Court of Appeal affirmed Country Garden Pacificview Sdn Bhd v Anand Raj Giri a/l Haripasar Giri

“Justice is a two-way street, and the Purchaser should bear the consequences of resiling from a contract that had already taken into effect, and which would have given the Developer a legitimate expectation that it would be performed.”

Court of Appeal affirmed Country Garden Pacificview Sdn Bhd v Anand Raj Giri a/l Haripasar Giri [2021] MLJU 1236 on 7.2.2023.

Brief Facts

The Purchaser purchased a unit of the Condominium at Forest City pursuant to a Sales and Purchase Agreement (SPA) dated 11.10.2017. The Purchaser signed the SPA together with the Sales Form, Special Promotion Package, and Reminder. The Purchase also paid a deposit on 11.10.2017. Throughout the period of November 2017 to April 2018, the Purchaser continued to make part payments. The Developer only signed the SPA on 7.8.2018. Sometime in August 2018, Purchaser changed his mind and refused to proceed with the SPA and took the position that he is entitled to the refund of all monies paid after deducting an administrative fee pursuant to the Sales Form. The Magistrate Court allowed the Purchaser’s claims.

Decision

The High Court allowed the Developer’s Appeal.

• Even the Developer signed the SPA only on 7.8.2017, SPA took effect on 11.10.2017 when it was signed by the Purchaser, and when the Deposit was paid by the Purchaser on the same day, i.e., 11.10.2017.
• The Sales Form which only allow the Developer to forfeit an administrative fee cannot be a collateral contract to the SPA (i.e., under Schedule H of the Housing Development (Control and Licensing) Regulations 1989).
• The SPA contained no clause which dealt particularly with the situation where the Purchaser wished to no longer to be bound by the SPA. Since the Purchaser indicated his intention to be released from the SPA, the Developer elected to terminate the SPA by issuing a Deed of Revocation, which was voluntarily and unconditionally signed by the Purchaser.
• The Deed of Revocation allowed the Developer to forfeit 10% of the Purchase Price. This is consistent with the remedies provided to the Developer under the SPA.

The Court of Appeal affirmed and agreed with the High Court Decision on 7.2.2023.

Key Takeaway

• Only in very limited circumstances a purchaser can terminate a SPA (i.e., under Schedule H of the Housing Development (Control and Licensing) Regulations 1989) when the Developer is not in breach of the SPA.
• Generally, the current laws (i.e., Housing Developer (Control and Licensing) Act 1966 and Housing Development (Control and Licensing) Regulations 1989) are social legislations to protect the interest of purchasers. However, such legislation cannot be a carte blanche for the purchasers to ride roughshod over the rights of the developers, and demand a full refund, the moment the purchasers change their mind regarding his contractual obligations.
• Be sure of your decision and means to buy a property before signing the SPA.

Our Managing Partner, Kho Sze Jia (together with Senior Associate, Aik Yin Chien and Associate, Muhaymin Faisal) acted for the Developer. Sze Jia can be reached at szejia@ikclaw.com.