AZALI B BAKAR V. INSUN DEVELOPMENT SDN BHD

Unreported

Haidar b Mohd Noor J:

In this originating summons ('OS') the plaintiff claims an order for:

(1) A declaration that on the true construction of the agreement of sale and purchase dated 12 December 1984, the defendant is bound to pay liquidated damages to the plaintiff calculated at the rate of 10% per annum on a daily basis on the purchase price of RM49,725 from 12 December 1986, to date of delivery of possession to the plaintiff of the house to be erected on Lot 26298 Mukim of Tebrau, State of Johor.

(2) Further or in the alternative a declaration that pursuant to the Housing Developers Act 1966 and Regulations and Rules made thereunder the defendant is bound to pay liquidated damages and/or indemnity to the plaintiff calculated at the rate of 10% per annum on a daily basis on the purchase price RM49,725 from 12 December 1986, to date of delivery of possession to plaintiff of the property held under Lot 26298 in the Mukim of Tebrau, State of Johor.

(3) Consequential relief that the defendant do pay the plaintiff liquidated damages at the rate of RM13.62 per day from 12 December 1986, to the actual delivery of possession of the property held under Lot 26298 in the Mukim of Tebrau, State of Johor.

(4) Costs.

The defendant resisted the OS on two grounds, namely:

(a) The OS for a declaratory order is not the right procedure as it should be by way of a writ for money due.

(b) The right to liquidated rind ascertained damages ( 'LAD') is time-barred by virtue of s. 6(1)(a) of the Limitation Act 1953.

Facts

The defendant is a housing developer and duly licensed under the Housing Developers (Control and Licensing) Act 1966. By a sale and purchase agreement dated 12 December 1984, ( 'SPA') the defendant agreed to sell a piece of land on Lot No. 26298 together with a single storey terrace house ( 'the said house') to be erected by the defendant in a housing estate known as Taman Puteri Wangsa in the Mukim of Tebrau, Johor Bahru for the sum of RM49,725 (see Exh. 'A' to encl. 2).

The plaintiff as the purchaser of the said house together with the land thereon took a loan from the Government of Malaysia in January 1987 and has been paying the Government a sum of RM310.25 a month by way of interest and settlement to the date of the filing of the OS totalling RM24,207.30. Furthermore, he had also paid a total sum of RM5,513.35 towards disbursements, legal costs and insurance to purchase the said house and the land.

By clause 18(1) of the SPA the defendant agreed to complete the said house and deliver vacant possession to the plaintiff within twenty-four (24) calendar months of the date of the SPA, that is, on 11 December 1986.

By clause 18(2) of the SPA the defendant also agreed to pay liquidated damages calculated at the rate of 10% per annum of the purchase price to be calculated on a daily basis in the event the defendant fails to deliver the said house within the time stipulated in clause 18(1) thereof.

Up to the time of the filing of the OS the defendant failed to complete and deliver vacant possession of the said house to the plaintiff. Instead, the defendant requested the plaintiff to enter into a new agreement whereby he has to forego the claim for LAD (see Exh. 'C' in encl. 7). The LAD up to the date of the OS is RM32,946.78 and continues to run on a daily basis at the rate of RM13.62 per day. The plaintiff quite naturally refused to enter into a new agreement as requested by the defendant.

However, on 24 March 1994, (after the filing of the OS) the plaintiff received from MBf Property Services Sdn. Bhd., agent of the defendant, asking the plaintiff to pay the balance of the purchase price of RM29,308 and to take delivery of the vacant possession of the said house (see Exh. 'A' in encl. 8).

Ground (a)

The plaintiff contended that he is proceeding for declaratory judgment and/or order under O. 15 r. 16 of the Rules of the High Court 1980 which reads:

No action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make a binding declaration of right whether or not consequential relief is or could be claimed.

