JCW

[Striking out — LAD for alleged invalid delivery of vacant possession — partial CCC (Form F1) — architect’s duty under statute vs developer’s contractual duty — settlement agreements / estoppel] Alvin (with Cheryl) acted as counsel for the Developer/Appellant (Cosmopolitan Avenue Sdn Bhd) in Civil Appeal No. B-02(IM)(NCvC)-1594-08/2022. Background: This appeal arises from a dispute between Cosmopolitan Avenue Sdn. Bhd. (the Developer), AR. Loo Chang Seng (the Architect) and Khong Yao Han & 57 others, who are purchasers of office units in a mixed commercial development project. The purchasers claimed Liquidated Ascertained Damages (LAD) on the basis that the Developer’s delivery of Vacant Possession (VP) was invalid because it was premised on a partial Certificate of Completion and Compliance (CCC) (Form F1). They contended that VP should only be delivered upon a full CCC (Form F) for the entire project, and that delay therefore continued beyond the partial delivery, entitling them to further LAD. Both the Developer and the Architect applied to strike out the purchasers’ claims under Order 18 rule 19 ROC 2012, but the High Court dismissed both striking-out applications. The Developer and the Architect appealed. Issues: 1. Whether the High Court was correct in finding that the purchasers had established a prima facie case of negligence and/or unlawful interference against the Architect for issuing a partial CCC (Form F1) instead of a full CCC (Form F). 2. Whether the High Court was correct in finding there were triable issues on the interpretation of the Sale and Purchase Agreements (SPAs) and the propriety of VP delivery by the Developer based on the partial CCC (Form F1). Legal Points / Grounds of Judgment: (1) The Court of Appeal held that the Architect’s duty to certify work progress / completion is a statutory and professional duty, and not the same as the Developer’s contractual duty under the SPAs to deliver VP within the contractual period. The purchasers cannot enforce the SPA delivery timelines against the Architect because the Architect is not a party to the SPAs. The Court further emphasized that the Architect’s certification duty is not subject to any contract** (including the SPAs) but is governed by applicable laws/by-laws/guidelines and local authority approvals, including LAM guidance on Form F1 issuance. (2) Relying on the Federal Court decision in Loh Kok Beng & 49 Ors v Loh Chiak Eong & Anor, the Court clarified that an architect’s scope of duty does not include ensuring that a building is certified so as to enable delivery of VP within the developer’s contractual period under the SPA. The purchasers’ remedy for delay/LAD lies against the developer, not the architect, and attempts to “disguise” a contractual LAD claim as a tort claim against the architect were rejected. (3) The Court held the SPAs clearly distinguished between “Parcel” and “Project”, and VP delivery was contractually tied to completion of the Parcel, not the entire Project. The term “Parcel” was expressly defined, leaving no scope for the purchasers’ interpretation that the whole project must be completed before VP delivery. The Court also relied on SPA provisions (including the clause acknowledging that construction of other parts of the Project may continue even after the Parcel receives CCC) to confirm the parties contemplated phased completion and delivery. Accordingly, the Court found the High Court erred in treating the issue as triable and requiring a trial. The contractual terms were clear and unambiguous, enabling summary disposal and striking out. (4) A large majority of purchasers had entered into full and final settlement agreements accepting LAD and agreeing to waive further claims. The Court held these settlement agreements should be honoured, and it would be unjust to allow the purchasers to reopen LAD issues that were unequivocally settled. They were therefore estopped from re-litigating the LAD claim. The Court observed that even if it were wrong on SPA interpretation, the claims would still be struck out because the settlement agreements independently barred the purchasers’ attempt to revive LAD claims. [Note: The purchasers subsequently obtained leave to appeal to the Federal Court against the Court of Appeal’s decision insofar as it concerned the Developer. The Federal Court allowed the appeal against the Developer and set aside the striking out order on a separate and distinct basis, namely that there remained an issue for trial in the High Court relating to the Developer’s alleged delay in procuring strata titles. The Court of Appeal’s decision in favour of the Architect remains undisturbed, as no appeal was pursued against that part of the judgment.]