KUALA LUMPUR (Nov 14): In a landmark decision, the High Court on Thursday ruled that developers who deliver vacant possession of a property without allowing the owners to occupy it is against public policy and goes against the purpose of the vacant possession.

Judge Datuk Ahmad Shahrir Salleh said between developers and purchasers, developers have an unequal advantage in bargaining power, and that delivering vacant possession of a property without allowing the purchasers the right to occupy the property is against public policy — even if the sales and purchase agreement (SPA) provides for such a move.

He also said developers would no longer be able to rely on such provisions in the contract to avoid having to pay liquidated ascertained damages for late delivery of properties to purchasers.

His decision favoured the appellants who had bought a commercial property from the developer Alpine Return Sdn Bhd in 2014. The two appellants were given vacant possession on July 22, 2018, but were not granted access to their unit.

Based on the SPA signed, the developer had to deliver vacant possession of the unit within 48 months from the date approval was given for the development plans.

The appellants then hauled the developer to the Sessions Court, which denied their claim in a March decision.

Subsequently, the buyers appealed against this decision, which led to the High Court's decision on Thursday.

In overturning the Sessions Court's decision, Ahmad Shahrir surmised that “the definition of vacant possession without the right to occupy was against public policy and as such, contravened Section 24(e) of the Contracts Act 1950”.

Section 24(e) of the Contracts Act 1950 stipulates that the consideration and object of an agreement is lawful unless the court regards it as immortal or opposed to public policy, which means such an agreement is unlawful and is rendered void.

He noted that the court should be slow or cautious in interfering with such a contract as both parties are bound to the SPA and its contractual terms. 

However, this does not hinder the court from determining whether a contract/contractual term is valid in law and in line with public policy at large, he added.

He said Alpine Return’s conduct in obstructing the appellants' right for occupancy of the said units clearly amounted to a failure to deliver vacant possession to the appellants under the SPA.

The judge awarded the appellants a sum of RM309,225.61 with interest as part of liquidated ascertained damages (LAD) from the developer.

Lawyers representing the appellants were Sachpreetraj Singh Sohanpal, Rajesh Nagarajan, Ambbi Balakrishnan of Messrs Raj & Sach. Cecilia Tan and Fann Izyan Mohd Fadzil of Soh Hayati & Co represented Alpine Return.