HIGH COURT OF MALAYA

LIM EH FAH & ORS  - vs - Seri Maju Padu

Coram

SURIYADI HALIM OMAR

[CIVIL APPEAL NO: MT(3) 11-3-1999]
12 JULY 2002

LAND LAW: Housing developers - Damages for late delivery - Agreement to deliver vacant possession within 24 months - Date of vacant possession - Whether time to commence from date of acceptance of deposit - Whether contract deemed to have existed on receipt of deposit

Judgment

Suriyadi Halim Omar, J

1. Three appeals were filed by the purchasers ("the appellants") of immoveable properties called the Desa Maju Padu Condominium, Kota Bharu, Kelantan from the developer-defendant. The appeals came about as the learned Magistrate had dismissed the purchasers' summary judgment applications filed pursuant to Order 26A of the Subordinate Court Rules 1980. The appellants had claimed damages against the respondent defendant for late delivery of the immovable properties.

2. The factual matrix further revealed that the appellants had much earlier filed three separate actions, later to be consolidated. For easy appreciation of this consolidated matter, I will concentrate on the appeal of the first appellant, the outcome of which will bind the other two cases.

3. To reiterate, the first appellant had bought one unit of the condominium at a cost price of RM75,300. Pursuant to that transaction he had deposited RM7,530, being 10% of the purchase price, with the respondent on July 17, 1992. About three months later i.e. on October 10, 1992 the first appellant executed a sale and purchase agreement ("the S&P agreement"), with the respondent pertaining to that impugned unit.

4. It was agreed upon by the respondent that vacant possession would be handed to the first appellant within twenty-four months from the date of the S&P agreement. In the event of any delay in the delivery of the relevant unit to the appellant, the respondent was to pay damages to the tune of 10% per year of the value of the unit. By virtue of a loan agreement and a deed of assignment, signed on June 12, 1993 the first appellant had assigned his rights and interest over the impugned property to the fifth appellant (the bank).

5. In response to the statement of claim, the respondent in its defence had alleged that countdown in the handing over of the property, should begin on or before June 12, 1993 and not any other dates. That being so, the respondent had asserted that it had fulfilled its part of the bargain within the stipulated time, except for the fixing of the septic tank and the piping system, which were outside its control.

6. The first appellant in retort had alleged that the respondent was contracted to hand over vacant possession on or before July 17, 1994, but as delivery of vacant possession took place only on December 1, 1996 a delay of 868 days, he was thus entitled to damages to the tune of RM17,906.96.

7. The legal poser before me, for purposes of determining the date of vacant possession in a claim for liquidated damages, was whether it was the day the deposit was accepted, the day the S&P agreement was executed or when the deed of assignment was signed.

8. Counsel for the first appellant ventilated that the relevant date had to be the date the deposit was paid to the respondent, which was July 17, 1992 with vacant possession to take place on or before July 17, 1994 (24 months). The respondent submitted June 12, 1993 i.e. the deed of assignment date, on the premise that the S&P agreement had to be read with the former. It was further submitted that the first appellant could not have made payments in accordance with the schedule, as he had yet to obtain the financial support to finance his purchase. That being so the appellant could only comply with the conditions of payments only after he had managed to obtain a loan from the fifth appellant, the bank. On those grounds, the respondent contended that June 12, 1993 must invariably take center stage.

9. To really appreciate the issue at hand, it is quite imperative that I lay down certain portions of the S&P agreement, in particular those found at pp 40-87.

   (i)	Clause 7 Time shall be the essence of the contract in relation to all provisions of this agreement.
   (ii)	Clause 22(1) The said parcel should be completed by the developers and vacant possession with the connection of water and electricity supply to the said parcel shall be handed over to the purchaser within twenty four (24) calendar months from the date of this agreement.
   (iii)	Clause 22(2) If the developer failed to hand over vacant possession of the said parcel together with connection of water and electricity supply to the said parcel in time the developer 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.
   (iv)	Clause 23(2) Upon the expiry of fourteen (14) days from the date of a notice from the developers requesting the purchaser to take possession of the said parcel, whether or not the purchaser has actually entered into possession or occupation of the said parcel, the purchaser shall be deemed to have taken delivery of vacant possession.

10. Having heard the submissions of the appellant and the respondent, and having intensely scrutinized the record of appeal, I was satisfied that no triable issue existed which warranted a full hearing. Based on that view I allowed the appeal and accordingly allowed the summary application under Order 26A of the Subordinate Court Rules 1980. I now supply my reasons.

