1. Claim for liquidated damages due to delayed delivery of vacant possession under a statutory sale and purchase agreement involving a contra debt arrangement for consideration. (Para 3 , 6 , 7 , 8 , 9 )
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2017 MarsdenLR 1808
MAHKAMAH TINGGI (SHAH ALAM)
DATIN ZALITA BINTI DATO’ ZAIDAN, JC
Bandar Subang Sdn Bhd & Anor – Plaintiff
Versus
Lim Eu Ching & Anor – Defendant
RAYUAN SIVIL NO: 12ANCVC-94-11/2016
Advocates:
Chan Weng Khai (Chang Weng Khai & Co) for the appellant.
Randy Chew (Terrence & Randy) for the respondent.
Chan Weng Khai (Chang Weng Khai & Co) for the appellant.
Randy Chew (Terrence & Randy) for the respondent.
A developer cannot rely on a stop work order to excuse delays in delivering vacant possession under a statutory SPA without obtaining a formal extension from the Controller of Housing. Additionally, under the Contracts Act 1950, consideration for a contract need not flow directly from the promisee.
Headnote:(A) Rules of Court 2012 - Order 14 - Summary Judgment - Principle that a plaintiff must establish a prima facie case and the defendant must demonstrate a triable issue or a bona fide defense to avoid summary judgment (Paras 31-33).
(B) Contracts Act 1950 - Section 2(d) - Consideration - In Malaysia, consideration need not flow from the promisee; it is sufficient if any party provides the consideration for a valid contract to exist (Para 42).
(C) Housing Development (Control & Licensing) Regulations 1989 - Regulation 11 - Statutory Sale and Purchase Agreement - Terms regarding the delivery of vacant possession in Schedule G are statutory protections for purchasers. A developer cannot rely on a stop work order to justify delays in delivering vacant possession unless they have applied for and obtained a formal extension of time from the Controller of Housing (Paras 46).
(D) Limitation - Cause of action for liquidated ascertained damages (LAD) under a statutory housing agreement accrues on the date the purchaser takes vacant possession of the property, not from the date the agreement was signed (Para 48).
Facts of the case:
A purchaser claimed liquidated ascertained damages for a delay of over nine years in the delivery of vacant possession of a residential property. The developer contested the claim on the grounds that no consideration had been paid by the purchaser, as no direct payment of the purchase price was made. It was revealed that the purchase price was settled through a contra-debt arrangement involving a third party. The developer further argued that a stop work order issued by local authorities caused the delay and that the claim was time-barred.
Findings of Court:
The court found that the contra-debt arrangement constituted valuable consideration under the law. The developer was estopped from relying on the stop work order because it failed to apply for an extension of time from the Controller of Housing as required by the statutory regulations. The claim was not time-barred as the cause of action accrued upon the actual delivery of vacant possession.
Issues: Whether the absence of direct payment by the purchaser meant there was no consideration for the contract; whether a stop work order is a valid defense for delay in delivering vacant possession without a formal extension from the Controller of Housing; and whether the claim for liquidated damages was barred by limitation.
Ratio Decidendi: Under the Contracts Act 1950, consideration may flow from a third party to validate a contract. In the context of statutory housing agreements, the developer is strictly bound by the delivery timeline unless a formal waiver or modification is granted by the Controller of Housing; failure to seek such an extension precludes the developer from using external delays as a defense. The accrual of the cause of action for LAD is triggered by the delivery of vacant possession.
Result: Appeal dismissed with costs.
Act Referred
Rules of Court 2012: O.14
Evidence Act 1950: S.91
Housing Development (Control and Licensing) Act 1966
Contracts Act 1950: S.2(d)
Housing Development (Control & Licensing) Regulations 1989: R.11, R.11(1), R.11(3)
Evidence Act 1950: S.91
Housing Development (Control and Licensing) Act 1966
Contracts Act 1950: S.2(d)
Housing Development (Control & Licensing) Regulations 1989: R.11, R.11(1), R.11(3)
Legal Category Hierarchy
Table of Contents
2. Dispute over whether a contra debt arrangement constitutes valid consideration, the effect of stop-work orders on delivery obligations, and whether the claim is time-barred. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 27 , 28 , 29 )
3. The court found the contra arrangement provided sufficient consideration, the developer failed to seek statutory extensions for stop-work orders, and the limitation period began upon vacant possession. (Para 30 , 34 , 35 , 36 , 37 , 39 , 40 , 41 , 43 , 44 , 45 , 46 , 47 , 48 )
4. Consideration need not flow from the promisee under the Contracts Act 1950, and statutory delivery deadlines in housing agreements require Controller of Housing approval for extensions. (Para 42 , 46 )
