result in the contract being frustrated when it turned out
that it could not be performed within the specified time.
 RAMLI BIN ZAKARIA V GOV OF MALAYSIA ( 1982 ) 2 MLJ 257

1) FACTS

a) In this case, the appellants were a group of 86 vocational school teachers

who were successful in their application for teacher training. One of the
conditions of the offer which was accepted was that the teachers would on
completion of the course be accepted as teachers on the UTS scale.
b) By the time they completed their course of training the UTS scale had been
abolished and the Abdul Aziz scheme came into force. The appellants were
offered salaries under the Abdul Aziz scheme.
c) The appellants claimed that they should have been paid salaries and
allowances under the UTS scheme.
d) The respondent pleaded that as the recruitment of teachers into the UTS
scheme had been discontinued the offer to employ them under the UTS
scheme had become frustrated.
e) The learned trial judge dismissed the claim of the appellants and they
appealed to the Federal Court.

2) HELD

a) Where after a contract has been entered into there is a change of

circumstances but the changed circumstances do not render a fundamental or
radical change in the obligation originally undertaken to make the contract
something radically different from that originally undertaken, the contract
does not become impossible and it is not discharged by frustration
b) In this case it is wrong to say that the contract was not capable of being
performed and it was not therefore frustrated. On the acceptance of the Abdul
Aziz recommendations the government put into force an improved salary
scale and this was applicable to the appellants.
c) Thus the UTS scheme was abolished and ceased to apply to the appellants.
After that the appellants were given a higher commencing salary and a more
favourable scale than that of the UTS scale.
 TAYLOR V CALDWELL ( 1863 ) 122 ER 309

1) INTRODUCTION

a) The case of Taylor v Caldwell is a fundamental case in the area of frustration

with regards to contract law. Taylor v Caldwell is an extremely important
case, as Murray states,“frustration developed to alleviate harshness of
absolute obligation rule”.
b) Frustration comes about in circumstances where the courts will discharge the
parties of obligations under the contract, therefore meaning that the parties
are not liable for any further obligations under the contract.

2) CASE FACTS

a) The case centred on a musical hall which the claimant agreed to hire from the
defendant. The hall was to be used for ‘grand concerts’ and fetes. However
before the performance that the music hall was to be used for; there was a
fire and the hall was destroyed. Neither party was at fault for this destruction.
The claimant sued for breach of contract.
b) The legal issue is whether because the hall that the claimants had contracted
to use could no longer be used, this excuses the rights and liabilities of the
parties’obligations under the agreement? Under the doctrine of absolute
obligations the defendants would be liable to the claimants because under the
agreement they would no longer be able to perform their obligations which
had been contracted for; namely the use of a music hall for four days
c) In the case, Justice Blackburn notes the harshness of this obligation and
therefore, it was held that the defendant was released from their obligations
under the doctrine of frustration.
d) The reasoning behind this is that this was the most just solution and the one
that made the most sense in terms of contract law. If the parties were forced
to continue their obligations under the contract even though the music hall
was on longer in use then this performance would be very different from the
ones that the parties had originally contracted to undertake.
e) The burnt down musical hall renders the contract undoable under the current
terms.

3) ANALYSIS

a) However Justice Blackburn does state that this will not always be the case, as
he points out in this case it was “absolute and positive”that there were no
express or implied terms of the contract that the obligations should carry on.
Therefore this means that if such a contract had, had a term in it- be it
express or implied- that even in the event of the accidental damage the
obligations of the parties were to carry on, then they wouldn’t have been
discharged. This is a key principle from the case because while it brings into
existence the doctrine of frustration it puts a caveat on it.
b) Justice Blackburn also sets out the example principle of when this type of
situation can arise. As the Courts point out these decisions will be made in
situations where “the performance depends on the continued existence of a
given person or thing, a condition is implied that the impossibility of
 performance arising from the perishing of the person or thing shall excuse
the performance.” This phrase gracefully sums up the position. He goes onto
say that even if this hasn’t been expressly put into the contract that the
excuse is implied by law. This where the crux of the matter lies, as he states
that the parties only contracted on a basis on the ‘continued existence’of the
chattel.
c) Without the chattel being in existence it was clearly not the intentions of the
parties to carry on the obligations of the contract.

