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Writer's pictureJX GOH

Southville City Sdn Bhd v Noranisah Mohamed Hisa & Anor and Another Case [2019] 1 LNS 750

The High Court held that the calculation for liquidated damages for late delivery of vacant possession begins from the date of payment of the booking fee to the lawyer acting for the developer.

 

Facts of the Case

The applicant (Southville City Sdn bhd) is a developer of a condominium known as ‘Savanna Executive Suites’, Southville City in Dengkil. The applicant had filed two judicial review application against the Tribunal of Homebuyers Claims seeking an order of certiorari to quash the award of the Tribunal. Both of the applications were heard together as the facts and issues involves are the same which concerned the calculation of the Liquidated Damages for late delivery of vacant possession of the purchased units. The first respondent of the respective judicial review application is the homebuyer and the second respondent is the Tribunal of Homebuyers Claims (Tribunal Tuntutan Pembeli Rumah).

Facts for the First Application

First respondent was invited by the applicant’s property agent to the show room of the project and was informed of an Incentive Scheme offered by the applicant to the purchaser of the project. The scheme offered the purchasers were a promotional rebate of 5% from the purchase price, legal fee on Sale and Purchase Agreement (“SPA”) including disbursement fee and on Loan Agreement is borne by the developer. The terms are that the purchasers must only engage the developer’s appointed panel of solicitors for preparation agreements and to accept the Letter of Offer from the developer’s appointed panel of end-financiers only for the purchase of the property.

On 21 September 2013, the first respondent paid RM3,000 as the booking fee to a designated lawyer from Messrs Khairin Nisa & Co and was asked to sign an Irrevocable Offer to Purchase addressed to Messrs Khairin Nisa & Co for the purchase of a parcel. In the Irrevocable Offer to Purchase contains the particulars, such as the indicative price is RM339,480, stakeholder sum of RM3,000 and appointment of Messrs Khairin Nisa & Co as stakeholder for the purchase of the property. On 27 March 2014, the applicant and the first respondent signed the SPA for the first respondent to purchase the parcel with the purchase price of RM339,480. Clause 25(1) of the SPA states the time for delivery of vacant possession is within 48 months from the date of the SPA and failing which the applicant is to pay Liquidated Damages in accordance with clause 25(20 which is calculated from day to day at the rate of 10% per annum of the purchase price from the expiry of the delivery of vacant possession of the parcel.

The applicant issued a notice of delivery of vacant possession of the said parcel to the first respondent on 29 March 2018. On 26 September 2018, the first respondent filed her claim with the Tribunal of Homebuyers Claims for Liquidated Damages for the late delivery of vacant possession. The claim was allowed and first respondent was awarded the sum of RM21,295.97 which is RM17,671.56 for the late delivery of parcel and RM3,534 for the common facilities.

Facts for the Second Application

The first respondent was invited to the show room of the project by the applicant’s property agent and was introduced to a lawyer from Messrs Khairin Nisa & Co who informed that a discount would be given to purchaser who bought the unit by paying RM3,000 booking fees. First respondent then paid RM3,000 and signed an Irrevocable Offer to Purchase dated 28 September 2013 as requested. The indicative price on the offer was RM343,500. On 27 March 2014, the applicant and the 1st respondent executed a SPA for the first respondent to purchase a parcel for the sum of RM343,500.

Similarly, the notice of delivery of vacant possession of the said parcel to the first respondent was issued on 29 March 2018. On 19 July 2018, first respondent filed a claim with the Tribunal of Homebuyers Claims for Liquidated Damages for the late delivery of vacant possession. The claim was allowed and first respondent was awarded the sum of RM25,296.65.

Hence, the judicial review applications were filed. The common grounds for both judicial review applications are that the second respondent committed an error of law allowing the first respondent’s claims and awarding the Liquidated Damages. Applicant argued that that the Rm3,000 payment was not a booking fee for the purchase of the parcel and it is a stakeholder sum held by Messrs Khairin Nisa & Co as stakeholder. Applicant argued that Messrs Khairin Nisa & Co is not an agent or panel of the applicant for the project. Applicant submits that they did not received the RM3,000 before the SPA was signed and that there was no agreement between the applicant and the first respondents before the signing of the SPA.

Applicant submits that the second respondent had acted out of jurisdiction and ultra vires the Housing Development (Control and Licensing) Act 1966 (“HDA 1966”) because clause 25 and 27 of the SPA specifically provides the time of delivery of vacant possession and completion of common facilities is 48 months from date of SPA. Applicant also argued that second respondent had committed an error of law when failed to apply the statutory law and failed to consider that the SPA is a statutory contract in Schedule H of Housing Development (Tribunal for Homebuyer Claims) Regulations 2002.

