Icon City Development Sdn Bhd v 1. ) Lim Cheng Nguan (BA-12BNCvC-20-04/2022)

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1 DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA (DALAM BIDANGKUASA RAYUAN) RAYUAN SIVIL NO.: RAYUAN SIVIL NO.: BA-12BNCvC-20-04/2022 ANTARA ICON CITY DEVELOPMENT SDN. BHD. (NO. SYARIKAT: 731177-K) (Dahulu dikenali sebagai SIERRA PENINSULAR DEVELOPMENT SDN. BHD.) − PERAYU

Schedule

Schedule A. (ii) Clause 35A of the SPA to obtain the Conversion Approval and Building Plans which includes any amended Building Plans. This clause entitled the Defendant to the extension of 6 months. (b) Pn HMS gagal mempertimbangkan bahawa tiada peruntukan dalam PJB yang menyatakan 42 bulan hendaklah bermula dari tarikh kelulusan Conversion dan tarikh pertama kelulusan Building Plan diperoleh. (c) Pn HMS khilaf dalam memutuskan bahawa LAD hendaklah dikira up until the expiry of 14 days from the VP Notice; dan (d) Pn HMS khilaf dalam memutuskan bahawa beban pembuktian terletak kepada Plaintif to prove the receipt of the VP Notice after 14 days is on the Plaintiffs since the Plaintiffs have claimed the LAD until the expiry of 14 days from the VP Notice. [14] According to the Defendant, Clause 1 of the SPA had defined the phrases/words “Period of Approval” and “Extended Approval Period”, namely – “Period of Approval” means twelve (12) months from the date of this Sale and Purchase Agreement to obtain the Conversion Approval and the approval of the Building Plans from the Appropriate Authorities. “Extended Approval Period” means a further extension of six (6) months from the expiry of the Period of Approval. Other phrases/words that also been defined are “Building Plans”, “Appropriate Authority” and calculation of the LAD are stated in the SPA. [15] Therefore, since nothing is vague on the clauses for the delivery of the vacant possession, the question arises is whether the learned SCj had divert from the plain and ordinary meaning of the said clauses and interpret the clauses in favour of the Purchasers for the alleged fairness. The appellate intervention [16] As clearly stated that principles on the appellate intervention only justified that on the available evidence, the SCj is erred (the case of Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn Bhd [1993] 2 CLJ 146). [17] The 2 tests identified and must be fulfiled in order for the appellate intervention i.e “plainly wrong test” adn “insufficient judicial appreciation of evidence test”. (the case of Lee Ing Chin @ Lee Teck Seng & Ors v. Gan Yook Chin & Anor [2003] 2 MLJ 97 at 98-99) [18] In Ong Leong Ciou & Anor v. Keller (M) Sdn Bhd & Ors And Another Appeal [2019] 3 MLRA 322 at 329, the Court of Appeal held that – “[125] We are mindful of the limited role of the appellate court in relation to the findings of facts made by the court of first instance. The general principle is that the conclusion of a trial judge is a finding of fact on the oral evidence based on the demean our and credibility of the witness before him or her. Generally, such finding ought not be disturbed unless the appellate court is convinced that it is plainly wrong. It would not be sufficient to warrant an appellate interference merely because the appellate court entertains doubt whether such finding is right.”. [19] In Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Administrator of the Estates of Tan Ewe Kwang, Deceased & Anor [2020] 10 CLJ 1, the Federal Curt held that – “... an appellate Court should not interfere with factual findings of a trial judge unless it was satisfied that the decision of the trial Judge was plainly wrong or one that no reasonable Judge could have reached. If it is not, the fact that the appellate Court may have reached a different conclusion on the facts, is irrelevant.”. Evaluation, Analysis and Findings of this Court in deciding the aappeal against the learned SCj’s decision [20] The LAD’s claim is not something unusual or unordinary especially when there is a delay in handing over or delivering the vacant possession of the property purchased. [21] Every purchaser would like to have the property delivered as stipulated in the contract. Whether the developer “can run away” or “avoid its obligation” to pay for the liquidated and ascertained damages depends on the facts. [22] This Court refers to the source as in https://www.designingbuildings.co.uk − Contract generally include a clause making provision for the contractor to pay liquidated damages (LD, sometimes referred to as liquidated and ascertained damages - LADs) to the client in the event that the contract is breached. In building contracts, liquidated damages usually relate to the contractor failing to achieve practical completion (i.e. completing the works so they can handover the site to the client) by the completion date set out in the contract. They are often calculated on a daily or weekly rate. Liquidated damages are not penalties, they are pre-determined damages set at the time that a contract is entered into, based on a calculation of the actual loss the client is likely to incur if the contractor fails to meet the completion date. They might include; rent on temporary accommodation, removal costs, extra running costs, and so on. They are generally set as a fixed daily or weekly sum, although there may be a more complicated formulae where the works are phased, where may be partial possession and so on. It is important that the method of calculation is precisely and formally documented. If the contract prevents the client claiming liquidated damages, or if actual losses are significantly different to those that were estimated at the time the contract was entered into, then the client may pursue a claim or unliquidated (i.e. actual) damages through the courts. Unliquidated damages are damages, the exact amount of which has not been pre-agreed, and are typically determined by the courts. As liquidated damages are not a penalty, they must have been based on a genuine calculation of damages when they were set. If they are not genuine, they may be considered a penalty by the courts and so will be unenforceable (see Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd). There be a causal link between all the losses the contract foresees are likely to be suffered, and the breach of contract, i.e. the damages flow naturally from the delay and must not be 'remote'. The principle of remoteness' is established in the case of Hadley v Baxendale in 1854. Liquidated damages can be beneficial for the client, as the remove their obligation to prove actual losses in the event of delay occurring. They can also be beneficial to the contractor as they limit their liability to a known amount in the event of delay. Extension of time If the project is delayed by an event that impacts on the completion date, but is not the fault of the contractor, then this may constitute a 'relevant event' for which the contractor may be granted an extension of time (i.e. the completion date in the contract is adjusted). This can have the effect of relieving the contractor from a claim of liquidated damages. However, mechanisms allowing extensions of time are not simply for the contractor's benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor could no longer be required to complete the works by the completion date and would only have to complete the works in a 'reasonable' time. With no enforceable completion date, the client would lose any ability to claim liquidated damages for other delays that are the contractor's fault. It is very important when deducting liquidated damages to ensure that the correct contractual procedures are adhered to. In the case of Octoesse LLP v Trak Special Projects Ltd [2016], Justice Jefford held that Octoesse was not entitled to deduct liquidated damages as they had agreed to an extension of time after a certificate of non completion had been issued. The JCT Intermediate Building Contract is constructed such that: 'If the Contractor fails to complete the Works or a Section by the relevant Completion Date, the Architect/Contract administrator shall issue a certificate to that effect. If an extension of time is made after the issue of such certificate, the extension shall cancel that certificate and the Architect/Contract Administrator shall where necessary issue a further certificate.' As Octoesse had not issued a further certificate of non completion, they were not entitled to deduct liquidated damages. [23] In the case of Daya CMT Sdn Bhd v. Yuk Tung Construction Sdn Bhd, [Suit No. 22c-61-12/2015], YA Lee Swee Seng, High Court Judge, Kuala Lumpur, quoted Hudson’s Building and Engineering Contracts 13th Edition paragraph 6-025 page 738− “It is well settled that in building contracts when there is a stipulation for work to be done in a limited time, if one party by his conduct-which may be quite legitimate conduct, such as ordering extra work-renders it impossible or impracticable for the other party to do his work within the stipulated time, then the one whose conduct caused the trouble can no longer insist on strict adherence to the time stated. In those circumstances, he cannot claim any penalties or liquidated damages for non-completion in that time. The House of Lords expressly approving the passage in the judgment of Lord Denning MR in the Court of Appeal in Trollope & Colls v. NW Metropolitan Regional Hospital Board [1973] 2 All ER 260.”. [24] Here, in this present case, the Plaintiffs’ claims had blown a full trial and be that of the learned SCj or me, I cannot find the delay is caused by the Plaintiffs. The Defendant should not use any interpretation to confuse the Courts and then to deny paying the liquidated damages to the Plaintiffs. [25] The clauses in the SPA is meant to protect not only the Defendant but it’s for the protection of the Plaintiffs’ rights too. [26] In the case of Metro Luxury Sdn Bhd v. PKNS Engineering & Construction Bhd [2018] 1 LNS 655, the Court of Appeal, Malaysia held − “… The respondent could well have invoked its rights under clause 41 and imposed LAD for non-completion…”. [27] In the case of PASDEC Putra Sdn Bhd v. Suara Hati Sdn Bhd [2018] 1 LNS 766, the Court of Appeal, Malaysia held – “[28] On the counterclaim, we similarly found that the learned judge misdirected herself in failing to consider that the plaintiff did not dispute that the project had been delayed notwithstanding various extensions given and that the plaintiff had agreed to pay RM4,600.00 per day as LAD. On the facts, we found no reason why the defendant should not be paid the LAD as agreed by the plaintiff. [29] The plaintiff argued that the defendant failed to give notice to the plaintiff on the defendant’s intention to claim for LAD as required under clause 40.1. We found no specific format of notice prescribed by the contract. In our view, on the facts and circumstances of the case where, according to the defendant, the plaintiff had prematurely filed this action before the contract flow could be completed, the defendant’s counterclaim is sufficient notice to the plaintiff of the LAD. The failure of the defendant to give a separate notice on the LAD and/or the failure to issue a final account to the plaintiff, in our view did not in itself absolve the plaintiff’s liability to pay the LAD at the agreed rate. [35] Except for the claim of LAD against the plaintiff for RM4,600.00 per day, we found no reason to disturb the learned judge’s decision in dismissing the rest of the defendant’s counterclaim.”