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Malayan Law Journal Unreported/2009/Volume /Expo Holdings Sdn Bhd v Saujana Triangle Sdn Bhd - [2009] MLJU 1600 - 30 November 2009

[2009] MLJU 1600

Expo Holdings Sdn Bhd v Saujana Triangle Sdn Bhd

HIGH COURT (SHAH ALAM) Dato' Zaleha Binti Yusof, JC ORIGINATING SUMMONS NO 24-1839-2008 30 November 2009

Sree Harry (Sree Harry & Co.)

Alister Dave (Abd Halim Ushah & Associates)

Dato' Zaleha Binti Yusof, JC

GROUNDS OF JUDGMENT Enclosure (1) is an Originating Summons filed by the plaintiff against the defendant for, inter alia, the following order:

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A declaration that the Supplementary Agreements dated 6.3.2002 made between the plaintiff and the defendant ("the Supplementary Agreements") are part of the statutory contract namely the Sale and Purchase Agreements dated 6.3.2002 made between the plaintiff and defendant ("the Sale and Purchase Agreements"); and A declaration that the actual purchase price under each of the statutory contract namely the Sale and Purchase Agreements is RM 118,000.00; and

ii

That the defendant pays the plaintiff liquidated damages to be calculated from day to day at the rate of ten per centum (10%) per annum of the purchase price arising from the defendant's failure to hand over vacant possession of the apartment units to the plaintiff within the time prescribed in the Sale and Purchase Agreements; That the defendant pays the plaintiff liquidated damages to be calculated from day to day at the rate of ten per centum (10%) per annum of the last twenty per centum (20%) of the purchase price arising from the defendant's failure to complete the common facilities within the time prescribed in the Sale and Purchase Agreements; A declaration that the plaintiff is entitled to set-off the remaining purchase price to be paid to the defendant against such liquidated damages found due from the defendant to the plaintiff under (b) and (c) above; A declaration that the plaintiff is entitled to claim liquidated damages under (b) and (c) above from the defendant until the date the defendant issues a fresh Notice of Vacant Possession after having setoff the balance purchase price against the liquidated damages found due under (b) and (c) above ("the date of the Fresh Notice of Vacant

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Possession");
f

That the defendant pays the plaintiff liquidated damages to be calculated from day to day at the rate of ten per centum (10%) per annum of the purchase price from 6.3.2005 to the date of the Fresh Notice of Vacant Possession; That the defendant pays the plaintiff liquidated damages to be calculated from day to day at the rate of ten per centum (10%) per annum of the last twenty per centum (20%) of the purchase price from 6.3.2005 to the date of the Fresh Notice of Vacant Possession; An order for payment by the defendant to the plaintiff of all sums found to be due from the defendant to the plaintiff after having set-off the remaining purchase price to be paid to the defendant against the liquidated damages found due under (f) and (g) above; An Order that the defendant delivers vacant possession and complete the common facilities of the apartment units to the plaintiff within 4 days from the date of this order; An order that the defendant hand over vacant possession of the accessory car parking parcels to the plaintiff within 4 days from the date of this order; A declaration that the plaintiff is entitled not to pay the service charge and sinking fund for the said apartments until the date of the Fresh Notice of Vacant Possession.

2. The defendant is a licensed housing developer under the Housing Development (Control & Licensing) Act 1966 ("Act 118") and has developed the housing development called "Flora Damansara". On 6.3.2002, the plaintiff had entered into two (2) separate Sale and Purchase Agreements with the defendant to purchase two (2) apartments and also the parties had entered into 2 separate Supplementary Agreement for the plaintiff to purchase the accessory parcels. 3. By clauses 22 (1) and 24 (1) of the Sale and Purchase Agreement, the defendant was required to deliver vacant possession of the apartments and complete the common facilities within 36 months of the date of the Sale and Purchase Agreement failing which the defendant shall pay the plaintiff LAD calculated in accordance with the said clauses 22(2) and 24 (2). As the Sale and

Purchase Agreement was dated 6.3.2002; the delivery date for vacant possession and completion of the common facilities was to be 6.3.2005 ("the completion date"). The defendant failed to complete by the completion date. The defendant only issued the Notice of Vacant possession on 9.4.2008 but the said Notice was attached with an annexure demanding settlement of the balance purchase price before the plaintiff can take vacant possession. On 15.4.2008, the defendant issued invoices demanding inter alia payment of service charge. On 5.5.2008, the plaintiff exercised its rights to set-off the balance purchase price against the LAD payable and challenged the imposition of service charge. When the defendant failed to comply with the plaintiff's demand, the plaintiff filed enclosure (1).

