Case Update: Court of Appeal Confirms Delivery of Vacant Possession Calculated from Date of Agreement

The Court of Appeal issued its grounds of judgment dated 20 August 2019 for GJH Avenue Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & 2 Others. The case has essentially decided that the Tribunal of Homebuyer Claims should have applied the plain language of the Schedule G format of sale and purchase agreements under the Housing Development laws. Delivery of vacant possession is to be calculated from the date of the agreement and not from the date of the payment of the booking fee.

Brief Background Facts

GJH Avenue Sdn Bhd (GJH) is a developer of a development project known as Taman Paya Rumput Perdana Fasa 2 located in Melaka.

The purchasers in this appeal had purchased three bungalow units in this project.

As is usual practice, the purchasers had made a booking fee earlier on. Much later, the purchasers eventually signed the sale and purchase agreement (SPA). The SPA contained the usual clause that vacant possession is to be delivered within 24 months from the date of the agreement.

The SPA was signed on 13 February 2012 and vacant possession was delivered on 14 February 2014. Therefore, GJH took the position that it was only two days late in delivering vacant possession. It made payment of this sum.

Later on, the purchasers filed a claim with the Tribunal for Homebuyers Claim (Tribunal) for liquidated ascertained damages (LAD) for a higher sum. The Tribunal awarded the sum of more than RM12,000 as LAD on the basis that the 24 months was to run from the date of the booking fee and not from the date of the agreement. The Tribunal applied two Supreme Court decisions on this issue.

GJH filed a judicial review application with the High Court. The High Court dismissed the judicial review application. This was then appealed to the Court of Appeal.

Decision

The Court of Appeal highlighted the standard clause 22 of the Schedule G statutory contract under the relevant Housing Development (Control and Licensing) Regulations.  Clause 22 is very clear and unambiguous that vacant possession shall be delivered within 24 months “from the date of this Agreement”.

The Court of Appeal decided that there was no need to look at various other case law to decide on the meaning of “from the date of this Agreement”.

The Court of Appeal distinguished the two earlier Supreme Court decisions in Hoo See Sen & Anor v Public Bank Bhd & Anor and Faber Union Sdn Bhd v Chew Nyat Shong & Anor. The Court of Appeal noted that these two Supreme Court decisions concerned SPAs which were pre-Schedule G of the Housing Development Regulations.

Further, the Tribunal is an administrative tribunal and not a court of law. It was established for the purpose of minimising the burden that purchasers have to face in order to claim remedies from developers. The Tribunal is to apply the law as clearly stipulated in Schedule G. It was not for the Tribunal to sieve through the authorities to justify its finding of the meaning of the “date of this Agreement”.

Therefore, the Court of Appeal concluded that the Tribunal had acted beyond the scope of its lawful powers and had committed a statutory breach which amounted to an error of law.

Comments

This decision will have to be read carefully. It is welcomed that there is the simple application that the clear terms of the SPA should be given effect. So where the SPA states that vacant possession is to be delivered within 24 months from the date of the SPA, time really indeed begins to run only from the date of the SPA. The 24-month period (and the knock-on LAD claim) should not run from the earlier date of the payment of the booking fee.

However, this Court of Appeal does does not appear to have tried to specifically overrule or clearly distinguish the Supreme Court decisions. It could even be said that this Court of Appeal decision should in future only be applied to overrule the Tribunal for Homebuyer Claims awards or decisions. There are general statements in this decision that the administrative tribunal or decision-making body created under the Act should just apply the clear words under the Act and under the relevant Regulations.

It will be interesting to see if we have a further appellate or apex Court authority to expressly distinguish or overrule the Supreme Court decisions on the point that time is to run from the payment of the booking fee.

There is the High Court decision in Hedgeford Sdn Bhd v Lynda Quah May Lu & Anor [2019] 3 AMR 525. The High Court had distinguished the Supreme Court decision in Hoo See Sen.  The Court held that the statement made by Tun Salleh Abbas LP in Hoo See Sen that “the payment of the booking fee was the date of the agreement was obiter dicta. It was not the ratio decidendi of the case”. Accordingly, the learned Judge was of the view that “the decision by the Kota Baru High Court in Lim Ee Fah and later followed by the Pulau Pinang High Court in Lembaman Development, that the relevant date for the calculation of liquidated damages for late delivery of vacant possession in the date of payment of the booking fee was made per incuriam.

Therefore, the High Court in this case also held that time was to run from the date of the SPA based on the clear terms of the SPA.

 

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