We refer to your letter dated +++
Kindly be informed that the alleged +++ are not within the scope of +++
Indeed, we have taken all necessary steps to +++
We further deny the +++’s claims for the sum of +++ in its entirety as the alleged amount is wholly unsubstantiated and, in any event, excessive.
Therefore, you shall not release the sum of ++++, being +++.
Anand Raj Giri A/L Haripasar Giri v Country Garden Danga Bay Sdn Bhd
The brief facts are as follows:-
11–10–2017 Purchaser signed the Sales Form and Schedule H SPA (“SPA”) for the purchase of a property worth RM670,380. Paid Deposit of RM10,000.
9–11–2017 Purchaser made part payment to the Developer.
16–4–2018 Purchaser made another 2 part payments. Total paid to Developer at this stage is RM80,445.20.
7–8–2018 Developer dated the SPA.
On or around August 2018, Purchaser did not want to continue with the Purchase, citing financial issues.
18–1–2019 Purchaser signed the Deed of Revocation sent to him by the Developer. In the Deed of Revocation, there is a clause that allows the Developer to forfeit 10% of the Purchase Price (same substantial remedy as in Clause 11 (2) of the SPA).
20–8–2019 Purchaser commenced an action against the Developer.
26–9–2019 Developer refunded RM8,916.68 to the Purchaser, after deducting RM67,038.00 and RM4,491 as legal fees incurred by the Developer which arose from the purchase of the property.
The learned Magistrate held for the Purchaser/Plaintiff.
On appeal to the High Court, the learned Judicial Commissioner allowed the appeal and held for the Developer.
Dissatisfied, the Purchaser/Plaintiff appealed to the Court of Appeal.
The issues which were raised before the Court of Appeal were essentially:-
(a) Whether a Purchaser under a Schedule H SPA can cancel the SPA 2 years after signing the same, in reliance of a Sales Form that was signed by the Purchaser?
(b) Is the Purchaser entitled to claim for a full refund of Deposit paid to the Developer in reliance of the Sales Form?
(c) Whether the Deed of Revocation is valid and enforceable?
The solicitors for the Plaintiff/Purchaser submitted that:-
(a) The learned Judicial Commissioner in holding that the Purchaser in refusing to perform the SPA, has repudiated the SPA, and therefore the Developer elected to terminate the SPA, is plainly wrong because:-
(i) This was not pleaded by the Defendant in its pleadings;
(ii) The learned Judicial Commissioner made a finding that is contrary to the testimony of witnesses;
(iii) In making a finding that the Purchaser has repudiated the SPA and the Developer has elected to terminate the SPA, the learned Judicial Commissioner referred to Clause 11 (1) (c) SPA.
(iv) The 30-day notice requirement in Clause 11 (2) SPA has to be fulfilled before the Developer can terminate the SPA.
(v) Clause 11 is immaterial. The Developer never terminated the SPA. The precondition was never fulfilled.
(b) The Deed of Revocation should not be accepted because:-
(i) it was not in compliance with Clause 11 (2) SPA, and is consequently not valid.
(ii) it was never signed by the Defendant.
(iii) There was no evidence to show that the Deed of Revocation was agreed by the Developer. RM8,916.68 was only refunded to the Purchaser after this Suit was commenced.
(c) On the Sales Form, 2 issues were raised:-
(i) Whether Clause (f) is applicable?
There is no conflict between the Sales Form and the SPA, because it deals with a different situation — Sales Form caters to a cancellation by the Purchaser, while Clause 11 SPA deals with situation where termination by the Developer.
(ii) Does the SPA supersede the terms of the Sales Form?
The Sales Form was intended to exist together with the SPA, therefore, there was no conflict between the SPA and the Sales Form.
On behalf of the Developer, we submitted the following in relation to the SPA:-
(a) The SPA took effect on 11.10.2017. Refer to PJD Regency (Federal Court Decision).
(b) The SPA, being a Statutory Agreement, prevails over the Sales Form.
