Tutorial 3
Task: Part 1: Question 1 and 2
Part 1: question 1
On 15th march 2015, a purchaser paid a booking fee to Sunshine Developers Sdn Bhd for the
purchase of a double storey terrace house costing rm 300,000. On 30th march 2015, he paid the
balance of his first 10% deposit and duly signed the sale and purchase agreement.
However, the SPA was dated 15th April 2015. Delivery of vacant possession was to be in 24
months of the SPA falling which Sunshine Developers sdn bhd would be liable to pay agreed
liquidated damages. Purchaser received a letter dated 15th September 2017 advising him of the
completion and delivery of vacant possession. Purchaser is very upset with the delay which has
caused him a great deal of expense resulting in stress and hypertension. He further discovers that
the vacant possession has not been certified by the Local Authority.
Purchaser seeks your advice on the remedies available to him.
Issue 1: Whether the contract between the purchaser and Sunshine Developers Sdn Bhd runs
at 15 March 2015 when the purchaser paid a booking fee
Law
Regulation 11(2) of Housing development (Control and Licensing)
(Amendment) Regulations 2015 stated that no person including parties acting as
stakeholders shall collect any payment by whatever name called except as prescribed by
the contract of sale.’ With this amendment, no person is allowed to collect booking fee,
deposit, stakeholder sum or any payment from the purchaser prior to SPA signing.
Daiman Development S/B v Mathew Lui Chin Teck & Anor [1981] 1 MLJ
56 - a booking pro forma constituted a binding contract
Faber Union S/B v Chew Nyat Shong & Anor. [1995] 3 AMR 2094 - In a claim for
damages for late delivery the question was when did time start running – was it from the
date the Purchaser paid the booking fee or the date the Purchaser signed the SPA. The
court held that the contract is from the date of payment of the booking fee.
PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Ors [2019] 1 LNS
267 - the purchaser paid a booking of RM10,000 to the developer on 16 January 2013 but
the SPA was executed on 21 March 2013. The developer delivered the VP on 23 January
2017, which was beyond the 42 months stated in the SPA.the court held that the time for
delivery of VP starts from the date the purchaser paid the booking fee.
Application
By applying into the fact, On 15 March 2015, purchaser paid a booking fee to Sunshine
Developers Sdn. Bhd for the purchase of a double storey terrace house costing RM300,000/.
However, the SPA was dated 15 April 2015. By referring to Daiman Development Sdn Bhd case,
when the purchaser paid a booking fee to Sunshine Developers Sdn Bhd on 5 March 2015, at that
date a contract has been made regardless to the execution of SPA on 30 March 2015. In general
rule, Sunshine Developers is not allowed to charge any booking fees by virtue Regulation 11(2).
Since the purchaser already paid the booking fees, it is unfair for the purchaser to count from the
execution of SPA. Thus, payment of booking fees is constituted as a contract.
Conclusion
The contract had been made on the date the purchaser paid the booking fee to Sunshine
Developer Sdn Bhd
Issue 2: Whether vacant possession given by Sunshine Developers Sdn. Bhd has to
be certified by Local Authority?
Law:
Rule 25 of Schedule G -
the developer must comply
with requirement of
Appropriate
Authority which are necessary
for the issuance of certificate of
completion and compliance in
respect of said building
Rule 26 of Schedule G - the
developer shall let Purchaser
into possession of property
upon
handling over keys of
property, issuance of
certificate of completion
and compliance,
architect’s certificate of
practical completion, water
and electrical supply,
issuance of
certificate of occupation,
purchaser paid all money
payable, completion of any
alteration or
additional work, and title which
is free from encumbrances
Section 7 HDA - the developer
has to inform the Controller of
the progress achieved in
relation to the issuance of
Certificate of Fitness and
exercise all such diligence to
ensure that
vacant possession of the house
is made simultaneously within
the issuance of Certificate of
Fitness and title to the house.
The latest amendments require
Certificate of Fitness (also
known as CCC) to be issued by
developer’s architect and
engineer to avoid delay.
Liability is
also placed on engineer and
architect
South East Asia Brickworks
S/B v Maria Antoinette
[1979] 2 MLJ 46 - the issue
is
whether vacant possession
meant practical completion
as per architect’s certificate
or
issuance of the Certificate of
Fitness for Occupation (CFO).