4) COMPARISON AND EVALUATION

a) However to fully appreciate the impact of Taylor it is important to analyse

two following cases to see how the doctrine functions fully. Krell v
Henry[8] and Herne Bay Steamboat Co v Hutton.
b) Both of these cases revolve around the procession of Edwards VII that was
cancelled due to ill health. In Krell the defendant hired a flat from the
claimant. Claimant brought an action to claim the rent was not already paid
under the agreement. It was held in this case that the contract had been
frustrated by the non-occurrence of the event.
c) The Coronation Procession was the foundation of the contract. However
comparing this with Herne Bay where the defendant rented a boat from the
claimant to take paying passengers to see a Naval Review that had been
organised as part of the Edward VII events day. However this time it was
held that the contract was not frustrated this was because neither the review
nor the tour of the fleet were at the foundation of the contract.
d) Both of these case had relied upon Taylor the issue centres around the
implied terms test from Taylor. Justice Sterling acknowledges the issues
from Taylor but stipulates that the defendants could still make use of the boat
and visit the fleet therefore the key area of the contract had not been
frustrated. But in Krell even though the use of the flat could still be enjoyed
its fundamental use had now been diminished.
e) This boils down to the fact there was still an element of commerciality in
Herne Bay but this was no longer there in Krell therefore frustrated the
contract. Harping back to Taylor, it is evident that there is a close line to be
drawn with regards to the implied terms of the contract. These two cases
offer an evolution of the rule, the reasoning being that the contract in Herne
was not dramatically altered as it was in Krell and Taylor therefore reads into
the implied terms of the contract.
f) It would not have been just and equitable to release the parties from their
obligations under this contract but it was the just thing to do with regards to
the other two cases.
 LEE SENG HOCK V FATIMAH BTE ZAIN ( 1996 ) 3 MLJ 665

1) FACTS

a) The appellant was the registered proprietor of a [half ] share in a certain

piece of land (‘the land’). The other [half ] share formed the asset of the
estate of one Hatijah bte Hj Jusoh (‘the deceased’). In December 1979, the
respondent – in her capacity as the administratrix of the deceased’s estate –
entered into a sale and purchase agreement with the appellant to sell the
deceased’s [half ] share of the land at a purchase price of RM40,000 (‘the
agreement’).
b) The appellant paid to the respondent a sum of RM4,000 representing
10[percnt] of the purchase price. In March 1980, a kadi’s certificate was
issued distributing the [half ] share of the land in the estate of the deceased to
the respondent and baitulmal in the proportion of a [half ] share each,
resulting in the respondent and baitulmal having a [lsqb ]1[sol ]4[rsqb ] share
each in the land. In May 1994, the whole land was acquired by the
government.
c) Compensation was awarded to the appellant for his [half ] share of the land,
and the respondent for her ¼ share of the land. The appellant filed an
application claiming for the compensation due to the respondent less the
balance of the purchase price due under the agreement. The respondent
contended that the agreement had been frustrated because of the compulsory
acquisition of the whole land by the government, and it was impossible to
perform the agreement.
d) The trial judge upheld this contention and ordered that the compensation
payable to the respondent for her ¼ share of the land be paid out to her less
the sum of RM4,000 being the 10[percnt] deposit to be refunded to the
appellant. The appellant appealed. The principal issue raised in this appeal
was whether the doctrine of frustration applied so as to discharge the parties
from their obligations under the agreement.

2) HELD

a) Held, dismissing the appeal .

b) The doctrine of frustration, as statutorily recognized by s[nbsp ]57(2) of the
Contracts Act 1950 (‘the Act’), was applicable in this case. The acquisition
of the land had radically changed the obligation of the respondent to sell her
[half ] share of the land to the appellant, as what was agreed and intended by
the parties and affirmed by the agreement was a transfer of a [half ] share of
the land from the respondent to the appellant by way of a sale
c) When the land was compulsorily acquired and compensation awarded, the
subject matter of the agreement ceased to exist and performance of the
agreement became impossible.
d) For that reason, the compulsory acquisition of the land had frustrated the
agreement so as to discharge both the appellant and the respondent of their
obligations under the agreement
e) Since the subject matter of the agreement had been taken away and replaced
by way of compensation, the appellant could not claim such compensation as
being due and payable to him because the basis of the appellant’s claim was
dependent on the agreement. Since the agreement was void under s[nbsp ]
57(2) of the Act, the appellant could not claim any right to such
compensation. At most, under s[nbsp ]66 of the Act he was entitled to be
refunded the 10[percnt] deposit he had paid to the respondent.
 PUBLIC FINANCE BHD V EHWAN BIN SARING ( 1996 ) 1 MLJ 331