The basis of the plaintiff proceeding by way of declaration is in order to enforce his right under the SPA and the Housing Developers (Control and Licensing) Act 1966 and the Rules made thereunder as otherwise he has to wait until the said house is completed and vacant possession delivered. According to the Counsel for the plaintiff, in view of the judgment of the Privy Council in Loh Wai Lian v SEA Housing Corporation Sdn. Bhd. [1987] 2 MLJ 1 (the factual situation would appear to be quite similar to the present case), that decided that in such a claim for LAD, the cause of action arises when the building has been completed and vacant possession can be given. As the said house was not yet completed and vacant possession could not be delivered, obviously the plaintiff could not pray for judgment for a quantified amount. Further, the defendant in para. 6 of the affidavit of its Chief Executive Officer, Hezan Shah Hj Abdullah (encl. 6) denied the claim of LAD by the plaintiff as per para. 5 of the plaintiff's affidavit (encl. 2). In fact the defendant thought it fit to request the plaintiff to enter into a new agreement foregoing his claim for LAD (see Exh. 'C' to encl. 7). Strangely though, the Counsel for the defendant in her written submission at p. 3, stated "the defendant admits unequivocally the plaintiff's right to damages under the agreement". It seems clear to me that the defendant is "blowing hot and cold" in respect of the claim of LAD by the plaintiff. Only now is the defendant contending that the plaintiffs claim for declaration would serve no useful purpose and in fact can be considered as academic as she submitted that the defendant admits unequivocally the plaintiff s right to damages under the SPA.

The Court's jurisdiction to make a declaratory order was considered by the Federal Court in Datuk Syed Kechik v. Government of Malaysia & amp; Anor. [1979] 2 MLJ where at p. 107, Lee Hoe, CJ (Borneo) (as he then was) quoting with approval the Privy Council case of Ibeneweka v. Egbuna [1964] 1 WLR 219, 224, stated:

The prevailing view seems to be that the Court's jurisdiction to make a declaratory order is unlimited subject only to its own discretion. In Ibeneweka v Egbuna, Viscount Radcliffe in giving the decision of the Privy Council stated:

The general theme of judicial observations has been to the effect that declarations are not lightly to be granted. The power should be exercised sparingly, with 'great care and jealously', with 'extreme caution', with 'the utmost caution'. These are indeed Counsels of moderation, even though as, Lord Dunedin once observed, such expressions afford little guidance for particular cases. Nevertheless, anxious warnings of this character appear to their Lordships to be not so much enunciation of legal principles as administrative cautions issued by eminent and prudent Judges to their possibly more reckless, successors. After all, it is doubtful if there is more of principle involved than the undoubted truth that the power to grant a declaration should be exercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances that call for their making. Beyond that there is no legal restrictions on the award of a declaration.

It seems clear to me that in view of the denial earlier on by the defendant of the right of the plaintiff to claim for LAD and the said house is yet to be completed and therefore vacant possession could not be delivered to the plaintiff, I am of the view that the circumstances warrant the plaintiff to seek the declaratory order by way of this OS. Further, on the same page, the learned Chief Justice of Borneo said:

As to the determination of right its importance for certain purposes is not in doubt, particularly when a mere declaration is usually the remedy. Zamir on "The Declaratory Judgment" at p. 200 states:

'It is not uncommon for persons to confront an allegation that at some future date they will become liable to another, or that they will not have a certain right which they expect to come into existence, or that their existing right will then expire. They may in such circumstances bring a declaratory action to remove the cloud from their future rights.'

If before the filing of the OS the defendant had unequivocally admitted the rights of the plaintiff to LAD then I would agree that the filing of the OS would serve no useful purpose and in fact is academic only.

As regards the submission of the Counsel for the defendant that the plaintiff ought to file a suit for money due and not for a declaratory order, the Counsel herself conceded that a Court will not normally refuse to grant a successful party to seek a declaration as to his rights because he is seeking or could seek alternative remedies.

In the circumstances the defendant fails on this ground.

Ground (b)

The defendant relied on clause 18 of the SPA to say that the claim of LAD by the plaintiff is time barred by virtue of s. 6(1)(a) of the Limitation Act 1953.

Clause 18 reads:

18(1) The said building shall be completed by the vendor and vacant possession delivered to the purchaser within twenty-four (24) calendar months from the date of this agreement.

(2) If the vendor fails to deliver vacant possession of the said Building in time the vendor shall pay immediately to the purchaser liquidated damages to be calculated from day to day at the rate of ten per centum (10%) per annum of the purchase price.