Issue of the Case

  1. Whether Messrs Khairin Nisa & Co. was the lawyer acting for or agent of the applicant for the project?

  2. Whether the payment of RM3,000 was the booking fee or merely a stakeholder sum pending the acceptance of the offer to purchase by the applicant?

  3. Whether the commencement date for the calculation of the liquidated damages is the date of the booking fee are paid or the date of the SPA?

Judgment of the Court

It is settled law that the court may review a decision on the grounds of illegality, irrationality or procedure impropriety. The review not only on the decision-making process but also its merits. (see Akira Sales Service (M) Sdn Bhd v. Nadiah Zee binti Abdullah & another appeal [2018] 2 MLJ 537).

First issue

The Court agreed to the findings made by second respondent that they were acting for the applicant and not the first respondents. The evidences are clear that Messrs Khairin Nisa & Co. handled the sale and purchase transaction and their fees was paid by the applicant.

Second issue

The Court referred to paragraph 22 of the Irrevocable Offer to Purchase which make reference to booking of the property where it states:

“22. This letter constitutes the whole agreement between me/us, and the Stakeholder with regard to the booking of the Property and the Stakeholder Sum and shall supercede all prior communications or understandings, inducements or conditions, expressed or implied, oral or written.”

Considering the facts that Messrs Khairin Nisa & Co. was applicant’s panel lawyer, the court agreed with the second respondent that RM3,000 was the booking fee for the purchase of the property by the first respondent. It was held that there was a contract between the applicant and the first respondents the moment the booking fee of RM3,000 was paid to Messrs Khairin Nisa & Co as panel lawyers or agent of the applicant and the signing of the Irrevocable Offer to Purchase.

Third issue

Although clause 25 of the SPA stipulates that the time of delivery of vacant possession shall be within 48 months from the date of the SPA and clause 27 provides the completion of the common facilities shall be completed within 48 months from the date of the SPA and it is a statutory contract pursuant to Schedule H of the Housing Department (Control & Licensing) Regulation 2002, it has been decided by the Supreme Court in Faber Union Sdn Bhd v. Tribunal Tuntutan Pembeli Rumah, Kementerian Perumahan dan Kerajaan Tempatan & Ors [2011] 7 CLJ 37 that the calculation for liquidated damages begins from the date of payment of the booking fee. The Court in Faber Union states:

“[13] The applicant contends that the Tribunal erred in amending the commencement date of the SPA to the date of payment of the deposit. The Tribunal relied on the case of Faber Union Sdn Bhd v. Chew Nyat Shong & Anor [1995] 3 CLJ 797 wherein the issue for determination by Supreme Court is whether, in ascertaining the date of delivery of vacant possession of a building to be constructed, time started to run from the date payment of the booking fee was made or from the date of the signing of the sale and purchase agreement. In that case the deposit was paid on 17 February 1984 and the agreement was signed on 27 June 1984. The Supreme Court held that for the purpose of ascertaining the date of delivery of vacant possession the relevant date when time starts to run is the date on which the purchaser paid the booking fee and not the date of the signing of the sale and purchase agreement. The decision of the Supreme Court was followed in Lim Eh Fah & Ors v. Seri Maju Padu [2002] 4 CLJ 37. In that case the purchaser paid the deposit on 17 July 1992. The sale and purchase agreement was executed on 10 October 1992. Suriyadi Halim Omar J (as His Lordship then was) held that the respondent assumed the responsibility to fulfil its part of the bargain at the date the deposit was paid, i.e., 17 July 1992, in effect being the date when the contract was struck, and not the date the deed of assignment was signed. Otherwise, the respondent could arbitrarily choose any date it favoured to execute the sale and purchase agreement which would certainly prejudice the purchaser. Thus, I find that the Tribunal has not erred in deciding that the relevant date for the purpose of calculating the amount of damages payable by the applicant is the date the respondents paid the deposits.”

The facts also show that the booking fee was paid before the applicant obtained its license and sale permit under Regulation 3(6) and 5(4) of Housing Development (Control and Licensing) Regulations 1989. The Court held that the contract upon payment of the booking fee is valid as the consideration and object of the agreement which is the purchase price are legal. In other words, the sales of the units in both cases is legal and valid. The Court referred to Kin Nam Development Sdn Bhd v. Khau Paw Yan [1984] 1 CLJ 347 which held:

“In any case there is nothing illegal about the consideration or object of the contracts because they are only contracts for the sale and purchase of houses, and neither do they come within any of the paragraphs of s. 24 quoted above, although the appellant may well be guilty of an offence under r. 17 for contravening r. 11(1) of the Housing Developers (Control & Licensing) Rules 1970. In other words, these Rules do not affect the validity or otherwise of the contracts which the developer has signed with the purchasers.”

Based on the aforesaid reasons, the High Court dismissed the judicial review application by the applicant in both cases with costs.

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