1) FACTS

a) The respondent purchased a motor car (‘the vehicle’) from T for RM82,000.
The respondent paid a sum of RM57,000 out of which RM40,517.97 was
paid to T, and RM16,482.03 to Public Finance Bhd (‘the appellants’), for the
purpose of settling T’s outstanding account with the appellants. For the
balance of RM25,000, the respondent (as hirer) entered into a hire-purchase
agreement (‘the agreement’) with the appellants (as owners) wherein that
sum was advanced by the appellants to the respondent to pay T the balance
of the purchase price.
b) The respondent had also signed a letter of indemnity whereby he agreed to
indemnify the appellants against all losses in the event the appellants lost the
title and possession of the vehicle. Six weeks after the agreement was
executed, the vehicle was seized by the Customs and Excise Department for
an alleged offence.
c) The respondent filed an action in the sessions court for the return of the
RM57,000 and a further sum which had been expended on repairs and other
charges on the vehicle.

2) HELD

a) Held, dismissing the appeal

b) The conduct and actions of the appellants showed that they had held
themselves out as the owners of the vehicle at the time the agreement was
entered into, and that they were capable of giving a good title to the
respondent whenever he might choose to end the hiring by paying the
balance due. However, as the vehicle was seized by the customs soon after
the agreement was executed and had not been returned to either party since,
it had become impossible for the appellants to pass a good title to the
respondent. Pursuant to s[nbsp ]57(2) of the Contracts Act 1950, the
agreement had become void, and the appellants were obliged to return the
RM57,000 to the respondent under s[nbsp ]66 of the Contract Act 1950
c) S 7(4) of the Act preserves the implied condition at common law whereby
the owner had to have a good title when he entered into the hire-purchase
agreement, and not when the final payment was made. The phrase ‘at the
time when the property is to pass’ in s[nbsp ]7(1)(b) means at the time when
a hirer decides to pay all sums due under a hire-purchase agreement. A
breach of s[nbsp ]7(1)(b) amounts to a breach which goes to the root of the
agreement, entitling a hirer to recover the amount already paid by him. The
Act does not differentiate between new and second-hand goods as far as
ownership is concerned. It also does not provide that the implied condition
and warranties under s[nbsp ]7(1) do not apply to second-hand goods. An
implied condition that the owner shall have good title to pass cannot be
excluded from a hire-purchase agreement
d) The letter of indemnity formed part of the agreement. The letter, which
purported to exclude provisions of the Act which was meant to provide
protection to hirers, contravened the Act and was void under s[nbsp ]34(a),
(b) and (g) of the Act. There had been a total failure of consideration, and the
appellants could not claim that the implied condition as to title provided for
under s[nbsp ]7(1)(b) of the Act was not applicable.
 LEE KIN V CHAN SUAN ENG ( 1933 ) MLJ 197

1) FACTS

a) By a sub-sub-sub-lease dated the 3rd October, 1927, the defendant sub-

leased to the plaintiff certain land for a period of five years and renewals
thereof subject to the provisions of the Mining Enactment,
1911.Subsequently the Mining Enactment, 1928, and the Tin and Tin-ore
(Restriction) Enactment, 1931, came into force.
b) The former Enactment, apart from repealing the Mining Enactment, 1911,
effected changes in the status of sub-sub-sub-leases, and the rules made
under the latter Enactment materially affected mining operations and the
interests of parties to mining leases entered into prior to it becoming law.

2) HELD

a) Held: There was nothing in the sub-sub-sublease from which it appeared that
the parties intended to bind themselves with reference to the future state of
the law, and the presumption was that the parties intended to contract with
reference to the law existing at the time the contract was made.
 METROPOLITAN WATER BOARD V DICK , KERR & CO ( 1918 ) AC 119

1) FACTS

a) In July 1914, Dick, Kerr & Co agreed to build a reservoir in six years for the
Metropolitan Water Board (London). The contract said that Dick, Kerr & Co
should apply to the engineer for an extension of time in the event of delay
‘whatsoever and howsoever occasioned’.
b) Two years alter on 21 February 1916, due to the war, the Ministry of
Munitions ordered Dick, Kerr & Co to stop work and sell their plant.
c) The MWD subsequently sued Dick Kerr to complete the reservoir.

