Federal Court allows developers’ appeals in LAD claims over late delivery of vacant possession

PUTRAJAYA, July 25 (Bernama) — The Federal Court here today allowed the appeals by two developers in their bid to stop claims for liquidated ascertained damages (LAD) from homebuyers over late delivery of vacant possession.

This followed a decision by a five-member panel led by Court of Appeal President Tan Sri Abang Iskandar Abang Hashim in ruling that the Federal Court’s decision made in 2020  in the case of  Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar should be applied prospectively and not retrospectively.

Citing Regulation 11(3) of the Housing Development Regulations (HDR) 1989, the court ruled that the Minister of Housing and Local Government had no power to delegate to the Controller of Housing to grant an extension of time to a developer to complete the units in a housing development.

The two developers - Prema Bonanza Sdn Bhd and Sri Damansara Sdn Bhd -- were sued by homebuyers for delivering vacant possession of the units more than 36 months from the specified time frame of between 42 and 52 months following the extension of time (EOT) granted by the Controller of Housing to complete the housing project.

 Federal Court Judge Datuk Sri Hasnah Mohammed Hashim, who delivered the decision, said at the time the EOT was granted, Regulation 11(3) of the HDR 1989, was valid and the terms of the SPA were based on the approved extension as required by law.

The other judges on the bench were Federal Court judges Datuk Zabariah Mohd Yusof, Datuk Harmindar Singh Dhaliwal and Datuk Abdul Karim Abdul Jalil.

Justice Hasnah said parties in the cases before the court today had accepted the terms of the SPA  and as such, were bound by the terms of the contract.

She said the law must be given full force and effect until they are declared invalid. 

If the Ang Ming Lee case were to have a retrospective effect, it would result in great injustice and devastating consequences for the housing industry, she said, adding that homebuyers could not use the decision in  Ang Ming Lee’s case as a "carte blanche" to make financial gain against developers that had obtained EOT.

Justice Hasnah said the developers complied with the provisions of the law at that time and they had not acted in any way to the detriment of the homebuyers.

The court delivered its decision in three cases namely Ombak-Ambak Holdings Sdn Bhd vs Prema Bonanza Sdn Bhd, Prema Bonanza Sdn Bhd vs KN Vignesh Naidu, and Sri Damansara Sdn Bhd vs Housing Tribunal, Fong Soo Ken and Yoa Kian How.

Prema Bonanza is the developer of the housing project known as The Sentral Residences, located near KL Sentral, while Sri Damansara is the developer of the Foresta Damansara condominium located near Kota Damansara, Selangor.

Meanwhile, in Obata-Ambak’s case, