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Additional Remedies Under Common Law Beyond the Express Provisions of a Statutory SPA

Introduction


The statutory Sale and Purchase Agreement (“SPA”) stipulates that a purchaser is entitled to issue a written notice to the vendor requiring the rectification of defects discovered within twenty-four (24) calendar months after delivery of vacant possession and the vendor is obliged to rectify such defects at its own cost and expense within thirty (30) days of receipt of the written notice.


In the event the vendor fails to rectify the defects, the purchaser shall be entitled to independently carry out the rectification works and to recover the rectification cost and expense from the vendor, provided that the purchaser notifies the vendor of such rectification cost at least fourteen (14) days prior to commencing the rectification works.


The Court of Appeal in Chrishanthini Angela Regina Sebastiampillai v. View Esteem Sdn. Bhd. [2023] 1 MLRA 731 considered the scenario where although the vendor has carried out rectification works the rectification was done poorly.


Material Facts


The purchaser ("Appellant") entered into a SPA with the vendor ("Respondent") to purchase a service suite unit (“Unit”). After collecting the keys, the Appellant discovered many defects in the Unit, including defects in the flooring, tiling, windows, toilets, water seepage and foul odour. The Appellant requested the Respondent to rectify the defects in accordance with Clause 29 of the SPA. The Respondent failed to rectify all the defects, and even caused further defects. The Appellant initiated legal action against the Respondent seeking relief for, amongst others, (i) rectification costs; and (ii) general damages.


Whether Statutory SPA Bars Purchasers from Enforcing Common Law Rights


In resisting the appeal and the Appellant’s argument that the Appellant should be allowed to avail herself to the remedy of damages under common law in addition to the contractual remedies stipulated in the SPA, the Respondent argued that the provisions of the SPA, a statutory prescribed creature, should supersede common law.


Court of Appeal’s Decision


The Court of Appeal decided that:-


(a) Clause 29 of the SPA, as a safeguard mechanism for the Appellant, does not bar the Appellant from claiming against the Respondent for damages. The ultimate aim of the safeguard mechanism is to ensure that the defects are rectified to the purchasers’ satisfaction;


(b) even though the Appellant had initially invoked the operation of Clause 29 of the SPA, the Appellant is not barred from claiming against the Respondent for breach of contract especially since “the rectification work was not to the appellant’s satisfaction”; and


(c) in the event defects are discovered after the lapse of the defect liability period, purchasers’ right to sue the vendors for defects at common law remains intact.


Ultimately, the Court of Appeal awarded the Appellant:-


(a) RM136.720.00 as rectification costs;


(b) RM50,000.00 as general damages for the stress and anxiety the Appellant was put through in the process of rectifying the Unit to make it suitable for residence; and


(c) costs of RM15,000.00.


Key Takeaways


Vendors and purchasers alike, ought to take an interest in this decision of the Court of Appeal as:-


(a) it does not limit or restrict the application of common law and purchasers will have a legal avenue to seek redress for genuine grievances; and


(b) it ensures that vendors are held accountable for defects.



This article is contributed by Benjamin Chia of the Project and Real Estate practice group and Soh Lip Shan of the Dispute Resolution practice group.


For more information, please visit www.kyblegal.com or please feel free to contact Benjamin Chia at benjamin@kyblegal.com and/or Soh Lip Shan at lipshan@kyblegal.com


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