2) HELD

a) The House of Lords held that the contract was frustrated, because the delay
clause was intended to cover temporary difficulties, and not such
fundamental changes in the contract’s nature.
 ABDUL KADER V SHAW , BROS LTD ( 1940 ) MLJ 216

1) FACTS

a) The court will not decree specific performance of an agreement for a

monthly tenancy.
b) If such an agreement is frustrated or rendered impossible of performance by
reason of the coming into force of the Rent Restriction Ordinance 1939, no
damages will be recoverable by either party in respect of the period of such
frustration.

2) HELD

a) PEDLOW J
b) I do not suppose that this matter is going to appeal, but if it does I would say
that I accept the view of both counsel that specific performance of a month to
month contract is not one which the Court should award, and that, as the
Rent Restriction Ordinance came into force on the 30th of October and was
given retrospective effect to the 1st of August, it seems to me that if there
ever was a contract for the letting of the cigarette stall which is now a
showcase, that contract was thereby frustrated as the previous tenant refused
to give up possession.
c) Claim dismissed.
 HA BERNEY V TRONOH MINES ( 1949 ) MLJ 4

1) FACTS

a) In this case the plaintiff sued for breach of contract of service. On the
invasion of Malaya by the Japanese forces the European staff of the
Defendant Company was evacuated from Tronoh, Tanjong Tuallang and
other places but the plaintiff elected to remain at Tanjong Tuallang.
b) The Defendants contended that consequent on the Japanese occupation of
Perak, the contract of employment between them and the plaintiff was
discharged by frustration.

2) HELD

a) Held, that the invasion of Malaya by the Japanese frustrated the performance

of the contract and therefore there was no breach of contract by the
Defendants.
 KRELL V HENRY ( 1903 )

1) FACTS

a) By contract in writing of 20 June 1902, the defendant agreed to hire from the
plaintiff a flat in Pall Mall on 26 June and 27 June, on which days it had been
announced that the coronation processions would take place and pass along
Pall Mall.
b) The contract did not contain any express terms on the coronation processions
or any other purposes for which the flat was to be hired.
c) The defendant paid the deposit upon signing the contract.
d) The processions, however, did not take place on the announced dates.
e) As a result, the defendant declined to pay the balance of the agreed rent.

2) ISSUE

a) Was the defendant obliged to pay the rent despite the fact that the
processions did not take place as planned?

3) HELD

a) The decision was in favour of the defendant.

b) Applying Taylor v Caldwell (1863) 3 B & S 826,as both parties recognised
that they regarded the taking place of the coronation processions on the days
originally fixed as the foundation of the contract, the words of the obligation
on the defendant to pay for the use of the flat for the days named were not
used with reference to the possibility that the processions might not take
place.
c) The plaintiff was not entitled to recover the balance of the rent fixed by the
contract.
 CHANDLER V WEBSTER ( 1904 )

1) FACTS

a) Mr Webster agreed to let Mr Chandler a room on Pall Mall to watch the

King's coronation on June 26 1902 for £141 15s. It was understood between
the parties that the money for the room should be paid before the procession.
Mr Chandler had in fact hired the room not for himself, but for a customer.
Ultimately the customer did not want the room, since a relative had died.
b) On June 10 Mr Chandler wrote to Mr Webster saying,“I beg to confirm my
purchase of the first-floor room of the Electric Lighting Board at 7, Pall Mall,
to view the procession on Thursday, June 26, for the sum of £141, 15s.,
which amount is now due. I shall be obliged if you will take the room on
sale, and I authorize you to sell separate seats in the room, for which I will
erect a stand. If the seats thus sold in the ordinary way of business do not
realize the above amount by June 26, I agree to pay you the balance to make
up such amount of £141, 15s.”
c) Mr Chandler paid £100 on 19 June but then the King fell ill.
d) The question was whether the £100 could be recovered by Mr Chandler, or
whether Mr Webster could demand the balance.

