On 26.7.2024 ,the Federal Court delivered a landmark decision, refining the after effects of Ang Ming Lee and delivered its decision on the primary issue of whether purchasers are entitled to claim Liquidated Ascertained Damages (“LAD”) when they have entered into a sale and purchase agreement with a completion period of more than 36 months. The Federal Court in its brief judgment ruled that:
- The cause of action accrues at the time of signing of sale and purchase agreement. If a purchaser challenges the completion period which ought to be 36 months (and not more than that), the cause of action accrues on the date of the sale and purchase agreement and if one challenges after more than 6 years, limitation period has set in by virtue of Section 6(1)(a) of the Limitation Act.
- The 2nd Actor Theory applies in this set of facts. Even if the extension of time (first act) was found to be nullified, the fact remains that the EOT issued by the Controller was relied on by various parties (2nd actors). In this set of facts, the Developer and purchasers have relied on it and its validity cannot be disregarded.
- Ang Ming Lee will have a prospective effect and extension of time granted before Ang Ming Lee (26.11.2019) will not be defeated by virtue of Ang Ming Lee.
- The purchasers should not be allowed to claim LAD because this amounts to unjustly enriching them.
A copy of the brief grounds are available to download below:
Claims made post Ang Ming Lee have been plaguing the Housing Development industry since 26.11.2019 and it is timely that the Federal Court provides clarity over the extent of application of Ang Ming Lee. The key takeaways for the Housing Development Industries are:
- EOT granted by virtue of Regulation 11(3) remains invalid (since Controller has no power to do so);
- EOT granted before 26.11.2019 is not affected (since at that point of time, it was taken to be valid and reliance was made on the EOT);
- EOT post 26.11.2019 will be granted by virtue of Section 2(2) of the Housing Development (Control and Licensing Act) 1966;
- In applying for EOT, the Developer must make sure they issue the letter addressed to the Minister (and not Controller);
- In the course of reply, the Controller (will refer to the minutes of meeting and set out expressly that the decision was made by the Minister and such exemption / variation was given by virtue of Section 2(2) HDA 1966);
- The EOT must be shown to the purchasers at the time of signing of the SPA;
- Developers may even put up an additional letter to get the purchasers to sign off acknowledging that the SPA is of one with more than the 36 months; and
- For more information, you can email us at [email protected]
