TEE AH KOW V. WISMA ENHUA REALTY SDN BHD

HIGH COURT [MUAR]
JEFFREY TAN, J
GUAMAN SIVIL NO. 22-49 TAHUN 1999
15 JULY 2004
DALAM MAHKAMAH TINGGI MALAYA DI MUAR

GUAMAN SIVIL NO. 22-49 TAHUN 1999

ANTARA

Tee Ah Kow
- Plaintif

DAN

Wisma Enhua Realty Sdn. Bhd.
Defendan


JUDGMENT
 

This is but one of 5 similar actions (others being Muar High Court 22-50-1999, Muar High Court 22-51-1999, Muar High Court 22-52-1999, and Muar High Court 23-104-1999) by 5 different: "purchasers" (Plaintiffs) that commenced as actions against Wisma Enhua Realty Sdn Bhd (Defendant) for (i) an order that the Defendant do specifically perform the respective contracts of sale entered into between the Defendant as vendor of the one part and the Plaintiffs as "purchasers" of the other part, with respect to 8 units of condominiums in a condominium block known as Ruby Condominium, Muar, and developed by the Defendant, (ii) damages, and, (iii) costs.

In all 5 actions, Mr.Tan Koon .Heo appeared for the plaintiff, while Mr. G.F. Nelson appeared for the Defendant. On the occasions when this action was called for hearing, both learned counsel affirmed that the decision in the instant case, namely Muar High Court 22-49-1999, should bind the other 4 actions. That came as no surprise. All 5 actions share the same background facts. All statements of claim and all statements of defence agree that the Defendant, by an agreement dated 30.5.1997, engaged one Fortune Sector Sdn. Bhd. (FS) to construct and complete the said Ruby Condominium, in consideration of the contract sum of RM9,332.498.00. Suffice it to say that it is no longer in dispute that by agreement dated 9.2.1999, FS and the Defendant agreed that FS shall accept 8 units of condominiums (namely units 01-05, 06-07, 04-08, 03-10, 04-11, 03-11, 04-12, and, 02-13) in lieu of the progress payment of RM 1,161,075.60 and towards account of the final balance sum payable on the aforesaid contract sum. It is also no longer in dispute that FS nominated the Plaintiff who were their building material suppliers, as purchasers of those 8 units, and that the Plaintiffs and Defendant then entered into 8 separate agreements, all dated 19.4.1999 and in the form prescribed in Schedule H of the 1989 Regulations made under the Housing Developers (Control and Licensing) Act 1966, with respect to the sale and purchase of those said 8 units. And both learned counsel affirmed that an order for specific performance is no longer in issue, as the Defendant had delivered all said 8 units to the Plaintiffs (4 units on 11.10.2000 and 4 units on 14.3.2001), and that the only outstanding issue is the claim for damages for late delivery.

At the close of the entire case, that is after the testimony of 3 witnesses (PW1, PW2, & DW1), Mr. Tan said, "Only issue is whether the 3 year delivery period applies or whether the 3 years delivery period does not apply. The result will follow the ruling."

Mr. Nelson confirmed that it was so and then submitted as follows. The Plaintiffs could not pick a particular clause, but must accept the agreement as they find it. Clause 22 of the sale and purchase agreement is the specific provision, and expressio unius exclusio alterius there is no room for any other provision. There is no ambiguity in clause 22. If it were intended that clause 22 should be inoperative, then it should have been expressly stated.

Mr. Tan submitted that the consideration for the said 8 units was settled by a set-off between FS and the Defendant, and that the court should consider clause 23 of the contracts of sale. It was agreed that the units should be delivered upon full payment. On 26.8.1999, the Defendant applied for Certificates of Fitness for Occupation in respect of those said 8 units. Clause 23 provided that occupation the Plaintiffs should not occupy the said units without Certificates of Fitness for Occupation. But even without Certificates of Fitness for Occupation, the Defendant must let the Plaintiffs into occupation.

Mr. Nelson replied that clauses 22 and 23 had different purposes, and that clause 22 prevails over clause 23.