2) HELD

a) High Court

i. Wright J held that the plaintiff was not entitled to recover the 100l.
which he had paid, and that, on the construction of the letter of June 10,
it appeared that the balance was not payable until after the procession,
and consequently the defendant was not entitled to recover on the
counter-claim.

b) Court of Appeal

i. Lord Collins MR, Romer LJ and Mathew LJ held that Mr Chandler was

not entitled to recover his damages before the procession became
impossible.
 YONG UNG KAI V ENTING ( 1965 ) 2 MLJ 98

1) FACTS

a) The defendant entered into a written agreement with the plaintiff for the sale
of timber on land in which a tribe had communal customary rights. In order
to cut the timber a licence from the forests department was required.
b) The written agreement did not refer to the necessity of obtaining a licence.
The defendant did his best to get a licence but this was refused.
c) On a claim for breach of contract.

2) HELD

a) There was an implied term that the sale of the timber was to be subject to the
obtaining of the necessary licence;
b) As the licence was refused the contract became impossible to perform
because of frustration and the plaintiff was therefore entitled to the return of
moneys advanced by him to the defendant under the terms of the agreement
 TSAKIROGLOU V NOBLEE THORL GMBH ( 1962 ) AC 93

1) FACTS

a) The appellants agreed to sell to the respondents Sudanese groundnuts for

shipment to Hamburg during November/December 1956. The agreement
included a CIF (cost, insurance and freight) term (requiring the seller to
arrange the carriage of the goods by sea to Hamburg and to provide the buyer
with the necessary documents to obtain the groundnuts from the carrier). 
b) A force majeure clause was also incorporated in the contract. It provided that
in cases of force majeure the deadline for the delivery of the goods should be
extended by no more than two months, after which the contract should be
cancelled.
c) At the beginning of November, the Suez Canal was closed to navigation due
to the military operations by the British and French armed forces against
Egypt, but the goods could have been shipped around the Cape of Good
Hope. The alternative route via the Cape of Good hope was almost twice as
long and respectively the freightage was more costly. The sellers failed to
ship the goods.
d) The case became subject to arbitration proceedings and the umpire held that
the sellers were in default. His decision was later confirmed

2) ISSUE

a) Were the appellants bound to ship the groundnuts via the Cape of Good
Hope?
b) Was the shipment of the groundnuts via the Cape of Good Hope a frustration
of the contract?
c) Could the appellants rely on the force majeure clause incorporated in the
contract?

3) HELD

a) The appeal was dismissed.

b) The term that the groundnuts needed to be shipped via the Suez Canal was
not implied.
c) Given that the customary route via the Suez Canal was closed, by virtue of s
32 (2)Sale of Goods Act 1893, the appellants were bound to ship the goods
via a reasonable and practicable route, despite the fact that this would have
cost more to them.
d) The shipping of the groundnuts via the Cape of Good Hope did not render
the contract fundamentally different and therefore, did not present a
frustration of the contract.
e) The appellants could not rely on the force majeure clause incorporated in the
contract since it covered the ‘shipment’ of the goods, not the failure to ship
them. Shipment meant loading the goods on the board of a ship prepared to
carry them to the contractual destination.
 KWAN SUN MING V CHAK CHEE HING ( 1965 ) 1 MLJ 236

1) FACTS

a) There was no evidence to establish usage and damages for breach of contract
was assessed on the proper value of the logs, ie their value at the place of
delivery.

2) HELD

a) There was no justification for interfering with the finding of the learned trial
judge on the question whether the storm amounted to an act of God because
his finding was based on all the evidence given in this case
b) There was no evidence to establish usage and the damages must be assessed
on the proper value of the logs, that is the value of the logs at the place of
delivery.
 KHOO THAN SUI V CHAN CHIAU HEE ( 1976 )

1) FACTS

a) The defendant has contracted to recuse logs from the river Sugut plaintiff to
Sandakan.
b) Defendants are required to attract eighty two logs, but only eleven arrived
safely only because of strong riut at sea.-Plaintiff has made a claim for
damages for any loss of logs wood, butthe defendant refused to pay damages
on the grounds that the natural disasters that have occurred that caused the
contract to be frustrated.