5. Appeal dismissed with costs, upholding the summary judgment for the plaintiff. (Para 50 )
6. Does consideration have to flow from the promisee for a contract to be valid under Malaysian law?
No. Under the Contracts Act 1950, consideration does not need to flow from the promisee; it is sufficient if any party provides the consideration for there to be a valid contract. (Para 42 )
7. Can a developer rely on a stop-work order to excuse delays in delivering vacant possession of a property?
No. A developer must apply for a written waiver or modification from the Controller of Housing under Regulation 11(3) of the Housing Development (Control & Licensing) Regulations 1989 to extend the delivery period. (Para 30 , 46 )
8. When does the limitation period for claiming liquidated damages for delayed vacant possession typically begin?
The cause of action for liquidated damages accrues on the date the purchaser takes vacant possession of the property, rather than from the date the agreement was signed. (Para 30 , 48 )
9. What is the standard for granting summary judgment under Order 14 of the Rules of Court 2012?
Summary judgment is granted when the plaintiff establishes a prima facie case and the defendant fails to show a bona fide triable issue or a defense that is sustainable in law or fact. (Para 31 , 32 , 33 , 49 )
Datin Zalita Binti Dato’ Zaidan JC:
GROUNDS OF JUDGMENT
Introduction
[1]This is an appeal by the Appellant who was the Defendant, on the decision of the Sessions Court in allowing for the summary judgment under Order 14 of the Rules of Court 2012
[2]Both parties, in this judgment, will be known as they were in the Sessions Court.
Factual Background
[3]The Plaintiff’s claim against the Defendant is for liquidated damages of the sum RM348,003.94 due to the Defendant’s delay of 3107 days in delivering vacant possession of a double storey semi-detached house held under the title H.S.(D) 177895, P.T. 4922 Mukim Bukit Raja, District of Petaling, State of Selangor Darul Ehsan with a postal address of No.3, Jalan Pulau Indanh U10/58, Seksyen U10, 40170 Shah Alam, Selangor Darul Ehsan (the said Property).
[4]The Plaintiff is a Malaysian citizen of full age having his residential address at No.7, Jalan SL 7/5, Bandar Sungai Long, 43000 Kajang, Selangor Darul Ehsan whereas the Defendant is a private limited company duly incorporated in Malaysia with its registered address at No. 1, Lintang Angsana, Bandar Baru Ayer Itam, 11500 Pulau Pinang and its business address at No. 2-8, Bangunan Farlim, Jalan PJS 10/32, Bandar Sri Subang, 46000 Petaling Jaya, Selangor Darul Ehsan.
[5]The Defendant is primarily involved in the business of property development wherein the Defendant’s projects include but not limited to a housing development known as the ‘Subang Impian, Shah Alam, Phase 2’ project (the said Development).
[6]It was claimed that on or about 11.11.2005, the Plaintiff had entered into a Sale and Purchase Agreement dated 11.11.2005 with the Defendant (the SPA) (can be found at pages 99 – 124 of the Appeal Record) for the sale of the said Property within the said Development wherein the said Property was sold by the Defendant, being the Vendor, to the Plaintiff, being the Purchaser, for a total purchase price of RM409,135.00 (the Purchase Price).
[7]The Plaintiff claimed that there are express terms and conditions of the said SPA on delivery of vacant possession which bind both the Plaintiff and Defendant, as follows:
“Clause 23(1) Vacant possession of the said Building shall be delivered to the Purchaser in the manner stipulated in Clause 24 herein within twenty-four (24) calendar months from the date of this Agreement;”
“Clause 23(2) If the Vendor fails to deliver vacant possession of the said Building in manner stipulated in Clause 24 herein within the time stipulated in sub-clause (1), the Vendor shall be liable to pay the Purchaser liquidated damages calculated from day to day at the rate of ten per centum (10%) per annum of the purchase price from the expiry of the delivery of vacant possession in sub-clause (1) until the date the Purchaser takes vacant possession of the said Building. Such liquidated damages shall be paid by the Vendor to the Purchaser immediately upon the date of Purchaser takes vacant possession of the said Building.”
“Clause 23(3) For the avoidance of doubt, any cause of action to claim liquidated damages by the Purchaser under this clause shall accrue on the date the Purchaser takes vacant possession of the said Building.”
[8]The Defendant alleged that there was no consideration given by the Plaintiff to the Defendant in relation to the purchase of the said Property as there was no payment made in accordance with clause 4.1 of the said SPA. The Plaintiff argued that Defendant’s allegation was wholly inaccurate as the said SPA and transfer of property had taken place due to reasons that the Defendant was indebted to Yap Grouting & Drilling Services Sdn. Bhd. (“Yap Grouting”) who was at that material time the main contractor for the said Development.
[9]The Plaintiff claimed that the Defendant had offered the said Property to Yap Grouting to set-off the debts due and owing by Defendant to Yap Grouting and Yap Grouting who was also indebted to the Plaintiff, had in turn offered the said Property to the Plaintiff as a set-off aga
