Post by R Rishi (瑞熙)

CASE REVIEW: When does the time start ticking for delivery of vacant possession? In the recent decision of Icon City Development v Lee Kean Hwa & 61 others, the Federal Court reaffirmed an important point, clarity and precision in contract drafting are not mere formalities, they could be your first line of defence in litigation. A developer sold 62 SOVO units (interesting abreviation indeed, SOVO, Small Office [Versatile] Office. Wonder what 'versatile' connotes, the office morhping into something completely juxtaposed at night? And reverting at dawn?). Anyways, the contracts said the project must be completed and delivered within 42 months from the date of approval. Simple? Not if you think ‘approval’ can mean whatever’s convenient. When the project got delayed, the developer argued the timeline started from the last amended building plan, not the first. The Federal Court saw through the developer’s position and held that the clock starts when the first approval is in hand. Anything else isn’t law, it’s creative accounting for time. Both the High Court and the Court of Appeal had sided with the purchasers, applying the principle of ‘business common sense’. The Federal Court has now endorsed that approach, incidentally holding that once the essential approvals were obtained within the stipulated period, the clock must begin. While this acknowledges that agreements cannot be detached from context or consequence, it will be interesting to see how this principle of 'business common sense' develops, for, rest assured, it is likely to be cause for much a clash of perspective. Litigants (through their 'brilliant' lawyers) would certainly seek to strretch (intentional additional r for added emphasis) the principle/concept of 'business common sense'. The Court did nonetheless caution against reading into the contract words that were never there i.e. 'expiry of the approval period' was not what the parties agreed. And penultimately emphasised that summary judgment remains an appropriate mechanism where the dispute turns purely on a question of law or contract interpretation, and where no factual triability exists. As the judgment puts it, 'no useful purpose would be served to go formally to trial where no further facts could emerge'.   In terms of takeaways, we should be mindful that every contractual clause could be a loaded weapon. Every ambiguity is a liability waiting to happen, and every time you draft a contract thinking we’ll deal with that later, you’re playing a risky game. In business, words make the deal/contract/agreement. In court, they decide who pays for it. The party that wins is the one that sees the trap before it’s set.