2) HELD

a) The defendants reason that natural disasters that cause the contract tobe
disappointed not acceptable due tempest that occurred have not reached the
stage of natural disasters and should be in such weather conditions, the
defendant should take precautions to face all eventualities.
b) Becomes more onerous or costly
YEE SENG PLANTATIONS V KERAJAAN NEGERI TERENGGANU ( 2000 )
3 MLJ 699

1) FACTS

a) The appellant was the sub-lessee of certain lands in Kerteh Terengganu (‘the

land’). In the years 1984 and 1986, the government of the state
of Terengganu acquired some of the land. The appellant took out an
originating summons (‘the first action’) challenging the acquisition. The
second, third and fourth respondents were cited as defendants in the first
action.
b) The State Legal Adviser represented them. Following negotiations between
the appellant’s solicitors and the State Legal Adviser, the first action was
compromised and the agreement was recorded in the form of a consent order.
However, difficulty arose when the state authority, ie the State Executive
Council (‘the Exco’) of the first respondent decided to reject the appellant’s
application for the alienation of the land referred to in the consent order. The
respondents commenced an action (‘the second action’) seeking for a
declaration that they were not bound by the terms of the consent order.
c) It was submitted that the obligation to secure the alienation of the land was
not something over which they had any control because the provisions of the
National Land Code 1965 (‘the Code’) vest the power to alienate land in the
sole discretion of the Exco.
d) The decision of the Exco was a supervening event over which the
respondents had no control. As such the consent order was frustrated. The
High Court agreed with the respondents’ argument and granted the relief
sought by them.
e) The appellant appealed.
f) The issues before the court were:
(i) Whether the first respondent had been impleaded as a party to the first action
and was therefore bound by its terms;
(ii) Whether the consent order had become frustrated; and
(iii) Whether the respondents adopted the correct procedure.\

2) HELD

a) Held, allowing the appeal:

b) By virtue of s16(2) of the Code, the State Authority is to be impleaded in a
suit or other proceeding by citing the State Director as a party. It was not in
dispute that the second respondent, the State Director, was a defendant in the
first action. He was the first defendant. The state authority was therefore a
party to the first action by virtue of s[nbsp ]16(2) of the Code (see p[nbsp ]
708H[ndash ]I).
c) It is well settled that the doctrine of frustration has no room where there is
fault on the part of the party pleading it. In the present case, the refusal of the
Exco to alienate the land in question was a deliberate act of non-compliance
of the consent order by a party to the first action. It was not a supervening
event at all. In these circumstances, it was not open to the respondents to rely
on the doctrine (see[nbsp ]pp[nbsp ]710F, I[ndash ]711A).
d) Section 29(1)(b) of the Government Proceedings Act 1956 has nothing
whatsoever to do with the facts of this case. There was no bar to the Exco
binding itself to alienate land to any person. Once the agreement was entered
into and formalised as a rule of court, it vested in the appellant a legitimate
expectation that the promise made to it will be carried out (see p[nbsp ]
711F).
e) Section 42 of the Code vests the power in the Exco to alienate land. That was
precisely what the Exco agreed to do in the first action. The Exco’s later
change of heart was not a supervening event that frustrated the consent order.
It[nbsp ]was a breach of an obligation voluntarily undertaken and given
effect to in the form of an order of the court (see p[nbsp ]712B[ndash ]C).
f) The declaration in the terms sought by the respondents would not result in
there being two inconsistent decisions in the same matter. Further a consent
order may be set aside in a fresh action on the same grounds on which an
agreement may be set aside. The respondents in the present case had not
made out a case to impeach the judgment in the first action 
 MARITIME NATIONAL FISH LTD V OCEAN TRAWLERS LTD ( 1935 )

1) FACTS

a) The respondents owned a steam trawler, which was fitted with an otter trawl.
The vessel could only operate as a trawler. The respondents chartered the
vessel to the appellants. According to the charterparty, the vessel could only
be used in the fishing industry. The charterparty was renewed for a year in
October 1932.
b) At the time, both parties knew that under the Canadian statute, it was an
offence to leave a Canadian port with the intent to fish with a vessel with an
otter trawl, unless licensed to do so by the Minister. In March 1933, the
appellants applied to the Minister to grant them licences for five trawlers that
they were operating. The Minister informed that appellants that only three
licences would be granted and asked them to name in respect of which three
vessels they should be granted.
c) The appellants named the three trawlers and the vessel in question was not
among them. Subsequently, they claimed that they were no longer bound by
the charterparty as it was frustrated by the refusal of the Minister to grant a
licence in respect of the steam trawler in question.

