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Construction Law Miniseries Episode 2: The relationship of Vacant Possession & Certificate of Completion and Compliance

By

Harneshpal Karamjit Singh, Legal Associate (Class Action, Commercial & Construction Department)


Hakem Arabi & Associates

Today, I would like to share my humble and respectful views on Construction Law touching Vacant Possession (“VP”), Certificate of Completion and Compliance (“CCC”) and Certificate of Practical Completion (“CPC”).


The Focus is on the High Court decisions of Lee Shy Tsong & Ors v Amprojek Construction Sdn Bhd [2018] 1 LNS 2088 (“Amprojek”) and Malaysian Resources Corporation Berhad v HSBC Bank Malaysia Berhad & Ors and Another Case [2019] 1 LNS 1158 (“Malaysian Resources”).



The Findings in Amprojek



In Amprojek, the High Court stated that Courts will imply into the Sales & Purchase Agreement (“S&P”) [pursuant to Regulation 11 of the Housing Developers (Control and Licensing) Regulations 1989 (“HDR”)] a provision that the Defendant must only deliver VP of parcels that are safe and fit for occupation.

This follows the position in SEA Housing Corporation Sdn Bhd v Lee Poh Choo [1982] 2 MLJ 31 where the probability to contracting out being countenanced where the party seeking to imply a condition into a statutory contract is the weaker party (purchasers).

This position may also expand to non-HDR S&P Agreements as the High Court specified that “there are other compelling reasons why such a provision ought to be implied. The essence of the S&P is the purchase of a parcel for occupation and it must thus follow that the parcel is safe and fit for that purpose. In fact as earlier stated delivery of VP must be supported by a CCC certifying that the building is safe and fit for occupation. This must necessarily mean the parcels must likewise be safe and fit for occupation before there can be a proper VP.”

The Court went further to state that nothing in the S&P Agreement that asserts positively that the procurement of the CCC provides for the conclusive evidence of the fact the building was safe and fit for occupation at the time of delivery of VP.

In addition, the Court noted that the doctrine of estoppel did not apply against the Plaintiffs for having collected the keys, paid the monies due and submitted the defect list. This is because without having done so they would be in no position to inspect their parcels and discover their condition.

Also, there was no adverse inference on the Plaintiffs in not calling the architect of the project who issued the CCC as the Plaintiffs were no longer seeking to set aside the CCC. The Plaintiffs’ case was now premised on the condition of the parcels at the time of delivery of VP.

As such, the evidence suggested that the parcels were not in a safe and fit condition for occupation when the VP notice was issued there had been no proper delivery of VP. The Plaintiffs’ claim was allowed and the Defendant therefore liable for inter alia liquidated and ascertained damages.

This is interesting as the Court did not give two hoots to the CCC as the measure that the building was fit and safe for occupation.



The Findings in Malaysian Resources



It is then interesting to note the decision of the High Court in Malaysian Resources whereby it was stated that the CCC is a requirement by law whereas practical completion and CPC is a contractual requirement. Essentially before the issue of the CCC, it is the duty of the principal submitting person to ensure that the building is safe and fit for occupation as provided for in Section 70(20) and Section 70(21) of the Street, Drainage and Building Act 1974 and By Law 25A of Uniform Building By-Laws 1984.



Reconciling Amprojek & Malaysian Resources



Following the position of Amprojek where the Court will imply into the S&P that nothing in the S&P positively asserts that the procurement of the CCC (a creature of statute) provides for the conclusive evidence of the fact the building was safe and fit for occupation at the time of delivery of VP, any Court may also find that the CPC (a creature of contract) will also not be a measure of the building and parcel’s safety and fitness and may null and void any notice of VP.



This Write-Up has been published with modifications as a LinkedIn Article by the Author and can be found at https://www.linkedin.com/pulse/construction- law-miniseries-episode-2-relationship-karamjit-singh/