CASE UPDATE: COSMOPOLITAN AVENUE SDN BHD v KHONG YAO HAN & 57 ORS [2024] CLJU 1893
Facts:
The Plaintiffs (58 purchasers) filed a suit in the High Court to claim ‘additional’ liquidated ascertained damages (“LAD”) against the developer and its architect. Both the developer and architect filed striking out applications against the suit, which were dismissed by the High Court.
The issue is whether the delivery of vacant possession (“VP”) via the issuance of Borang F1 / Partial Certificate of Completion and Compliance, Certificate of Fitness for Occupation / Partial CFO (“Partial CCC”) is valid.
Issues:
2 issues determined by the Court of Appeal are as follows:
1st issue: Whether or not the learned Judicial Commissioner (“JC”) was correct to find that the Plaintiffs had established a prima facie case of negligence and/or unlawful interference against the architect for issuing a partial CCC in Form F1 instead of a full CCC in form F.
2nd issue: Whether or not the learned JC was correct to find that there were triable issues as to the interpretation of the Sale and Purchase Agreements (“SPAs”) and as to the propriety of the delivery of VP by the developer based on the partial CCC in Form F1.
High Court Decision:
The High Court dismissed both the developer and architect’s striking out application on the ground that the case was not plain and obviously unsustainable for it to be summarily struck out:
- Contractual interpretation is a triable issue and cannot be summarily determined via affidavit evidence.
- Whether or not the architect owed a duty of care to the purchasers and had been negligent in issuing a partial CCC in Form F1 instead of a full CCC in Form F is a triable issue.
Court of Appeal:
1st issue: The Court of Appeal found that the learned JC was certainly wrong to find that the Plaintiffs had established a prima facie case of negligence and/or unlawful interference against the architect for issuing a partial CCC in Form F1 instead of a full CCC in Form F. There is no privity of contract between the architect and the Plaintiffs.
The architect ’s role in the issuance of Form F1 is entirely distinct and separate from the SPAs and is instead governed by clear governing laws (Undang-Undang Kecil Bangunan Seragam Selangor / UUKBSS) and guidelines. Therefore, it is erroneous for the Plaintiffs to assume that the architect ’s role and duty to be one and the same with the Developer ’s contractual duty to deliver VP within the contractual period under the SPAs.
2nd issue: The Court of Appeal found that the SPAs in clear and unequivocal terms prescribes the Partial CCC in Form F1 (for the completion of specific ‘Parcels’) as the contractual threshold in which the Developer may deliver VP. In this regard, ‘Parcel’ was defined in the SPA to mean one of the unit situated in the Units and more particularly described in Part II of the SIXTH SXHEDULE. The Court of Appeal is of the view that under Clause 20.4 of the SPA, the Plaintiffs have agreed that even after the issuance of the CCC in respect of the parcels, construction works of the other parts of the Project shall continue until its completion.
The Court further took note that the Plaintiffs have already entered into full and final settlement agreements in which they were already paid LAD. The Plaintiffs are estopped from claiming additional LAD.
Key Takeaways:
The issuance of a partial CCC can be taken as a valid delivery of vacant possession of parcels if the same is provided for in the terms of the SPA signed by parties. In this case, it must be noted that the parcels concerned in this case are office units as opposed to residential units (in which case the SPA is prescribed under the Housing Development (Control and Licensing) Regulations 1989).
The case might be different if it involves a pure residential building where prescribed SPA is signed. [Reference can be made to a case update written earlier where the Court is of the view that a full CCC is required for a valid delivery of vacant possession to be given]. Partial CCC itself does not outrightly connotes that the delivery of vacant possession is invalid for office parcels. Whether or not partial CCC is allowed is subject to the terms of the SPA signed by parties.
