Housing Development and Financing Facilities Series

INTRODUCTION

The following motions filed in the Federal Court stemmed from two civil suits commenced by the purchasers to claim against the developer for LAD in respect of late delivery of vacant possession and completion of common facilities based on the case of Ang Ming Lee:

(a) Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd- Civil Application No.: 08(i)-147-03/2022(W) (“Motion 147”);

(b) Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd- Civil Application No.: 08(i)-148-03/2022(W) (“Motion 148”);

(c) Prema Bonanza Sdn Bhd v Vignesh Naidu a/l Kuppusamy Naidu – Civil Application No.: 08(i)-273-05/2022(W) (“Motion 273”); and

(d) Prema Bonanza Sdn Bhd v Vignesh Naidu a/l Kuppusamy Naidu – Civil Application No.: 08(i)-274-05/2022(W) (“Motion 274”).

Motion 147 and Motion 148 were filed by the purchasers arising from a Court of Appeal decision delivered on 19.2.2022 in favour of the developer. Motion 273 and Motion 274 were filed by the developer stemming from a Court of Appeal decision delivered on 7.4.2022 in favour of the purchasers.

The 4 motions were directed to be heard concurrently given that the cases involve similar facts and issues. The motions were heard on 26.7.2022 before the following panel of judges:

(a) Y.A. Dato’ Abdul Rahman bin Sebli, HMP;

(b) Y.A. Dato’ Zabariah binti Mohd. Yusof, HMP; and

FACTS:

In both of the cases, the purchasers signed SPAs with the developer which state 54 months as the time period for the completion of housing project (as opposed to 36 months prescribed by Schedule H of the Housing Development (Control and Licensing) Regulations 1989 (“HDR”)). Notwithstanding that, the purchasers claimed for LAD due to late delivery of vacant possession on the basis that the parcel ought to be delivered to them within 36 months following the case of Ang Ming Lee.

Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd

On 18.5.2021, the learned High Court Judge YA Datuk Seri Mohd Firuz Bin Jaffril struck out the purchaser’s claims for LAD based on the following grounds:

The Plaintiff’s cause of action has exceeded the limitation period.
The Plaintiff ought to commence the action by way of judicial review.

Dissatisfied with the decision, the purchaser has on 12.8.2021 filed appeals against the High Court decision. On 19.2.2022, the Court of Appeal found in favour of the developer and dismissed the purchaser’s appeals with costs. It was held by the Court of Appeal that the purchaser’s claim is barred by limitation period since the cause of action runs from the date of the SPA which was entered into more than 6 years ago.

Vignesh Naidu a/l Kuppusamy Naidu v Prema Bonanza Sdn Bhd

On 31.3.2021, the learned High Court Judge YA Dato’ Rozana binti Ali Yusoff dismissed the purchaser’s application for summary judgment and struck out the purchaser’s claim for LAD based on the following grounds:

The Plaintiff could not rely on the Ang Ming Lee case since there are substantive differences of background facts for both cases.
The Plaintiff failed to provide particulars as to why he has the right to claim LAD outside the scope of the SPA.
The Plaintiff has signed a settlement letter and undertaken to waive any further claims, demand and/or not to institute any legal suit or proceeding against the Defendant.

Dissatisfied with the decision, the purchaser has on 26.4.2021 filed appeals against the High Court decision. On 7.4.2022, the Court of Appeal found in favour of the purchaser and allowed the purchaser’s appeals with costs.

7 QUESTIONS OF LAW WHERE LEAVE WAS GRANTED:

On 26.7.2022, leave to appeal was granted to both the developer and purchasers on 7 questions of law as follows:

Motions 147 and 148:

Question 1

“whether a sale and purchase agreement for a housing accommodation of a high rise building between a purchaser and a developer which provides for a period for completion of the housing accommodation extended illegally under the ultra vires Regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 should revert to the 3-year period as provided in the standard Schedule H Agreement?”

And if the above is answered in the affirmative,

Question 2

“whether the cause of action for the late delivery liquidated damages shall accrue to the purchaser only upon expiry of the said 3-year period?”

Question 3

“whether the limitation period of a claim for the late delivery liquidated damages shall commence only upon the expiry of the said 3-year period?”

Motions 273 and 274:

Question 4

“Does the doctrine of prospective overruling and the exceptions set out in Re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680 (“Spectrum Plus”) apply to Malaysian cases where a court’s decision and/or judicial pronouncement would bring disruptive consequences to an industry as a whole?”

Question 5

“Does the reliance test (the greater the reliance on the law or legal principle being overruled, the greater the need for prospective overruling) apply to Malaysian cases where great reliance was placed on a statutory regime?”

Question 6

“When does time for a purchaser’s claim for liquidated ascertained damages start to run under Section 6(1)(a) of the Limitation Act 1953 where:

(a) a purchaser and a developer enter into a sale and purchase agreement (“SPA”) prescribed by Schedule H of HDR;

(b) the SPA expressly states a time frame of more than 36 months for delivery of vacant possession under Clause 25 and completion of common facilities under Clause 27 (“Extended Period”);

(d) the purchaser consequently claims LAD from the developer for that part of the Extended Period which exceeds 36 months.”

Question 7

“Whether a purchaser is to be taken to have enjoyed benefit at the expense of a developer when the developer is required to pay Additional Liquidated Ascertained Damages to the purchaser pursuant to the statutory agreement prescribed under Schedule H of the HDR having duly adhered to the extended time period for delivery of vacant possession and completion of common facilities as agreed by the purchaser and the developer?”

TAKEAWAYS

The uncertainties which occurred post the decision of Ang Ming Lee concerning the claims of late delivery of vacant possession will soon be addressed by the Federal Court to settle the dilemmas and rising concerns of the:

(a) Purchasers who have voluntarily signed SPA that provides a time period for the delivery of vacant possession and completion of common facilities different from that in the statutory prescribed Schedule H (36 months);

(b) Developers who are caught in a situation similar to the Defendant in the above cases who have, prior to the change in law post Ang Ming Lee, duly adhered to the statutory regime then.

It is anticipated that the Federal Court’s determination on the questions of laws would fill in the gaps and clarify the muddled situations left by the decisions post Ang Ming Lee and benefit the housing industry in Malaysia as a whole.

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