SYARIKAT
KEMAJUAN PERUMAHAN NEGARA SDN BHD V. LEE CHENG & ANOR
COURT OF APPEAL, PUTRAJAYA
[CIVIL APPEAL NO: C-04-28-1999]
ABDUL MALEK AHMAD PCA , TENGKU BAHARUDIN SHAH JCA , JAMES FOONG JCA
8 SEPTEMBER 2005
JUDGEMENT
James Foong JCA:
Introduction
This appeal centres on the perennial dispute as to whether delivery of
vacant possession of a house sold by a developer to a purchaser should
include supply of water and electricity to the house and if so to what
extent and manner.
Facts
The undisputed facts of this case are these:
By a sale and purchase agreement dated 16.5.1990 (S & P Agreement), the
respondent purchased from the appellant a shop house in Raub for a sum of
RM95,000.00. Complying with regulation 11(1) of the Housing Developers
(Control And Licensing) Regulations 1989 (1989 Regulations), the S & P
Agreement contains the following clauses, relevant to the dispute in this
case:
Clause 17(1)
The Vendor shall, at its own cost and expense, lay or cause to be laid all
necessary water, electricity and sewerage mains, gas piping (if any) and
internal telephone trunking and cabling (if any), to serve the said Estate
and at its own cost and expense undertake to apply for the connection of
internal water, electricity, sanitary and gas installations (if any) of the
said Building to the water, electricity and sewerage mains of the
Appropriate Authority, and the gas mains of the relevant authority.
Clause 17 (2)
The Purchaser shall be liable for and shall pay, within fourteen (14) days
after the receipt of a notice requesting for payment from the Vendor, the
deposits for the installation of water, electricity and gas meters and the
Vendor shall bear all other costs, if any.
Clause 20(1)
The said Building shall be completed by the Vendor and vacant possession
with the connection of water and electricity supply to the said Building,
shall be handed over to the Purchaser within twenty-four (24) calendar
months from the date of this Agreement.
Clause 20(2)
If the Vendor fails to hand over vacant possession of the said Building
together with the connection of water and electricity supply to the said
Building in time, the Vendor shall pay immediately to the Purchaser
liquidated damages to be calculated from day to day at the rate of ten per
centum (10%) per annum of the purchase price.
Clause 21(1)
Upon the issue by the Vendor's Architect of a Certificate certifying that
the construction of the said Building has been duly completed and water and
electricity supply has been connected to said Building and the Purchaser
having paid all monies payable under clause 4(1) in accordance with the
Third Schedule and all other monies due under this Agreement and the
Purchaser having performed and observed all the terms and covenants on his
part under this Agreement the Vendor shall let the Purchaser into possession
of the said Property.
The last date for the appellant to deliver vacant possession of the said
building under the S & P Agreement is 16 May 1992. Water pipes and
electricity mains were duly laid and connected to the said building on 13
January 1991. Keys to the said building were handed over to the respondent
on 30 October 1991. Certificate of Fitness to the said building was issued
on 19 August 1993. However, electricity supply was only connected to the
said building on 18 January 1994.
For this, the respondent claimed from the appellant in the Magistrate's
Court in Raub a sum of RM15.902.73 for late delivery of vacant possession of
the said building from 16 May 1992 to 18 January 1994; a total of 611 days.
The learned Magistrate allowed the respondent's claim with interest and
costs. Dissatisfied, the appellant appealed to the High Court in Raub.
Judicial Commissioner Dato' Azhar Ma'ah (as he then was) dismissed the
appeal with costs. Still discontented, the appellant filed this appeal
before us.
Appellant's Argument
Mr. Felix Dorairaj, counsel for the appellant, first submitted that the
appellant has complied with its obligation to the respondent to hand over
vacant possession of the said building to the respondent on time. At that
time, the appellant had, at its own cost and expense, laid all the pipes and
cables for connection of water and electricity to the said building as well
as having applied to the appropriate authorities for such connection in
accordance with cl. 17(1) of the S & P Agreement. He then stressed that the
appellant is not responsible to energize the water and electricity flow into
the building. To support this, he relied on r. 12(1)(l) of the Housing
Developers (Control and Licensing) Rules 1970 (1970 Rules) that requires the
developer "shall at his own costs and expenses cause the connection of
electricity, water and sewerage mains of the Appropriate Authority or public
authority with the internal electricity, water and sewerage mains of the
housing accommodation erected for the purchaser". To top this, he cited this
court's decision in Salmah binti Sulaiman & Anor v. Metroplex Development
Sdn Bhd [1997] 2 CLJ 148 where, this court has declared:
We agree with Siti Norma Yaakob J that the Rule speaks of connection of the
electrical and water mains and that the respondent's obligation was only to
connect electricity and water mains to the internal electricity and water
mains and not the flow of water and electricity.
In short, what the appellant is maintaining is that the developer is only
obliged "to connect the electricity and water mains to the internal mains of
the said building; the flow of water and electricity is the responsibility
of the relevant authorities".
Respondent's Contention
Mr. K.C. Cheah, counsel for the respondent, was swift to identify the
fallacy of the appellant's argument that relied on an out-dated rule or
regulation. He enlightened this court that the 1970 Rules has been repealed.
And subsequent to this, there has been four amendments to the Housing
Developers (Control and Licensing) Rules, the latest is the Housing
Developers (Control and Licensing) (Amendment) Regulations 2002. But since
this case evolved between the period of 1990 (the date of the S & P
Agreement) and 1992 (the date when vacant possession was supposed to be
delivered) the Housing Developers (Control and Licensing) Regulations 1989
(1989 Regulations) should be applicable. In fact, the entire terms and
conditions in the S & P Agreement are pari materia to the mandatory
formatted sale and purchase agreement set out in Schedule G of the 1989
Regulations where all developers had to adopt when selling their developed
properties. Under cls. 20(1), 20(2) and 21(1) of the S & P Agreement, as
spelt out in the earlier part of this judgment, the appellant when
delivering vacant possession must have water and electricity supply
connected to the said building. This means that the appellant, as developer,
must energize the water and electricity flow into the said building. To
support this contention, Mr. Cheah cited a number of High Court authorities
which I shall dwell into in the latter part of this judgment.
Analysis
With such disclosure, at the outset, it is clear that the appellant has
relied on an out dated 1970 Rules where r. 12(1)(l) therein merely states:
provisions binding on the licensed housing developer that he shall at his
own costs and expenses cause the connection of electricity, water and
sewerage mains of the Appropriate Authority or public authority with the
internal electricity, water and sewerage mains of the housing accommodation
erected for the purchaser.
After the 1970 Rules were repealed, the Housing Developers (Control And
Licensing) Regulations 1982 (1982 Regulations) came into force. The 1982
Regulations requires every sale and purchase agreement for houses
constructed and sold within the definition of the said Act to comply with
the prescribed formatted sale and purchase agreement set out in Schedule E
thereof. And cl. 15(1) of the prescribed agreement states:
The Vendor shall at its own cost and expense cause to be laid all necessary
water, electricity and sewerage mains to serve the said Building and
undertakes to apply for at its own cost and expense the connection of the
internal water, electricity and sanitary installations of the said Building
to the water, electricity and sewerage mains of the Appropriate Authority.
Then cl. 18(1) spells out:
The said Building shall be completed by the Vendor and vacant possession
delivered to the Purchaser within twenty-four (24) calendar months from the
date of this Agreement.
In April 1989, the 1982 Regulations were replaced by the 1989 Regulations.
Clause 20(1) in the formatted sale and purchase agreement listed under
Schedule G of the 1989 Regulation demands:
The said Building shall be competed by the Vendor and vacant possession,
with the connection of water and electricity supply to the said Building,
shall be handed over to the Purchaser within twenty four (24) calendar
months from the date of this Agreement.
Then cl. 20(2) states that:
If the Vendor fails to hand over vacant possession of the said Building,
together with the connection of water and electricity supply to the said
Building, in time, the Vendor shall pay immediately to the Purchaser
liquidated damages to be calculated from day to day at the rate of ten per
centum (10%) per annum of the purchase price.
From the above, one can observe that the phraseology with regard to water
and electricity supply is tied-up with vacant possession and the demand for
such amenities to be supplied and connected to the building constructed has
changed since the 1970 Rules and the 1982 Regulations. The 1989 Regulations
requires the developer to complete and hand over vacant possession of the
building within a specific time "with the connection of water and
electricity supply to the said Building". As a result of this, a number of
High Court authorities have interpreted this provision in the 1989
Regulations to mean that "there must be water and electricity supplies
actually running through the internal water pipes, electric lines and power
lines in the dwelling house before the question of whether or not vacant
possession has been delivered could even be considered" - Abdul Malik Hj.
Ishak J in Hoya Holding Sdn Bhd v. Chia Thin Hing & Anor [1994] 4 CLJ 992.
In another case, Lew Yoke Leng & 2 Ors v. Syarikat Kar King Sdn Bhd [2000] 4
CLJ 184, decided by me as judge of first instance, I have also interpreted
cl. 20(1) and (2) of the formatted sale and purchase agreement under
Schedule G of the 1989 Regulations to say that "water and electricity must
be connected to the house before it is considered to be completed with
vacant possession for the purpose of calculating time to hand over the
property to the plaintiffs". I then went on to add that "Simply put: it
means when the plaintiffs entered the house upon delivery of vacant
possession and turned on the lights it will be illuminated when he affixes a
bulb to it. I cannot comprehend it to mean electricity supply only to a
sub-station in the housing estate where the house is erected, be that
becomes near or far".
