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2025 MarsdenLR 4015
HIGH COURT MALAYA KUALA LUMPUR
SMART AVENUE PROPERTY SDN BHD – Appellant
Versus
BBCC DEVELOPMENT SDN BHD – Respondent
[Civil Appeal No: WA-12BNCvC-156-12-2023]
The interpretation of force majeure in property development contracts during the COVID-19 pandemic recognized delays beyond strict lockdown periods, emphasizing the need for a holistic reading of contract terms.
Headnote:(A) Contract Law - Force Majeure - The appeal addressed the applicability of force majeure in contractual obligations during the COVID-19 pandemic, specifically regarding delays in property development. The Sessions Court had found that the pandemic-related restrictions constituted valid grounds for exempting liquidated damages beyond certain periods. (Paras 1, 8, 12, 34)
(B) Judicial Appreciation - The court elaborated that an appellate court would not interfere with a trial court's factual findings unless they demonstrate a plain error. The Sessions Court's assessment of evidence was deemed sufficient. (Paras 4, 41)
(C) Contract Interpretation - The court emphasized that the SPA must be interpreted holistically, and delays caused by force majeure extending beyond strict lockdowns were recognized. (Paras 30, 34)
Facts of the case:
The Appellant sold two commercial properties, with delays in delivery due to COVID-19 restrictions. The Sessions Court allowed certain delays as excusable under the force majeure clause, leading to a dispute over liquidated ascertained damages totaling RM193,274.24. (Paras 6-10)
Findings of Court:
The Sessions Court's ruling was upheld, determining that force majeure justified the delay beyond a strict lockdown definition, and the Appellant's claims lacked substantive challenge to the evidence. (Paras 12, 27)
Issues: The key issues involved the application of force majeure to construction delays and whether the Sessions Court properly assessed the evidence. (Paras 12, 13)
Ratio Decidendi: The court supported the Sessions Court's interpretation that government restrictions constituted a legitimate force majeure situation that excused certain delays in delivery, and emphasized that appeals should not disrupt well-founded trial judgments. (Paras 34, 41)
Result: Appeal dismissed, and costs of RM10,000.00 awarded to the Respondent.
| Table of Content |
|---|
| 1. implications of force majeure on contractual obligations during covid-19. (Para 1 , 2 , 3) |
| 2. scope for appellate intervention based on factual findings. (Para 4 , 11 , 12) |
| 3. overview of sessions court's findings regarding lad and force majeure. (Para 6 , 7 , 8 , 10) |
| 4. confirmation of force majeure impact beyond strict lockdown periods. (Para 15 , 16 , 18 , 19) |
| 5. evaluation of documentary evidence and witness credibility. (Para 20 , 21 , 22 , 27) |
| 6. holistic interpretation of contracts regarding liability and completion. (Para 29 , 30 , 32 , 33) |
| 7. rationale behind affirming the sessions court's judgment. (Para 36 , 38 , 41) |
| 8. final determination and dismissal of the appeal. (Para 37 , 39 , 40) |
[1] Submissions by both parties were heard on 16 January 2025. This Court stood the matter down for deliberation. This appeal raises important questions about force majeure in the context of property development during the COVID-19 pandemic. At its heart lies the interpretation of contractual obligations when faced with unprecedented circumstances that challenged traditional concepts of construction delays and delivery timelines.
[2] The Appellant challenged the Sessions Court's findings that force majeure excused the developer from liquidated ascertained damages beyond strictly- defined lockdown periods. This presented an opportunity to examine the delicate balance between contractual certainty and commercial reality in extraordinary times.
[3] The issues transcend mere contractual interpretation — they reflect the broader challenge faced by the property development industry during a global pandemic, where construction progress was impacted not just by total lockdowns, but by an array of restrictions and safety measures that fundamentally altered how development projects could proceed.
[4] This Court's judgment therefore addresses whether the Sessions Court's findings warrant appellate intervention, guided by established principles that an appellate Court should not disturb factual findings unless they are plainly wrong or reflect insufficient judicial appreciation of evidence.
The Sessions Court's Findings
[5] This trial before the Sessions Court was as a result of the Appellant having pursued the claim of the balance of liquidated ascertained damages (LAD) due to the late delivery of vacant possession by the Respondent of the properties purchased. Initially the Appellant's statement of claim (SoC) claimed for the payment of RM325,134.24 for 360 days of delay. On 22 September 2022 the Sessions Court granted judgment by admission for RM131,800.00 for 146 days of delay as admitted by the Respondent. The Appellant thereafter claimed for the remaining 214 days (LAD in the sum of RM193,274.24) which was tried by the Sessions Court.
[6] The findings of facts after trial by the Sessions Court as to the background of this case are as follows:
(a) The case involved two sale and purchase agreements between the parties (the SPA);
(b) It concerned two commercial properties known as Parcel No A2- 27-03 and A2-27-03A Strata Office (The Stride) at Bukit Bintang City Centre;
(c) The purchase price was RM1,735,000.00 for each unit.
[7] The chronology of the events as per the grounds of judgment by the Session Court are as follows:
(a) The SPA is dated 28 October 2016;
(b) The completion deadline was 27 October 2020 (48 months from the SPA);
(c) The actual delivery of vacant possession was on 9 March 2022;
(d) There was a delay of a total of 497 days.
[8] The Sessions Court accepted that there was a force majeure situation due to COVID-19 pandemic restrictions. The period from 18 March 2020 to 12 May 2020 and 1 June 2021 to 20 August 2021 was excluded from LAD calculation due to total lockdown in the country. The Sessions Court ruled that the dates in between the total lockdown were also to be exempted having found that the COVID-19 restrictions affected construction work, including:
(a) obtaining the required MITI approvals;
(b) there
