Remeggious Krishnan v SKS Southern Sdn Bhd (formerly known as MB Builders Sdn Bhd) [2023] 3 MLJ 1

Case: Remeggious Krishnan v SKS Southern Sdn Bhd (formerly known as MB Builders Sdn Bhd) [2023] 3 MLJ 1

Court: Federal Court (Putrajaya)

Topic: Delivery of Vacant Possession Without Electricity Supply

Facts 1.     The Respondent in this suit is the developer of a residential project named as Sky Habitat @ Meldrum Hill, Johor Bahru.

2.     The Appellant on the other hand is the purchaser of a unit of apartment identified as Parcel No L-15-08 in the project (‘the Property’).

3.     According to the sale and purchase agreement (SPA) dated 6 February 2017, the Respondent was obligated to deliver vacant possession of the property within 36 months from that date, which means on or before 6 February 2020.

4.     The agreement stated that vacant possession would be considered delivered when water and electricity were ready for connection to the property.

5.     However, in this case, the Appellant received vacant possession without electricity connection, leading to two separate claims filed by the Appellant at the Tribunal for Home Buyers Claims (“the Tribunal”).

6.     The first claim was a ‘non-technical claim’ amounting to RM49,832.00 related to the delay in electricity connection. The second claim was a technical claim amounting to RM40,000.00.

7.     The Tribunal heard the non-technical claim and awarded the Appellant RM16,452.05 with costs of RM400.00 in favor of the Appellant for the delay in the connection of the electricity.

8.     The Respondent filed a judicial review application against the award, but it was dismissed by the High Court.

9.     However, on appeal, the Court of Appeal ruled in favor of the Respondent.

10.  Aggrieved with such decision, the Appellant decided to appeal to the Federal Court.

Issue 1.     Whether it was appropriate for the Court to award damages for the non-connection of electricity to the said property?
Ratios 1.     In regard to the damages claim, the Federal Court had carefully examined the decision of Court of Appeal in which it was previously decided that Clause 27(1)(c) of the SPA, which provides for ‘ready for connection’, does not necessarily mean that the property must have an actual supply of electricity installed.

2.   However, the Federal Court respectfully disagreed with this interpretation as it was made without considering Clause 1(k) of the SPA.  Both of the provisions of Clause 27(1)(c) of the SPA is read as follows:

“Clause 27—Manner of delivery of vacant possession

(1)  The Developer shall let the Purchaser into possession of the said parcel upon the following:

(a) 

(b) 

(c)  water and electricity supply are ready for connection to the said Parcel;”  [Emphasis Added]

3.     While Clause 27 (1)(k) of the SPA provided the definition for ready in connection’ which means electrical points fully functional and supply is available for tapping into the property.

4.     The Federal Court reinforced its argument that when Clause 1(k) of the SPA is read together with Clause 27(1)(c) of the same agreement, it becomes evident that ‘ready for connection’ means the electrical points must be fully operational, and the supply should be accessible for connection to the property.

5.     Accordingly, there was an obligation on the developer to provide actual supply of water and electricity to the property.   Any other interpretation would be unfair to the purchasers save for the payment of any deposits for the supply of water and electricity if the SPA provided for it.

6.     Thus, the Federal Court agreed that the Respondent i.e the developer has breached Clause 27 of the SPA because delivering vacant possession without electricity supply was invalid since there was no electricity supply connected at the time.

7.     The Federal Court concurred with the previous High Court’s decision, and held that the Appellant suffered losses as they could not utilize and enjoy the property due to the absence of electricity.

Decision 1.     It was appropriate for the Court to award damages to the Appellant for the non-connection of electricity to his property because the Appellant was deprived of opportunity to fully utilize the property.

2.     The appeal was allowed with costs subject to allocator.

3.     The Federal Court set aside the order of the Court of Appeal, and restoring the order of the High Court.

Key Take Away 1.     The developer has a clear obligation to provide a functioning water and electricity supply to the properties they developed.

2.     Failure to do so is a breach of the agreement which resulted in the purchaser of the property being deprived of the opportunity to use and enjoy their own property.

3.     Thus, the purchaser who suffered such loss of enjoyment to property is entitled to claim for compensatory damages.

 

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