2) ISSUE

a) Was there a frustration of the charterparty because a licence was not granted
in respect of the steam trawler?
b) Did the charterers remain liable for the hire?

3) HELD

a) The decision was in favour of the respondents.

b) There was no frustration of the charterparty as the absence of a licence was
due to the fact that the appellants’ choice of vessels, which were to be
granted licences.
c) Therefore, the appellants remained liable for the hire of the vessel.
 DATO YAP PENG V PUBLIC BANK BHD ( 1997 )

1) FACTS

a) On 8 August 1986 Bank Negara, acting under the powers conferred upon it

by reg 8(1) of the Essential (Protection of Depositors) Regulations 1986 ('the
Regulations'), issued the Essential (Protection of Depositors) (No 14) Order
1986 ('the Order').
b) The effect of the Order was, subject to the consent of Bank Negara, to
impose a prohibition upon the first appellant and all companies in which he
had an interest from dealing, either by themselves or through their agents,
with their assets. At the time the Order was made, the second to the fifth
appellants had borrowed various sums of money from each of the five
respondents in this appeal. The first appellant was the majority shareholder
of the second to the fifth appellants and had guaranteed the loans.
c) To each respondent, one or more of the appellants had provided security,
either in the form of public quoted shares or land. When the respondents
were not paid what was due to them under each of the contracts of loan or
security transactions they had with one or more of the second to the fifth
appellants, they took steps to exercise the rights available to them. In some of
the cases, consent was applied from Bank Negara before the forced sale took
place. On 19 January 1994, the appellants issued a writ against the
respondents claiming, inter alia, a declaration that the sale of the properties
was illegal and void.
d) There was also a claim for damages. Each of the respondents delivered their
respective defences to the action. Later, each of them took out an application
to have the writ and statement of claim struck out under the provision of O
18 r 19 of the Rules of the High Court 1980. These applications were heard
together by the deputy registrar who granted them. The appellants then
appealed to the judge in chambers.
e) The appeal came before the learned judicial commissioner who affirmed the
deputy registrar's order and dismissed the appeal. It was against his decision
that the present appeal had been brought.
f) Counsel for the appellants submitted that since each of the respondents as
bankers was the appellants' agent in respect of the properties they had sold,
and the Order did not permit sale by the appellants or their agents, the sale
was illegal and void.
g) It was also submitted that the right of redemption and the right to obtain a
discharge of charge under each of the relevant security transactions which the
appellants had with each of the respondents had been frustrated by the
making of the Order.
h) Counsel argued that the judicial commissioner had failed to deal with the
issue of frustration and had erred in summarily disposing of the case.

2) HELD

a) Held, dismissing the appeal:

b) Where the relationship between a banker and a person or corporation against
whom a reg 8 Order was made was not one of principal and agent, but
creditor and debtor, or surety and creditor, the Order did not apply. The
 relationship relied upon in the statement of claim in the instant appeal was
one of creditor and debtor and not principal and agent. It was therefore futile
to argue that the Order had the effect of prohibiting each of the respondents
from disposing of the securities in their hands for the purpose of recovering
moneys owed them. The judicial commissioner was entirely correct in
concluding that the Order had no application to the fact pattern which the
statement of claim disclosed .
c) A supervening prohibition of some contractually undertaken obligation,
which could be overcome by obtaining a licence, would only frustrate a
contract at once if the person affected by the prohibition could show that no
licence could in any event have been obtained. If this was uncertain, then his
obligation was to use his best endeavours to obtain the necessary licence, and
the contract then only became frustrated if and when all such efforts had
failed. In this case, a provision in the Order enabled sale or disposal of the
assets with the consent of Bank Negara. It was for the appellants to apply for
and obtain that consent in any case in which they wished to exercise their
right of redemption over movables or to discharge a charge over
immovables. On the facts, this had not been done and the test for frustration
of the contracts had not been satisfied.
d) Even if there was frustration, it was self-induced frustration which was not
recognized by law (see p 493B—H); Dalmia Dairy Industries
Ltd v National Bank of Pakistan [1978] 2 Lloyd's Rep 223, Davis
Contractors v Fareham Urban District Council [1956] AC 696 and Joseph
Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd [1942] AC
154 followed.
e) Having scrutinized the statement of claim and having considered the
arguments of counsel the court was of the opinion that this was a plain and
obvious case and was suitable for summary disposal (see p
494E); Rediffusion (Hong Kong) Ltd v A- G of Hong Kong [1970] AC
1136; [1970] 2 WLR 1264 followed.
LAI KOK KIT @ SULAIMAN BIN ABDULLAH V MBf FINANCE BHD ( 2000
) 3 MLJ 136