Decision 1. The Sale and Purchase Agreement entered into by the parties is a statutory contract as it was made based on Schedule H, Standard Form Sale and Purchase Agreement under Act 118. As can be seen from its long titled, Act 118 was enacted to regulate the business of housing development and to protect public interest, in particular purchasers, who are economically in a weaker position, in their relationship with housing developers. The purpose of the Act has been clearly explained by the Federal Court in S.E.A Housing Corp Sdn Bhd v Lee Poh Choo [1982] CLJ Rep 205 and also CityInvestment Sdn Bhd v Koperasi Serbaguna Cuepacs Tanggungan Bhd [1985] 1 MLJ 285. The Federal Court has emphasized that the protection afforded by the legislation to house buyers is not merely a private right but a matter of public interest which Parliament has intended to protect from being bargained away. 2. Now the 1st question for me to determine is whether the Supplementary Agreement forms part of the statutory contract and enjoys the protections and benefits conferred by the Act 118. To my mind, in interpreting the statutory contract for the apartment and the Supplementary Agreement for the Accessory Car Parking Parcel, this court must bear in mind the objectives of Act 118, namely that it is an Act which was legislated by Parliament to protect purchasers in their relationship with developers by regulating the business of housing development. 3. Looking at Schedule H, the schedule covers 2 kinds of purchasers. The first, are those (like the plaintiff herein) who can afford and want to buy an apartment

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with an accessory car parking parcel. The second, are those purchasers who cannot afford or do not want to buy an apartment with an accessory car parking parcel. This can be seen in the last and final preamble of the said standard Schedule H Statutory Contract Form ("the said preamble"). For those purchasers who can afford and want to buy an accessory car parking parcel with their apartment, then the said preamble should not be amended by deleting the sentence indicated by the "*" sign. 4. However, for those purchasers who cannot afford or do not want to buy an accessory car parking parcel with their apartment, then the said preamble should be amended by deleting the sentence indicated by the "*" sign. The said preamble reads as follows: AND WHEREAS the Vendor has agreed to sell and the Purchaser has agreed to purchase a parcel with vacant possession distinguished as Parcel No which is delineated and shaded GREEN in the Storey Plan, measuring square metres within Storey No of Building No, which is in turn delineated and shaded RED in the Site Plan (hereinafter referred to as "the said Bulding") with accessory parcel with vacant possession distinguished as accessory parcel No of Building No (hereinafter referred to as "the said Parcel"), subject to the terms and conditions hereinafter contained". 5. It is therefore clear that if Parliament never intended the accessory car parking parcel to come within the standard Schedule H Statutory Contract Form and to enjoy the protections prescribed by the Housing Act, then Parliament would have not have provided at all the sentence within the said "*" in the said preamble. The fact that Parliament included it in the said preamble can only mean that Parliament intended to confer the benefits and protections under the Housing Act for the accessory car parking parcel for those purchasers who can afford and want to purchase the apartments with the accessory car parking parcel. 6. Section 17A of the Interpretation Act 1948 and 1967 (Act 388) reads as follows: Regard to be had to the purpose of Act 17A. In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object".

