Developers can’t use new contracts as exit

01/05/2008 The Star By Raphael Wong

PUTRAJAYA: Housing developers cannot use new contracts imposed on buyers as a means to get out of their legal obligations stated in the sale and purchase agreements, the Court of Appeal has ruled.

Justice Gopal Sri Ram said parties to a contract in a standard sale and purchase agreement cannot contract out of the scheduled form and impose terms more onerous to a purchaser.

“So too terms imposing additional obligations on the part of a purchaser may not be included in the statutory form of contract,” he ruled.

He said a housing developer signing a sale and purchase agreement with a buyer would not have the freedom of making provisions as it is a special contract prescribed by the Housing Development (Control and Licensing) Act 1966.

Therefore, a buyer was not required to give notice to the developer to obtain damages for late delivery of the property unlike in a normal contract.

“Once the date for delivery of vacant possession has passed, the developer’s liability to pay liquidated damages calculated in accordance with the formula provided becomes immediate and no question of time being at large therefore arises,” he said.

Justice Sri Ram said this when he together with Court of Appeal judges Justices Heliliah Mohd Yusoff and Ahmad Maroop dismissed 10 appeals of developer Sentul Raya Sdn Bhd against the High Court's decision to award 82 purchasers liquidated ascertained damages for late delivery of vacant possession of their Sang Suria Golf View condominium units.

In 1999, YTL Land & Development Bhd assumed ownership of the Sentul Raya project from Taiping Consolidated Bhd when the project had been abandoned for three-and-a-half years.

In his judgment, Justice Sri Ram also said that in the present case, Sentul Raya could not rely on the defence of frustration as the 1997 financial crisis had merely made it more onerous or perhaps more expensive for the appellant to perform its obligations but it did not render the contract radically different.

The chairman of the appellate court also allowed four cross appeals of the condominium purchasers against the High Court’s refusal to award liquidated damages for the period until they obtained actual vacant possession of their respective apartments.

Justice Sri Ram said the notices requiring several purchasers to pay the balance sum due to Sentul Raya before obtaining vacant possession were clearly invalid because delivery of vacant possession in each case was based on the payment of a sum not due.

“The relevant respondents were therefore entitled to continue to claim liquidated damages until they took possession of their keys to their respective apartments. There is therefore merit in the cross appeals,” he said.