1) FACTS

a) The plaintiff was the registered proprietor of a double storey terrace house in
Klang ('the subject property'). In 1987, the plaintiff charged the subject
property to the defendant to secure a loan of RM80,000 which was made
under an agreement dated 28 August 1987 ('the first agreement'). The
plaintiff defaulted in making repayment and the defendant instituted
foreclosure proceedings for the sale of the subject property by way of public
auction. Later, an agreement was entered into between the plaintiff and the
defendant to restructure the loan facility that formed the subject matter of the
first agreement.
b) On 14 June 1989, the defendant wrote to the plaintiff a letter setting out the
terms and conditions of the restructure which the plaintiff had accepted ('the
second agreement'). The defendant granted the plaintiff a fresh loan of
RM80,000 and a personal loan of RM5,000.
c) The obligation on the defendant under the second agreement was to cancel or
withdraw the order for sale. On 27 July 1989, the defendant wrote to the land
administrator. It asked for the auction to be adjourned until November 1989.
But it did not ask for cancellation or withdrawal of the sale. The land
administrator refused the adjournment.
d) Subsequently, the defendant applied to the High Court for an order setting
aside the order for sale made by the land administrator. On 8 April 1991, the
High Court declined the defendant's application. From about June 1991
onwards, the plaintiff ceased to honour his part of the bargain.
e) The defendant then took out two actions against the plaintiff. The action in
the magistrates' court was for the recovery of the balance due under the
personal loan granted under the second agreement while the action in the
sessions court was to recover the whole of the balance due under the first
agreement.
f) The plaintiff also took out proceedings against the defendant for negligence
and for breach of contract which were tried by the High Court. The learned
judge found that the main object of the second agreement had been rendered
impossible of performance. Counsel for the plaintiff argued that the learned
judge was wrong in treating this case as one coming within the doctrine of
frustration. His argument is that this is a case of an obligation voluntarily
undertaken by the defendant, namely to withdraw or cancel the order for sale.
g) And the defendant had plainly failed to fulfill that obligation and once the
second agreement had taken effect, the first agreement was at an end.
However counsel for the defendant argued that the express clause contained
in the second agreement entitles the defendant to revert to the original
position whenever there is a default.
h) Counsel has drawn the court's attention to the fact that the plaintiff had
defaulted in his obligation since June 1991.
2) HELD

a) Held, allowing the appeal:

b) After a contract has been entered and there is a change of circumstances
which do not render a fundamental or radical change in the obligation
originally undertaken to make the performance of the contract something
radically different from that originally undertaken, the contract does not
become impossible and it is not discharged by frustration (see p
143F); Ramli bin Zakaria & Ors v Government of Malaysia [1982] 2 MLJ
257 (folld) followed. The present case concerns a change in circumstances
that were not radically different from those that prevailed at the time the
second agreement was entered into. All that had happened was that the
defendant had failed to pursue its best endeavours to secure the sale or
withdraw the order for sale .
c) The primary obligation under the second agreement was on the defendant to
do what it promised, namely to have the order for sale cancelled or
withdrawn.By June 1991 (date of the alleged default by the plaintiff), that
obligation remained plainly unfulfilled. Since the defendant had breached its
part of the bargain, it does not lie on its mouth to complain of the plaintiff's
default. The plaintiff was clearly within his rights to refuse to continue
performance of his obligations under the contract in view of the defendant's
d) Upon the making of the second agreement and upon the defendant's breach
of it, the rights of the parties were to be determined in accordance with that
agreement. The defendant did not have the right to have recourse to the first
agreement. Accordingly, the sums claimed by it in the sessions court action
were clearly irrecoverable.
e) However, the plaintiff was under a separate obligation to pay and settle the
personal loan given him under the second agreement