Completion timelines in contracts must consider necessary approvals; damages for delay require proof of entitlement and cannot be baseless.

JUDGMENT

Abu Bakar Jais JCA:

Introduction

[1] This is an appeal by the appellant against the decision of the High Court in allowing the respondents' claim.

[2] After reading the written submissions filed, hearing both parties orally and perusing the records of appeal, we decided to allow the appeal.

Background Facts

[3] The appellant is a housing developer. The respondents (husband and wife) are the landowners of a piece of land ("the Property"). On 23 November 2009 the appellant signed a Joint-Venture Agreement ("the Agreement") with the respondents to jointly develop the Property into a housing project for the construction of 26 units of semi-detached double-storey houses ("the Project").

[4] The dispute between the appellant and respondents largely revolves on the issue when the Project must be completed and whether there were extensions of time agreed by both parties for the completion of the Project. Another issue of substance is whether the respondents should be paid compensation because of the purported delay in completing the Project.

High Court's Decision

[5] The Learned High Court Judge found as follows. The relevant term of the agreement provides for the completion of the Project within 24 months of the signing of the Agreement after all approvals have been obtained from the authorities in respect of all plans for the Project.

[6] Both parties agreed to vary this term by signing the Agreement first before the approvals from the authorities. Thus, the signing comes first and then the approvals, instead of the converse.

[7] Therefore the 24 months started to run from 23 November 2009, the date of signing and ended on 23 November 2011, the last date for the Project to be completed.

[8] Both parties then further agreed to extend the time for completion beyond that date of 23 November 2011. And in view of this, the respondents were paid RM100,000.00 by the appellant. This payment came in two parts. Each payment was for RM50,000.00. The first on 18 April 2012 and the second, on 1 February 2016. These payments were after that date, 23 November 2011. These payments were in consideration of the respondents agreeing to extend time for the completion of the Project beyond that date.

[9] For the first payment parties agreed to extend time until 30 July 2012 and for the second payment parties further agreed to extend time until 1 February 2016. The Project was still not completed on that date, 1 February 2016.

[10] The appellant's representative, DW2 and the 1st respondent signed an undated letter ("D9") that indicates both parties agreed to extend further the time for the completion of the Project until 30 June 2017 and for the present suit by the respondents to be withdrawn. However, D9 was issued without the knowledge and approval of the 2nd respondent. D9 cannot be accepted as it restrained the respondents from their right to sue and because the 2nd respondent was not aware of D9 and did not give her approval.

[11] The Project was finally completed on 28 February 2018. This is well beyond the first agreed date of completion, ie 23 November 2009.

[12] The respondents can claim damages as provided by the Agreement. The valuation report produced by the respondents through the registered valuer, PW3, proved that they are entitled to RM11,800,000.00 and RM21,995.00 for the production of the report as damages.

Summary Of The Appellant's Contentions

[13] The completion date for the Project can only be determined after all approvals are obtained from the authorities. Without these approvals, the Project could not be completed. The High Court failed to read the whole Agreement and to consider business efficacy in reading the entire Agreement.

[14] D9 was wrongly considered by the High Court. Evidence by DW1, DW2 and cross-examination on the 1st respondent were not considered or insufficiently considered as to the effect of D9.

[15] The payments by the Appellants to the 1st respondent referred in D9 were for "wang ehsan" (gratuitous payments) to alleviat