The pertinent clauses 22 and 23 in all 5 sale and purchase agreements dated 9.9.1999 read as follows:

Clause 22 - Time for handing over of vacant possession

(1) Vacant possession of the said Parcel to which water and electricity supply are ready for connection shall be handed over to the Purchaser within thirty-six (36) calendar months from the date of this Agreement.

(2) If the Vendor fails to hand over vacant possession of the said Parcel to which water and electricity are ready for connection to the said Parcel, 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.

Clause 23 - Manner of delivery of vacant possession

(1) Upon the issuance of a Certificate by the Vendor's Architect certifying that the construction of the said parcel has been duly completed and water and electricity supply are ready for connection to the said parcel and the Vendor has applied for the issuance of the Certificate of Fitness for Occupation from the Appropriate Authority and the Purchaser having paid all monies payable under clause 4(1) in accordance with the Third Schedule and all other monies due under this Agreement and the Purchaser having performed and observed all the terms and covenants on his part under this agreement the Vendor shall let the Purchaser in possession of the said parcel.

PROVIDED THAT such possession shall not give the Purchaser the right to occupy and the Purchaser shall not occupy the said Parcel until such time as the Certificate of Fitness for Occupation for the said Building is issued.

(2)Upon the expiry of fourteen (14) days from the date of a notice from the Vendor 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.

In a typical case, a contract of sale in the form prescribed in Schedule H of the Housing Developers (Control and Licensing) Regulations 1989 (all present contracts of sate were in such prescribed form), of a subdivided building should work like this. Save where the building has been completed, a developer sells while a purchaser buys a specified piece of land together with a building that has been approved for construction and or is about or is in the process of being constructed, with a covenant by the developer to deliver the completed building to the purchaser within 36 months from the date of the agreement. The agreed price, whatever it may be, is paid first by a deposit, and then by specified instalments payable upon the completion of specified stages of building works. The Third Schedule to the Act specifies both the instalments (being preset percentages of the total purchase price), and the stages of building works. In other words, in a contract of sale in form prescribed in Schedule H, the instalments relate directly to the progress of building works. It follows that a purchaser who enters into a contract of sale in form prescribed in Schedule H, with respect of a building already at an advance stage of construction, would have to fork out not just the deposit but also all instalments payable till the stage of completion of building works. Conversely, a developer could not demand payment of the instalments without the attendant stage of building works. It should be such that land and completed building would be handed over to the purchaser by the time that the final instalment of 5% of the purchase price would be tendered by the purchaser to the developer's solicitors.

But the facts here are not that typical. Construction of all 8 units was completed by 26.8.1999, as the Defendant had applied for Certificates of Fitness for Occupation in respect of those said 8 units on 26.8.1999, which the Defendant could not reasonably have done so if the 8 units were not ready for occupation. And since construction of those 8 units had been completed, any other purchaser of any one of those 8 units would have to straight away fork out the entire purchase price. But would that hypothetical purchaser have to wait 36 months for the delivery of the completed unit, albeit that he had paid the full purchase? In another situation, such as in the case of a contract of sale between a non-developer vendor and purchaser, and unless otherwise provided, it is norm that a vendor would deliver both possession and good title upon tender of the full purchase price. But in the case of a contract of sale between a developer and purchaser, the contract of sale "shall be in the form prescribed in Schedule H" (see Regulation 11(1) of the 1989 Regulations), which would mean that that hypothetical purchaser would yet have to enter into a contract of sale with the Defendant in the form prescribed in Schedule H, a contract with a clause 22 provision albeit that construction had been completed and the purchaser had paid for it in full. So could that hypothetical purchaser be denied possession of the said unit, on account of the existence of a clause 22 provision providing for vacant possession to be delivered within 36 months from the date of the agreement? It would not seem so that that hypothetical purchaser who had paid the full purchase price could be denied immediate possession, albeit the existence of a clause 22 provision. In the first place, full payment could not be collected without the handing over of vacant possession (see Regulation 11(2) read together with the Third Schedule). And in the next place, there would be a clause 23 provision providing that where the developer had applied for a Certificate of Fitness for Occupation and the purchaser had paid all monies payable in accordance with the Third Schedule that "the developer shall let the purchaser into possession". And in the instant case, each Plaintiff stood in the shoes of that hypothetical purchaser. Each Plaintiff had paid the full purchase price. In each case, the Defendant had received the full purchase price. That payment was by way of a set-off of accounts is entirely immaterial. The plain fact of the matter is that value had been given and received in full.

