When the developer delivers to the purchaser vacant possession of a house under the sale and purchase agreement that was prescribed under the Housing Development (Control and Licensing) Act 1966 would it be right for the purchaser to expect the actual supply of water and electricity to be available at the house? Or is the developer’s obligation limited to merely applying for the connection of water and electricity to the authorities?
This question came up for determination before the High Court in Bandar Eco-Setia Sdn Bhd v. Tribunal Tuntutan Pembeli Rumah & 2 Ors [2020] 5 AMR 251. The purchasers jointly purchased from the developer a double-storey semi-detached house. Upon completion they collected the keys from the developer. They later discovered that there was no supply of water and electricity to the house.
They treated this as not amounting to a valid delivery of vacant possession and filed a claim at the Homebuyers Tribunal for liquidated damages. They claimed that under the agreement the developer is obliged to deliver vacant possession with actual supply of water and electricity within the prescribed period of 24 months. There cannot be a valid delivery of vacant possession until there was actual supply of water and electricity. Following this they claimed for liquidated damages for the period from the expiry of the 24 months till the actual supply of water and electricity to the house. The developer contended that under the terms of the agreement their obligation was only to apply for the internal connection of water and electricity from the house to the mains for which there was no time frame to apply and they were not obliged to provide actual supply of water and electricity within the 24 months period. The Tribunal agreed with the purchasers and allowed the claim.
The developer was dissatisfied with the decision and applied for judicial review to the High Court. The application came before Wong Kian Kheong J.
His Lordship, amongst others, examined the terms of the agreement that was a Schedule I agreement made under reg 11(1A) Housing Development (Control and Licensing) Regulations 1989 of the Act. His Lordship referred in particular to clause 26(1) that defined the manner of delivery of vacant possession. It was stated in clause 26(1) that the developer shall let the purchaser into possession upon the issuance of a certificate of completion and “water and electricity supply are ready for connection to the Building”. His Lordship then referred to the definition of “ready for connection” in the agreement that was defined as “means electrical points and water fittings and fixtures in the said Building have been installed by the Developer and are fully functional and supply is available for tapping into individual building units”. His Lordship held that the clauses are clear. A literal interpretation of the clauses indicate that it is the developer’s obligation to provide actual supply of water and electricity to the property when vacant possession is delivered on or before the 24 months period.
His Lordship held that to agree with the developer’s contention would be to render redundant the words “water fittings and fixtures in the said building have been installed by the developer and are fully functional and supply is available for tapping into individual building units” in the definition of “ready for connection” in the agreement. Such interpretation would also further and advance the object of the Act to protect purchasers. To decide otherwise would be detrimental to the interest of the purchasers.
The developer in support of their contention relied on the Court of Appeal case of Salmah binti Sulaiman & Anor v. Metroplex Development Sdn Bhd [1997] 1 AMR 592 that held that the developer’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.
His Lordship held that the decision in Salmah Sulaiman would not apply to the agreement in the instant case as Salmah Sulaiman was decided pursuant to rule 12(1)(l) of the Housing Development (Control and Licensing) Rules 1970 and clause 18 of the agreement therein. The said rule 12(1)(l) and clause 18 are clearly different from the relevant clauses in the 1989 Regulations and the definition of “ready for connection” in the current agreement.
His Lordship further held that to accept the developer’s contention would be contrary to the purpose of the Act and the 1989 Regulations to protect the purchasers because the purchasers cannot occupy the house without actual water and electricity supply to the house. Such outcome would be clearly unjust to purchasers who have fulfilled all their obligations to the developer under the agreement. The decision of the Tribunal was upheld and the judicial review application was dismissed.
This is probably the first reported decision that had decided that vacant possession must be accompanied with actual supply of water and electricity to the house, and not merely making available the connections.
This is a decision that very much advanced the interest of purchasers in accordance with the object of the Act and should be welcomed by the public. Hopefully this issue is now put to rest.
R. Jayabalan