(c) The Sales Form is no longer applicable once the SPA is signed.
(d) If we were to refer to Clause (i) of the Sales Form, it “…will be construed with the provisions of the SPA…” and “in the event of any conflict, the provisions of the SPA shall prevail.”
(e) Clause (f) of the Sales Form states that “…in event of cancellation… charge 5% deposit as administrative fee and balance of deposit will be refunded.” However, Clause (f) catered for a scenario where the SPA has not been signed, because Clause (b) states that the Purchaser needs to sign the SPA in 7 days.
(f) Further, the reference to the word “deposit” in Clause (f) should be read together with Clause (a) of the Sales Form, which states that the deposit refers to the sum of RM10,000 and not any other sum (that is in the SPA).
Further, on the Deed of Revocation, we submitted that if only a situation under Section 8A of the Housing Development (Control and Licensing) Act 1966 occurs, i.e., if the Developer abandons the project, then the Purchaser may terminate the SPA, subject to certain terms and conditions:-
(1) Notwithstanding anything contained in any agreement, a purchaser shall at any time be entitled to terminate the sale and purchase agreement entered into in respect of a housing development which the licensed housing developer is engaged in, carries on, undertakes or causes to be undertaken if-
(a) the licensed housing developer refuses to carry out or delays or suspends or ceases work for a continuous period of six months or more after the execution of the sale and purchase agreement;
(b) the purchaser has obtained the written consent from the end financier; and
(c) the Controller has certified that the licensed housing developer has refused to carry out or delayed or suspended or ceased work for a continuous period of six months or more after the execution of the sale and purchase agreement.
(Case law has impliedly shown that a Deed of Revocation signed between parties may be used as a mode of such termination, notwithstanding that the Controller’s certification is not obtained. See Cemerlang Land Sdn Bhd v Ali bin Saat & Anor and other appeals [2018] 1 MLJ 331 Court of Appeal.)
In the present case, it was the Purchaser who wanted to cancel the deal, in response to which the Developer had prepared the Deed of Revocation. Although the Deed of Revocation was not signed by the Developer, it was acted upon by the Developer when it refunded RM8,916.68 to the Purchaser.
Further, the Deed of Revocation is in compliance with Clause 11 SPA, as the substantive remedy is same, i.e., both Clause 11 SPA and Deed of Revocation provide that the Developer can forfeit 10% of the Purchase Price.
It was conceded that the Developer never issued any 30-day notice as required under Clause 11 (2) SPA, but the point here is, it would be futile for the Developer to issue any such notice, since it was the Purchaser who had decided to cancel the deal (although technically speaking he cannot do so) and he also went on to cancel the bank loan. Therefore, the 30-day notice is no longer necessary. The Developer has no other choice except to prepare the Deed of Revocation, which was duly signed by the Purchaser.
The Developer had a legitimate expectation that the SPA will be performed. It was only after 2 years of signing the SPA that the Purchaser decided not to continue with the purchase. Therefore, based on parties’ agreement, the Developer forfeited 10% of the Purchase Price RM67,038 and the legal fees borne by the Developer on behalf of the Purchaser, amounting to RM4,491.
The Learned Judicial Commissioner therefore correctly decided that the Appeal at the High Court should be allowed.
Last but not least, if this Appeal is allowed, it would potentially create a floodgate in the housing industry, where the Purchaser can simply renege on a Schedule H SPA anytime, without having to deal with any repercussions.
After listening to parties, the Court of Appeal unanimously decided that the applicable agreement has to be the SPA as prescribed, and not the Sales Form. When the Purchaser indicated his intention to cancel, the Developer had followed up with a Deed of Revocation. Therefore, the High Court was correct to point out that there was repudiation by the Purchaser, that the Developer decided to accept. A non-compliance of Clause 11 (2) SPA cannot invalidate the Deed of Revocation when the Purchaser has agreed to it. There is no appealable error, and the appeal is thereby dismissed with costs of RM5,000.00, subject to allocatur.
