The court ruled that a Certificate of Practical Completion does not equate to valid delivery of vacant possession without a Certificate of Completion and Compliance, deeming exploitative contract terms against public policy.

JUDGMENT

Ahmad Shahrir Mohd Salleh J:

Introduction

[1] In this judgment, the parties are referred to as they were at trial. The plaintiffs sued the defendant for breach of contract in respect of the purchase of a property and claimed damages for late delivery and general damages in alternative.

[2] After a full trial, the Sessions Court ruled that the notice of vacant possession and the Certificate of Practical Completion were valid and dismissed the plaintiff's claim. The plaintiffs were not satisfied with the decision of the Sessions Court and appealed.

Brief Facts

[3] The plaintiffs purchased from the defendant a commercial unit at the Star Boulevard, Kuala Lumpur at the purchase price of RM6,759,172.00. On 7 August 2014, the parties entered into a sale and purchase agreement ("SPA"). According to the SPA, the defendant was supposed to complete and deliver vacant possession of the unit within 48 months from the date the project development plan was approved.

[4] The project development plan was approved on 23 July 2014. As such, the plaintiffs took the stance that vacant possession of the unit should be delivered on 23 July 2018.

[5] One day before the deadline for delivery of vacant possession, the defendant issued to the plaintiffs a notice for delivery of vacant possession. In the notice, the defendant mentioned that it had obtained the Certificate of Practical Completion from the architect. However, the Certificate of Completion and Compliance has yet to be issued. As a result, the plaintiffs could not occupy the unit.

[6] In addition to the inability to occupy the unit, the plaintiffs faced a host of other issues. The plaintiffs did not receive the complete set of keys. Entry to the plaintiffs' unit was only possible with the presence of a representative from the defendant on appointment basis. The main entrance to the unit was locked with a "no entry" sign conspicuously displayed. Ongoing construction work can be seen around the plaintiffs' unit and within the commercial area of the project.

[7] The plaintiffs sued the defendant for breach of the SPA. The plaintiffs claimed that the purported delivery of vacant possession on 22 July 2018 was invalid. In their claim, the plaintiffs sought for the following reliefs:

(a) a declaration that the delivery of vacant possession was invalid,

(b) liquidated ascertained damages ("LAD") amounting to RM309,225.61 for late delivery,

(c) in alternative for general damages to be assessed,

(d) interest and cost.

[8] In defence, the defendant maintained that delivery of vacant possession was good in law as it was done in accordance with the terms of the SPA. The defendant insisted that the CPC was valid and that the plaintiffs were bound by the terms of the SPA which they had signed.

Analysis And Findings

Whether Issuance Of The CPC Constitute A Valid Delivery Of Vacant Possession Without The CCC

[9] The CPC was issued pursuant to the SPA. Section 39.1 of the SPA clearly allows for delivery of vacant possession upon issuance of the CPC.

Section 39.1 of the SPA provides as follows:

"Section 39 Manner of Delivery of Vacant Possession 39.1 Upon issuance of a certificate by the developer's architect certifying that the construction of the Parcel has been practically completed and the Purchaser having paid all monies payable under this Agreement and having performed and observed all terms and conditions on the Purchaser's part under this Agreement, the Developer shall let the Purchaser into possession of the Parcel provided always that such possession shall not give the Purchaser the right to occupy and the Purchaser shall not occupy the Parcel until such time as the Certificate of Completion and Compliance for the Parcel is issued.".

[10] Despite issuance of the CPC, s 39.1 of the SPA did not allow the plaintiffs' possession of their unit until the CCC was issued. Clearly, this requirement of the SPA was made in contemplation of the statutory prohibition against occupying any building which has not been is