According to the Third Schedule, vacant possession should be delivered by the Defendant upon receipt of the full purchase price.

Perhaps it may not be entirely right to hold the Defendant strictly to the provisions of the Third Schedule, in view of the fact that receipt of the full purchase price was by way of a set-off of accounts between the Defendant and FS, and between FS and the Plaintiffs. Even still, there was clause 23 that provided that the Defendant should let the plaintiffs into possession. It is an agreed fact the Defendant applied for Certificates of Fitness for Occupation in respect of those said 8 units on 26.8.1999. It is also an agreed fact that the contracts of sale were executed on 19.4.1999. It pans out that the Plaintiffs had paid all monies due under the contracts of sale when the Defendant applied for Certificates of Fitness for Occupation in respect of those said 8 units. According to clause 23, the Defendant should let the Plaintiffs into possession on 26.8.1999, and not on 11.10.2000 in respect of 4 units, and not on 14.3.2001 in respect of the balance 4 units.

It was contended that clause 22 is the specific provision and there is no room for clause 23. With respect, effect must be given to all provisions and Schedules (see City Investment Sdn Bhd v. Koperasi Serbaquna Cuepacs Tanggungan Bhd [1985] 1 MLJ 285. Clause 22 should not be read in isolation. To arrive at the true interpretation of a document, a clause must not be read in isolation, but must be considered in the context of the whole of the document ("Chamber Colliery Co. Ltd v. Twyerould [1915] 1 Ch 268). As a corollary of the principle that a document must be construed as a whole, alt parts of it must be given effect where possible (Re Strand Music Hall Co Ltd [1893] 35 Beav 153) and no part should be treated as inoperative or surplus (SA Maritime et Commerciale of Geneva v. Anglo-Iranian Oil Co Ltd [1954] 1 WLR 492) unless it is impossible to reconcile it with another and more express clause in the same deed (Re Strand Music Hall Co Ltd). And in the case of the instant contracts of sale, both clauses 22 and 23 could be easily reconciled. While clause 22 gave 36 months to the Defendant to complete the building works, clause 23 provided that in the event the Defendant had applied for Certificates of Fitness for Occupation and the Plaintiffs had paid all monies due under the contract of sale (DW1, the Chairman of the Defendant, in his testimony agreed, "plaintif tidak perlu bayar sebab defendan hutang pada FS"), the Defendant shall let the Plaintiffs into possession. But clause 22 had been overtaken by events. Certificates of Fitness for Occupation had been applied for and all monies due had been paid. And clause 23 came into play on 26.8.1999.

The purpose of clause 22 and the like should be recognised for what it is. The 36 months allowed for delivery of vacant possession is solely on account of what is reckoned is reasonable time needed by a developer to construct and complete the building approved for construction, the underlying rationale being that without time for construction then there would only be contracts of sale of land and completed building. But when it comes to it, where conditions in clause 23 and the like have been met, the developer shall let the purchaser into possession, albeit that the said 36 months have yet to come to an end.

For the above reasons, it is ordered that the Defendant do pay to the Plaintiffs (i) liquidated damages calculated from 26.9.1999 (1 month is given to the Defendant to comply with clause 23) to 11.10.2000 (with respect to 4 units), or to 14.3.2001 (with respect to the balance 4 units), all at the rate of 10% per annum of the purchase price (RM127,681.20, RM178,369.20, RM167,119.20, RM136,681.20, RM141,181.20, RM136,681.20, RM141,181.20 or RM132,181.20/ as applicable), (ii) interest on the respective judgment sums at the rate of 8% per annum from 26.9.1999 to date of satisfaction, and, (iii) costs.