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Construction Dispute: Court of Appeal Dismisses Appeal Against Developer

Court of Appeal Case No.: B-01(A)-467-09/2020 Coram: Y.A Datuk Yaacob Bin Haji MD Sam, HMR, Y.A. Datuk Ravinthran A/L Paramaguru, HMR, Y.A. Dato’ Mohd Nazlan Bin Mohd Ghazali, HMR Decision delivered on 17th October 2022.



Govindan Kumar A/L Muniandy (“the First Appellant”) entered into a Sale and Purchase Agreement (“the SPA”) with Eco Green City Sdn Bhd (“the Respondent”) on 30th October 2015 (“the SPA Date”). The SPA provides for the delivery of vacant possession (“VP”) by the Respondent to be within 36 months from the SPA Date, failing which the Respondent would be required to pay Liquidated Ascertained Damages (“LAD”) to the First Appellant.

The First Appellant claimed LAD based on an alleged delay of 208 days (calculated from the expiry of 36 months from the booking confirmation date, but without booking fee being paid, to the installation date of the electricity meter), whereas the Respondent argued that the LAD should be calculated from the expiry of 36 months from the SPA date to the issuance date of the notice of delivery of Vacant Possession (“the VP Notice”) which was only 17 days of delay. The First Appellant succeeded at the tribunal, with an award of LAD based on a delay of 130 days (calculated from the expiry of 36 months from the date of booking fee paid to the installation date of the electricity meter).


High Court (“the HC”) – No issue on LAD starting date, but when was the delivery of VP?

The Respondent took the position that VP was delivered on the issuance date of the VP Notice whereas the First Appellant argued that VP was delivered on the installation date of the electricity meter as the SPA provides that water and electricity supply shall be “ready for connection”. The HC held that the LAD was to be calculated from the expiry of 36 months from the date of booking fee paid until the issuance date of the VP Notice.


Court of Appeal (“the CA”) – VP date: Issuance date of the VP Notice

The CA agreed with the HC that “ready for connection” does not mean “actually connected”. The CA further elaborated that “ready for connection” means “electrical points and water fittings and fixtures have been installed by the developer and tested and commissioned by the appropriate authority or its authorised agents, and supply is available for tapping into individual parcel units”.

In addition, there is a significant difference between delivery of VP by the developers (the issuance date of the VP notice) and taking of VP by purchasers (matters take place after the delivery of VP such as collection of keys, defect inspection and settlement of outstanding monies due and owing by purchasers to the developer). This is further supported by the fact that the SPA did not mention the time frame given to the Respondent to fulfill its duty to apply to the relevant authorities for the connection of matters on water and electricity.

In any event, it is difficult to deny that once an application is made by the developer to the relevant authority, it is no longer within the control of the developer but that of the relevant authority to install the water and electricity meters that the developer has applied for. In this case, the Respondent has notified the First Appellant that the application has been submitted to Tenaga Nasional Berhad (“TNB”) and agreed further to pay the First Appellant’s deposit by setting off with the LAD. As such, there is no valid basis to contend that the Respondent delayed in making the application or deposit payment to the TNB.

Furthermore, based on the evidence such as Form G16 (Stage Certification: External Electricity Supply System) and site photos, the Respondent has ensured compliance with the SPA in that electricity supply for the unit has at all material times been ready for connection. To conclude, VP is deemed delivered by the Respondent to the First Appellant on the date of the issuance of the VP Notice, but not on the installation date of the electricity meter.

The successful Respondent in this appeal was represented by Halim Hong & Quek Partner, Mr. Ankit Sanghvi in the Dispute Resolution Department. Ankit has been active in commercial and construction practice in Halim Hong & Quek and has represented several housing developers in initiating and defending claims involving the sale and purchase transaction of properties.

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This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.

About the Author

Wong Kuai Yi
Associate, Real Estate and Banking & Finance
Halim Hong & Quek

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