Court of Appeal decides that the time for delivery of vacant possession starts from the date of agreement

In a typical sale of landed housing by a developer, the contract used is the statutory agreement in Schedule G as prescribed under regulation 11(1) of the Housing Development (Control and Licensing) Regulations 1989.

Under clause 22 of the statutory agreement, the developer has 24 months from the date of the sale and purchase agreement to deliver vacant possession to the purchaser.

Clause 22 reads as follows (with emphasis added):

“Time for delivery of vacant possession 

22. (1) Vacant possession of the said Building shall be delivered to the Purchaser in the manner stipulated in clause 23 herein within twenty-four (24) calendar months from the date of this Agreement.

(2) If the Vendor fails to deliver vacant possession of the said Building in manner stipulated in clause 23 herein within the time stipulated in subclause (1), the Vendor shall be liable to pay to 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 date of the delivery of the vacant possession in subclause (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 the Purchaser takes vacant possession of the said Building. 

(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.”

In most cases, the purchaser would have paid to the developer in advance, a booking fee. The sale and purchase agreement will be signed (and dated) later. At that time, the balance of the 10% deposit will be paid.

Previously, there were conflicting decisions as to which date the 24 months to deliver vacant possession is to be calculated from. Some cases have decided that it would be from the date that the booking fee is paid, while others have used the date of the sale and purchase agreement as the relevant date.

This is important, as the amount of liquidated damages will obviously be higher if the 24 months period starts from the date that the booking fee is paid.

The recent Court of Appeal case of GJH Avenue Sdn. Bhd. v. Tribunal Tuntutan Pembeli Rumah, Kementerian Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Ors has for now settled the issue by deciding that the 24 months period starts from the date of the sale and purchase agreement, where the Schedule G agreement is used. 

The court of appeal’s rationale is that the words of clause 22 are clear and unambiguous. They must, therefore, be simply applied.