It is not disputed that the said house was not completed within twenty-four months as stipulated under clause 18(1), that is, on 11 December 1986. The said house was only completed and vacant possession can be delivered vide a notice dated 11 March 1994, issued by the plaintiff's agent, MBf Property Services Sdn. Bhd. to the plaintiff (see Exh. 'A' in encl. 8). The notice was received by the plaintiff on 24 March 1994. It is apparent therefore that there was a delay in completion and delivery of the vacant possession of the said house from 12 December 1986, to 25 March 1994. The OS was filed on 31 July 1993. The defendant contended that as the plaintiff's claim is based on a contract in the event of the breach of clause 18 (which is not disputed) the time for instituting an action would be within six years from the date of the accrual of the action (see s. 6(1)(a) of the Limitation Act 1953). In this case, the defendant claimed that the cause of action accrues on the day following the expiry of the 24th month under the SPA, that is, 12 December 1986.

No doubt the rules i.e. Housing Developers (Control and Licensing) Rules 1970 which the Privy Council considered in Loh Wai Lian's case, may be differently worded compare to the present Housing Developers (Control and Licensing) Regulations 1982 on which the present case is concerned, I am of the view that the effect is the same. The Housing Developers (Control and Licensing) Rules 1970 provides for general provisions that should be incorporated in a sale and purchase agreement whereas the Housing Developers (Control and Licensing) Regulations 1982 provide for the express provisions to be incorporated in a sale and purchase agreement. The common denominator in both legislation are the words:

payment of liquidated damages to be calculated from day to day immediately upon the vendor failing to deliver vacant possession of the building within the stipulated time

or words to that effect. The Privy Council in Loh Wai Lian v. SEA Housing Corporation Sdn. Bhd. [1987] 2 MLJ 1 had the opportunity to consider a similarly worded clause in line with the statutory provisions when it said at p. 4:

This appeal raises no point of principle but simply a question of what is the true construction of the contract in which the parties entered. In their Lordships' judgment, the only sensible construction of clause 17 is, as Mr. Kidwell has contended that it imposes an obligation to pay, in substitution for any other right to damages which the purchaser might otherwise have, a single sum to be calculated and ascertained at a particular date and until that sum has been ascertained it does not become due and cannot be sued for. (Emphasis added)

In my view this is the correct approach to take in the construction of clause 18 of SPA. The Privy Council in Loh Wai Lian's case at p. 4 stated thus:

A construction which would import into the clause a fresh obligation on the vendor to pay the calculated amount at the end of each day would be capricious, involving as it does a series of breaches of contract as each day passes without payment being made.

The Counsel for the defendant, if I understand her correctly, was trying to impress upon the Court that this was what the plaintiff should do, failing which the plaintiff would run the risks of being caught by the time prescribed under the Limitation Act 1953. With respect, the distinction she tried to draw between the old legislation and the new legislation pertaining to the provisions required to be inserted in a sale and purchase agreement especially in respect of the words "shall pay immediately" in fact has no distinction.

In the circumstances I am of the view that the contention of the Counsel for the defendant that the action is time barred under s. 6(1)(a) of the Limitation Act 1953 is totally without basis having regard to the interpretation given to such similar clause by the Privy Council in Loh Wai Lian's case when it said:

an obligation to pay ... a single sum to be calculated and sum ascertained at particular date, and until that sum has been ascertained it does not become due and cannot be sued for.

It would appear that in matters of clauses such as clause 18 as in this contract, time would start to run only from the date of the completion of the building and when vacant possession can be delivered.

On the facts and the law, s. 6(1)(a) of the Limitation Act 1953 does not apply in this case and therefore the defendant fails on this ground also.

For the reasons set out by me I make an order in terms of Prayer (1) and in view of the plaintiff s further affidavit at encl. 8, it is apparent that the said house has been completed and vacant possession can be delivered and therefore the sum can now be ascertained. I accordingly make a consequential order that the plaintiff is entitled to LAD at the rate of RM13.62 per day from 12 December 1986, to 25 March 1994, amounting to RM35,943.18. Costs to the plaintiff.