11. As regards the date to take into consideration for purposes of calculating the damages on the late delivery of vacant possession, I concluded it to be July 17, 1992 i.e. the date when the deposit was paid, and not the date of the deed of assignment. To support my finding, I seek solace from the case of Faber Union Sdn Bhd v Chew Nyat Shong [1995] 3 AMR 2094 which factually was on all fours with the current case. There a purchaser had bought a unit of property from the developer (appellant). A deposit was paid on February 17, 1984 with the agreement being signed on June 27, 1984. The developer failed to deliver the impugned property within the agreed thirty-six months, whereupon the buyer claimed liquidated damages. Following an earlier case of Hoo See Sen v Public Bank Bhd [1988] 2 MLJ 170, the Supreme Court had decided that the relevant date for ascertaining when time started to run, to be when the booking fee was paid. Under held it is clearly authored:

    For the purpose of ascertaining the date of delivery of vacant possession, the relevant date when time started lo run was the date on which the purchaser paid the booking fee, and not the date of signing of the sale and purchase agreement.

12. Despite the submission that the appellant could only commence paying pursuant to Clause 4(1) of the S&P agreement, only after having received financial backing from the fifth appellant (the bank) and a deed of assignment having been executed, hence the assertion that time began to run on June 12, 1993, I found that argument unacceptable. Apart from the above case of Faber Union Sdn Bhd being crystal clear, in the event of the appellant failing to adhere to the schedule of payment, there was nothing to stop the respondent from imposing interest on the late payments. This right is sufficiently provided for under Clause 8 of the S&P agreement. Any failure on the part of the appellant, if any, to comply with Clause 4, did not extinguish the responsibility of the respondent to fulfill the contract within the stipulated time.

13. One must bear in mind that the date of July 17, 1992 i.e. the deposit payment date, was the date when the contract was struck, and the very date the respondent assumed responsibility to fulfill its part of the bargain. If the date of the signing of the S&P agreement were to be taken as the relevant date, when time started to run for the delivery of the vacant possession, the respondent could willy-nilly pick any dates it favoured to execute the S&P agreement, which would certainly prejudice the interest of the purchaser.

14. Under the Housing Developers (Control And Licensing) Act 1966 (Act 118) & Regulations 1989 & 1991, s 11(2) reads:

    No housing developer shall collect any payment by whatever name called except as prescribed by the contract of sale.

15. In relation to this case, the above provision explicitly means that the respondent was permitted to accept deposits so long as it was provided for under the S&P agreement. A reading of the receipt, found at p 39 of the record of appeal, highlighted that the payment was a "deposit on apartment No. 6, Floor 2, Kampong Cina, Kota Bharu, Kelantan". What is the purpose of a deposit if not to indicate offer and acceptance, each with its respective responsibilities that must be fulfilled in accordance with the provisions of the S&P agreement. The main obligation of the appellant was to pay in full the purchase price of the impugned property (Clause 4), failing which interest may be imposed on any late payments. At the other end of the agreement, it was the duty of the respondent to build, deliver and to hand over vacant possession within the agreed period to the appellant, failing which liquidated damages at the rate of 10% per annum of the costs of the property must be paid to the appellant.

16. Based on the above reasons I concluded that the respondent had failed to live up to its bargain to deliver vacant possession within 24 months, as indicated in the notice of November 17,1996 (pp 132 and 133 of the record of appeal). Evidentially, pursuant to Clause 23(2) of the S&P agreement, the date of handing over was supposed to be December 1, 1996 a delay of 868 days (from July 17, 1994 until December 1, 1996). As I had concluded that there was no merit to the defence of the respondent, I thereupon allowed the appeal with costs, and accordingly granted the summary judgment application.

Cases

Faber Union Sdn Bhd v Chew Nyat Shong [1995] 3 AMR 2094; Hoo See Sen v Public Bank Bhd [1988] 2 MLJ 170

Legislations

Housing Developers (Control And Licensing) Act 1966 (Act 118) & Regulations 1989 & 1991: s.11(2)

Subordinate Court Rules 1980: Ord.26A

MS Ong (Raja Eleena Siew Ang & Associate) for Plaintiff

Jegathesan (C Jegathesan) for Respondent

This decision is also reported at [2002] 4 AMR 4491