Court of Appeal Clarifies Delivery Period in SOHO Sale Agreements Commences from Initial Building Plan Approval in Icon City Development

In Icon City Development Sdn Bhd v Lee Kean Hwa & Ors & Other Appeals [2025] CLJU 1577, the Court of Appeal clarified on the interpretation of the delivery timeline in Sale and Purchase Agreement (SPAs) for Small Office Versatile Office (SOHO) units. The Court confirmed that the 42-month period for delivery of vacant possession commences from the local authority’s initial approval of building plans, rather than from subsequent amendments.

Background of the Case

This dispute arose from the Icon City mixed development involving sales of non-housing SOVO units with standardized SPAs. The SPAs stipulated the developer must deliver vacant possession within 42 months from the “Period of Approval” or an extended six-month approval period following the SPA, with liquidated damages (LD) payable at 10% per annum for delay.

The local authority first approved the building plans on 2 August 2012; later amendments were approved up to November 2015. The developer delivered possession after 42 months from the initial approval, which triggered purchasers’ claims for LD. The developer contended the delivery period only started after the last amendment approval.

Court of Appeal’s Decision

1. Delivery Period Runs from Initial Approval: The Court held that the 42-month period starts from the local authority’s first approval, consistent with SPA clauses requiring approvals within 12–18 months and ensuring prompt construction commencement. Resetting the timeline for later amendments would conflict with the contract’s express “time is of the essence” provision.
2. Contra Proferentem Rule: Ambiguities in contract terms drafted by the developer favor purchasers, resolving doubts about approved building plans against the developer.
3. SOHO Units Are Non-HDA: The Court clarified SOHO units are not “housing accommodation” under the Housing Development Act 1966, so statutory forms do not apply; instead, general contract principles govern.
4. Res Judicata Does Not Bar New Suit: A prior Court of Appeal ruling invalidated lower courts’ jurisdiction to hear the matter, making previous decisions a nullity and allowing purchasers to bring fresh High Court suits without estoppel.
5. No Triable Issue for Summary Judgment: The High Court correctly granted summary judgment where no genuine dispute on SPA interpretation existed.
6. Evidence from Null Proceedings Permitted: Since SPA interpretation was a question of law, evidence from earlier proceedings was not determinative.
7. Specific Contract Terms Prevail: General clauses allowing plan amendments do not override clear delivery deadlines under the legal maxim generalia specialibus non derogant.

Key Takeaways

1. Strict Timelines in Commercial SPAs: In non-HDA developments like SOHO projects, delivery periods start from initial approvals, preventing developers from indefinitely extending timelines via amendments and upholding time as essence.
2. Business Common Sense in Interpretation: Courts prioritize constructions that make commercial sense, avoiding interpretations that negate fixed obligations or allow open-ended delays.
3. Contra Proferentem Protects Purchasers: Ambiguities in developer-drafted contracts are resolved against them, reinforcing fairness in all transactions.
4. Jurisdictional Nullities and Res Judicata: Decisions void for lack of jurisdiction do not estop fresh suits on merits, preserving equitable access to justice and preventing undue prejudice.
5. Summary Judgment in Clear Cases: Where SPA interpretation raises no triable issues, summary judgment streamlines disputes, especially in multi-purchaser claims.
6. Evidentiary Continuity in Refiled Suits: Evidence from nullified proceedings can be reused, promoting efficiency without retrying settled facts.