. [28] From the two cases as decided by the Court of Appeal, the LD or LAD is stipulated in the SPA and the rate and calculation are agreed by the parties. The LD or LAD is because of the delay in handover the property to the purchaser and any denial must be supported with evidence. [29] In the appeal against the SCj’s decision, after a full trial, the issue on LAD is only based on the calculation of period for LAD. There is no issue or dispute on the delay in handover or delivery of the vacant possession. [30] Therefore, it is necessary to state at the outset that the Defendant’s appeal is predicated on findings of fact and law by the learned SCj. [31] The learned SCj had examined the evidence with particularity and ultimately found that the developer (Defendant) was at fault and the purchasers (Plaintiffs) had proven their claims against the Defendant. [32] The SPA which expressly provides that the Defendant shall be liable to pay LAD to the Plaintiff for late delivery of vacant possession of the said Property. This obligation is a clear provision and the Defendant should not exit from this clause. [33] As for the issue on the interpretation on when the 42 months should start to commence from the date when the 2 Approvals were obtained i.e on 02.08.2012, it is settled law that the issue on interpretation of a contract is a question of law to be determined by the Court (see Berjaya Times Square Sdn Bhd v M Concept Sdn Bhd [2010] 1 CLJ 269). [34] The questions/issues raised pertaining on the Land Conversion Approval; the first building plan approval; the last amendment to the building plan was approved, are within the purview of the Defendant. It is strange to raise about the well written provision in the SPA when it involves the LAD claims. [35] The Property that is located in 2 Towers are both delayed in its completion. The Plaintiffs only claimed for what is within the agreed terms by the parties, namely, Clause 35A of the SPA and Section 10 Schedule A of the SPA [36] On the issue of calculation of the 42 months, the learned SCj had interpreted correctly, that is – “Mahkamah mendapati bahawa seksyen 10 PJB tidak ada memperuntukkan ungkapan habis tempoh (expiry). Mahkamah selanjutnya mendapati ungkapan yang relevan adalah “from the date of the period of approval or extended approval period”. Tiada dinyatakan tentang “expiry”.” [37] This Court agrees that the interpretation of the calculation of the 42 months is start to commence of 18 months regardless of whether the Approvals are obtained or not. It is the duty of the developer (Defendant) and not the purchasers (Plaintiffs). Here, the Approvals are obtained within 12 months of the Period of Approval i.e on 2-8-2012, so Clause 35A of the SPA had been satisfied and fully complied with as at 2-8-2012, the time period of 42 months should start to commence from that date. No question of the 6 months extension because the Approvals are obtained within 12 months of the Period of Approval. This is the finding of the learned SCj and I agree. [38] The learned SCj is not erred when she said – “Mahkamah berpendapat dakwaan Defendan bahawa tarikh penyerahan milikan kosong berubah dari semasa ke semasa bila-bila building plan dipinda, yang, kesan daripada pindaan kepada building plan itu, menurut Defendan mempunyai kesan yang besar bagi tarikh milikan kosong hendak diserahkan adalah tidak munasabah. Dan, tarikh tidak boleh ditukar sesuka hati apabila terdapat pindaan kepada building plan.”. [39] As the drafter of the SPA, the Defendant had put the words in the SPA without any ambiguity. It is not wise for the Defendant to raise about the interpretation of the SPA after the claims been filed against them. This Court would not like to elaborate about the contractual rules of interpretation that is Contra Proferentum Rule (the contract will be construed against the Defendant who drafted the SPA). [40] In this appeal, this Court finds that on 2-8-2012, the 42 months period had started to commence for the purposes of completion and delivery of vacant possession. The submission by the learned counsel for the Plaintiffs that – “… the date cannot be changed whenever there is an amendment made to the building plan. It will riddle the SPA with uncertainty. To allow such an interpretation would result in uncertainty as to when the property is due for vacant possession as the date will keep changing each time there is an amendment to building plan. It will also result in unfairness and absurdity as the Defendant is allowed to start with the construction works when the two (2) Approvals were obtained on 02.08.2012, while the completion date for delivery of vacant possession will keep changing from time to time whenever there is an amendment made to the building plan.”. The learned SCj had analysed this submission with the evidences before her and I cannot say that the SCj was plainlywrong or that there was any flaw in the evaluation of the evidence led.. Conclusion [41] For the reasons given above, my judgment is “Dengan alasan yang dinyatakan, Mahkamah ini dengan penuh hormat memutuskan bahawa penghakiman dan keputusan Pn HMS adalah teratur dan menurut lunas undang-undang. Oleh yang demikian rayuan Perayu ditolak dengan kos.”. [42] In this appeal before me, this Court in exercising its appellate role, would slow to interfere with findings of facts. The findings and interpretation of the law by the learned SCj are correct. Dated: 2 October 2022. RoziBainon ( ROZI BINTI BAINON ) Judicial Commissioner High Court NCvC12 Shah Alam The Counsels: For the Appellant/Defendant : Kwong Sook Wen Tetuan Ricky Tan & Co., Kuala Lumpur For the Respondents/Plaintiffs : Suriyany binti Abd Majid Tetuan Ching Tan & Assoc. Kuala Lumpur