Admittedly, there are cases that were decided otherwise. In Tay Ket @ Chan
Kong Seong v. Bumibakti Development Sdn Bhd [1994] 2 AMR 35:1832, Wan Adnan
Ismail J expressed the following views:
As at February 18, 1987, the defendants had already caused electricity to be
connected to the sub-station. As the developer, the defendants had to build
the sub-station for the supply of electricity to all the houses in the
project. The sub-station had been energized. What was left to be done was
for meters to be installed at the houses within the project. This the
defendants could not do even if they wanted to ... Only LLN can install the
meters and connect the electricity to the houses.
But it must be noted that this case was decided based on the 1982
Regulations where the words: "with connection of water and electricity
supply to the said Building" are absent. This is evidenced from the
statement by the learned judge who said at p. 1836: "Therefore item 3 of the
Third Schedule of the Housing Developers (Control and Licensing) Regulations
1982 was complied with as soon as the defendant has energized the
sub-station to enable electricity to be connected to all the houses in the
project". Thus, it is my view that this case was not decided on the same set
of laws applicable to the present case.
This similar approach is shown in Salmah binti Suleiman & Anor v. Metroplex
Development Sdn Bhd (supra), a decision of this court. Zakaria Yatim JCA,
delivering the judgment of this court then, declared that he had "to examine
the relevant provision of the law ... Rule 12(1)(l) of the Housing
Developers (Control and Licensing) Rules 1970" in deciding on the case. But
as disclosed, the 1970 Rules, similar to the 1982 Regulations, does not
contain the words "with connection of water and electricity supply to the
said Building" that is evident in the 1989 Regulations.
But even before the coming into force of the 1989 Regulations, there is
already a line of authorities that differs from the approach of two cases
mentioned above. In Syarikat Lean Hup (Liew Brothers) Sdn Bhd v. Cheow Chong
Thai [1988] 1 LNS 74 ; [1988] 3 MLJ 221, Mustapha Hussain J had even decided
that under the 1982 Regulations, vacant possession has to include the
connection of water and electricity to the said house. The Supreme Court
affirmed this decision in 1989.
Then in Kandasamy a/l Sreenivasagam v. Syarikat Muzwina Development Sdn Bhd
[1990] 1 MLJ 15 Abdul Malek J (as he then was) followed and adopted the
approach of Syarikat Lean Hup (Liew Brothers) Sdn Bhd v. Cheow Chong Thai
(supra). Again, this was repeated in Charles Muriel (f) v. Newacres Sdn Bhd
[1994] 2 AMR 23:1145, a decision of Abu Mansor J (as he then was).
From the line of authorities cited, most cases were decided in accordance
with the respective rules and regulations applicable to the facts of each
case. Thus whatever principles and propositions enunciated in these cases
must be considered in the light of those rules and regulations that were
applicable. They cannot be of universal guide for all cases associated with
late delivery of vacant possession of houses classified under the Housing
Developers (Control and Licensing) Act except when the appropriate rules and
regulations so applied are similar. Thus, one must be cautious when relying
on such authorities to support or argue against the scope and extent of
water and electricity to be supplied to the constructed building under the
said Act. Here, what sauce is good for the goose is not necessarily good for
the gander. The respective rules or regulations used in each case must be
fully appreciated. In our instant case, there is no doubt that the 1989
Regulations are applicable. With the phase "vacant possession of the said
Building together with the connection of water and electricity supply to the
said Building" expressly and unambiguously stated in mandatory statutory
provision of cls. 20(1) and (2) of the formatted agreement set out in
Schedule E in the 1989 Regulations and repeated in identical fashion by cl.
20(1) and (2) in the S & P Agreement, I am convinced that all those
statements expressed by Abdul Malik Hj. Ishak J in Hoya Holding Sdn Bhd v.
Chia Thin Hing @ Cheah Thin Heng & Anor (supra) and me in Lew Yoke Leng & 2
Ors v. Syarikat Kar King Sdn Bhd (supra) is the correct state of the law
relating to the meaning of this term in respect of the 1989 Regulations. To
add, I would say that vacant possession with connection of water and
electricity to the said building must include the developer's duty to
energize the water and electricity flow into the building. It is not
sufficient for the developer to just lay the pipes and cables for
electricity and water to connect the said building to the sub-station or
water mains. The developer must ensure, at the time of delivery of vacant
possession of the said building, that there is supply of water and
electricity ready for tapping into the building.
Conclusion
On these considerations, I am of the view that this appeal should be
dismissed with costs.
My two brother judges have concurred with the grounds as stated above.
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