It was held that delivery of
vacant possession would be
effective with the architect’s
certificate of practical
completion
By applying into the fact,
Sunshine Developers Sdn Bhd
is required to ensure that there
is an
issued certificate of fitness
before vacant possession is
delivered. Without the
certificate
certified by Local Authority,
Sunshine Developers Sdn
Bhd is prohibited to
delivery its
vacant possession
Rule 25 of Schedule G- the developer must comply with requirement of
Appropriate Authority which are necessary for the issuance of certificate of completion
and compliance in respect of said building
Rule 26 of Schedule G - the developer shall let Purchaser into possession of property
upon handling over keys of property, issuance of certificate of completion and
compliance, architect’s certificate of practical completion, water and electrical
supply, issuance of certificate of occupation, purchaser paid all money payable,
completion of any alteration or additional work, and title which is free from
encumbrances
Section 7 HDA - the developer has to inform the Controller of the progress achieved in
relation to the issuance of Certificate of Fitness and exercise all such diligence to ensure
that vacant possession of the house is made simultaneously within the issuance of
Certificate of Fitness and title to the house. The latest amendments require Certificate of
Fitness (also known as CCC) to be issued by developer’s architect and engineer to avoid
delay. Liability is also placed on engineer and architect
South East Asia Brickworks S/B v Maria Antoinette [1979] 2 MLJ 46 - the issue is
whether vacant possession meant practical completion as per architect’s
certificate or issuance of the Certificate of Fitness for Occupation (CFO). It was held
that delivery of vacant possession would be effective with the architect’s certificate of
practical completion
Application:
By applying into the fact, Sunshine Developers Sdn Bhd is required to ensure that there is an
issued certificate of fitness before vacant possession is delivered. Without the certificate
certified by Local Authority, Sunshine Developers Sdn Bhd is prohibited to delivery
its vacant possession
Conclusion:
Therefore, the vacant possession given by Sunshine Developers Sdn. Bhd has to be
certified by Local Authority in order to constitute a valid possession.
Issue 3: whether the purchaser can claim for liquidated damages for later delivery of vacant
Possession
Law:
Rule 24 of Schedule G and I of the Housing Development (Control and Licensing)
Act - Vacant possession of the said Property shall be delivered to the Purchaser in the
manner stipulated in clause 26 within twenty-four (24) months from the date of the
Agreement. If the Developer fails to deliver vacant possession of the said Property, in the
manner stipulated in clause 26 within the period stipulated in subclause (1), the
Developer shall be liable to pay to the Purchaser liquidated damages calculated from day
to day at the rate of 10% per annum of the purchase price from the expiry of the period
stipulated in subclause (1) until the date the Purchaser takes vacant possession of the said
Property.
SEA Housing Corpn. S/B v Lee Poh Choo [1982] 2 MLJ 31- Respondent had sued the
appellant developer for breach of contract to complete and deliver a housing
accommodation with issue document of title within the stipulated 18 months. The house
was only completed after 23 months. The developer sought to rely on a clause 32 in the
SPA which purported to exempt the developer for non fulfilment of any terms caused by
circumstances beyond their control. FC held that the HDA and the Rules were for the
protection of the interests of the public and the developer could not contract out of these.
Held; The Respondent was entitled to liquidated damages as per r. 12(1)(r) and was
entitled to set off the withholding of the final installment payment against the liquidated
damages for delay in completion
Chinaya Ganggaya v Senthul Raya Sdn Bhd [2008] 3 CLJ 23 - the right of the
plaintiff to liquidated damages is solely governed clause 22 (2) and 24 (2) by Schedule H,
CA clearly has no relevance. Here, vacant possession was only delivered after 7 years
from date of SPA which is unacceptable
Application:
By applying into the fact, Sunshine Developers Sdn Bhd has failed to delivery vacant
possession within 24 months from the date of payment of booking fees which has caused
him a great deal of expense resulting in stress and hypertension.
Conclusion:
Therefore, purchaser can claim liquidated damages from Sunshine Developers Sdn Bhd
Part 2: question 2
A sale and purchase agreement provided by Bagus developer sdn bhd contains the following
clause on “Time for handing over vacant possession”
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 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 supply 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.
Discuss with reference to the recent cases the law on vacant possession and the calculation of
damages for late delivery
Law on vacant possession
Introduction
1. Vacant possession means the right to occupy and enjoy the property either by the owners
themselves or by the tenants or licensees. The possession should be given in a condition
to occupy.
2. Where a person takes vacant possession of property, the property is both unoccupied and
free from any claim to a right to possession from anyone else.
3. The word ‘vacant’ means that the tenant should have ceased occupying the
accommodation with the intention of not coming back to it again as reflected in the case
of Mahavir Prasad v Kewal Krishna AIR 1953
Cases:
[CASE 1] Icon City Development Sdn Bhd v K-Shin Corp Sdn Bhd [2022] 6 MLJ
941: The appellant appealed against the decision of the High Court in allowing the claim
of the respondent against the appellant pursuant to the sale and purchase agreement dated
30 June 2011 (‘SPA’) for the liquidated ascertained damages (‘LAD’) for the delay in
delivery of the vacant possession of a unit of eight-storey shop offices identified as
Parcel No A-16, Block No A (‘shop office’).