Based on the said provision of section 17A of Act 388, I am of the opinion that the court must adopt a purposive approach in construing the statutory contract under the Act 118. Therefore when the defendant amended the statutory contract by deleting the sentence beginning from the and instead got the plaintiff to sign the Supplementary Agreement for the accessory car parking parcel, the defendant had clearly removed the very protection and benefits guaranteed to the plaintiff under the Housing Act. 8.Further, I also note that there are certain clauses in the Supplementary Agreement which are relevant to the issue. Those provisions are as follows: Clause 4 In the event the purchaser commits a breach of the terms of the Sale Agreement and the vendor determines the Sale Agreement pursuant to clause 9 thereof, all sums paid by the purchaser herein this agreement shall be forfeited absolutely to the vendor. Clause 5 The Accessory Car Parcel parking shall be completed and ready for the purchaser's use upon completion and handing over vacant possession of the said parcel under the Sale Agreement. Clause 7 " The Accessory Car Parking parcel shall be appurtenant to the said parcel and shall not be separated therefrom and shall pass with the title to the said parcel whether or not separately described ". 9. To me, those clauses strengthen the plaintiffs contention that the accessory car parking parcel under the Supplementary Agreement indeed formed part and parcel of the apartments under the statutory contract. Even the defendant's forms indicate RM 11,800.00 payment as 10% of the purchase price. In other words, the full purchase price for each unit is RM 118,000.00. 10. The next question is on the plaintiff's claim on LAD. This relates to several issues i.e whether the plaintiff is entitled to set-off the balance of purchase price against the LAD payable; whether the plaintiff is entitled to claim continued LAD until the defendant issues a fresh notice of vacant possession after having set-off the balance purchase price against the LAD payable so that the plaintiff can take delivery of vacant possession and whether can the plaintiff claim for LAD under

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clause 24 (1) beyond the date of the defendant's purported notice of delivery of vacant possession? To answer these issues, I would like to quote the decision of the Court of Appeal in SentuI Raya Sdn Bhd v Hariram Jayaram & Ors & Other Appeals [2008] 4 CLJ 618 at page 629 as follows: We now turn to the cross appeals. In four of the appeals before us the High Court refused to award the respondents liquidated damages for the period until they obtained actual vacant possession of their respective apartments. The factual position is this. The appellant gave each respondent concerned notice that vacant possession was available. Each notice was accompanied by a statement of the balance sum due from each respondent to the appellant However there was at the material time liquidated damages owing from the appellant to the relevant respondents. These damages exceeded, in each case, the sum owing from the respondents to the appellant. The respondents were entitled to a set off the sums owing to them against the sums owing by them. See, S.E.A Housing Corp. Sdn Bhd v Lee Poh Choo [1982] CLJ 355, ; [1982] CLJ (Rep) 305. Accordingly, in our judgment, the notices relied upon by the appellant were clearly invalid because delivery of vacant possession in each case was predicated upon the payment of a sum not due. The relevant respondents were therefore entitled to continue to claim liquidated damages until they took possession of the keys to their respective apartments. There is therefore merit in the cross appeals." 11. Based on the said Court of Appeal's decision, I conclude that the answers to all the issues raised in paragraph 10 of this judgment are in the affirmative. 12. In its affidavit in reply, enclosure (5), paragraph 10, the defendant tries to escape liability to pay LAD on the ground that the delay was beyond the defendant's control. However this is a mere unsupported averment without any details given. The defendant does not state the factors that were beyond the defendant's control. In any event, the Court of Appeal in Sentul Raya Sdn Bhd (Supra) at page 628 had stated as follows: Under reg. 11 (3) of the Regulations it was open for the appellant to make representations to the Controller of Housing - to quote from the Regulation owing to special circumstances or hardship or necessity compliance with any of the provisions in the contract of sale is impracticable or unnecessary". In our judgment reg. 11 (3) clearly excludes the operation of the doctrine of frustration in respect of contracts regulated by the Act.". 13. Similarly, in the instance the only way the defendant can escape liability to

pay LAD under a statutory contract is for the defendant to secure a certificate from the Controller of Housing extending the delivery date. 14. On the question of the plaintiff's liability to pay service charge and sinking fund, since the defendant's purported notice to deliver vacant possession, in my opinion is bad, the plaintiff has thereby been prevented from taking possession of the apartment and enjoying the common facilities. Hence, until the defendant rectifies this position by issuing a fresh notice of vacant possession after having set-off the balance purchase price against the LAD payable, it is clear to me that the plaintiff is not liable to pay the service charge and sinking fund. 15. The defendant in paragraph 4 of enclosure (5) had also averred that the plaintiff's claim here is wrong and should have been filed in the lower court as at best, the plaintiffs claim is only for RM 44,419.73 being the LAD payable as at 5.5.2008. However, with due respect, as has been stated earlier in this ground, the plaintiff's relief herein is not just a claim for LAD as the plaintiff has sought various declaratory relief in enclosure (1). 16.Based on the abovementioned grounds, I allow enclosure (1) with costs.