The granting of ‘vacant possession of the Shop Office without the right to occupation’
was nothing novel. As such, without a right of occupation, the issue of actual electricity
and water supply was not relevant and neither did the SPA specified these requirements.
There was a clear difference between ‘occupation’ and ‘possession’. Vacant possession
was not synonymous with the right of occupation
In the premises, the appellant was ordered to pay to the respondent, the sum of
RM834,246 as liquidated damages calculated
Principle:
The availability of water and electric supply is a right to occupation; hence delivery of vacant
possession has to come hand in hand with right to occupation. Merely giving vacant possession
without right to occupation allows for the payment of liquidated damages.
[CASE 2] Lam Su See v Prema Bonanza Sdn Bhd [2021] MLJU 713
Premised on the completion period of 36 months as stipulated in the Schedule H contract
of sale, P avers that vacant possession of the Property was delivered late. There was a
delay of 579 days P avers that D is liable to pay liquidated ascertained damages for late
delivery of vacant possession of the Property: Pursuant to clause 25(2) of Schedule H, the
LAD for late delivery of vacant possession shall be calculated at the rate of 10% per
annum on the purchase price, from the due date for delivery of vacant possession until the
date P takes vacant possession.
Held: the SPA must follow the prescribed form in Schedule H. Which provides a
completion period of 36 months. D is not permitted to change or vary the completion
period from 36 months to 54 months. To my mind, any amendments or variations made
to the SPA which is inconsistent or contradicts the terms in the Schedule H contract of
sale is of no legal effect and does not bind P. It follows that D is required to deliver
vacant possession of the Property within 36 months (not 54 months) in accordance with
Schedule H. Hence liquidated ascertained damages has to be paid.
Principle;
Any variation of the SPA which contradicts and is inconsistent with the terms in Schedule H will
have no legal effect and if there is a late delivery of vacant possession, the clause of the SPA has
to be put into effect, which is that the payment of liquidated damages should be perform as
prescribed.
Sections/rules/regulation:
Schedule G of 1989 Regulations, the law was amended to require that vacant possession
be accompanied by an architect’s certificate of practical completion and compliance
(CCC), the connection of water and electricity, and the vendor’s application for CFO.
Rule 26 of Schedule G provided that the developer shall give the purchaser possession of
the property upon handing over keys to the property, issuance of a certificate of
completion and compliance, an architect's certificate of practical completion, water, and
electrical supply, issuance of a certificate of occupation, payment of all money due,
completion of any alteration or additional work, and title
Section 7 of the HDA, the developer must notify the Controller of the progress made in
relation to the issuance of the Certificate of Fitness and use all reasonable efforts to
ensure that vacant possession of the house is obtained concurrently with the issuance of
the Certificate of Fitness and title to the house. The most recent amendments require the
developer’s architect and engineer to issue a Certificate of Fitness (CFO) in order to
avoid delays. Engineers and architects are held accountable as well
Under Rule 24 of Schedule G and I of the HDA, the purchaser may seek liquidated
damages for late delivery of vacant possession.
Applying back to the question,
Vacant possession of the said property shall be delivered to the Purchaser in the manner
specified in the clause, within thirty-six (36) months of the date of the Agreement. If Bagus
Developer sdn bhd fails to deliver vacant possession of the said property in the manner specified
in the clause, they shall be liable to pay to the Purchaser liquidated damages calculated daily at a
rate of 10% per annum of the purchase price from the expiry of the period specified in the
clause until the date the Purchaser notifies Bagus Development Sdn Bhd.
Calculations
It is a statutory remedy to compensate the buyer for the failure of the developer to fulfill his
obligation under the agreement to hand over vacant possession on a specific date. The LAD
should be calculated from day to day at the rate of 10% per annum of the purchase price.
The calculation for late delivery of vacant possession is as follows:
(10% x Purchase price x number of days of delays) divided by 365 (days) = ___
[using example of the first question]
On 15th march 2015, a purchaser paid a booking fee to Sunshine Developers Sdn Bhd for the
purchase of a double storey terrace house costing rm 300,000. On 30th march 2015, he paid the
balance of his first 10% deposit and duly signed the sale and purchase agreement.
However, the SPA was dated 15th April 2015. Delivery of vacant possession was to be in 24
months of the SPA falling which Sunshine Developers sdn bhd would be liable to pay agreed
liquidated damages. Purchaser received a letter dated 15th September 2017 advising him of the
completion and delivery of vacant possession. Purchaser is very upset with the delay which has
caused him a great deal of expense resulting in stress and hypertension. He further discovers that
the vacant possession has not been certified by the Local Authority.
The purchaser may claim the late delivery charges by applying the formula 169/365 x 10%
x RM300,000 totaling to RM13,890.41- pls check this again, my math sucks...
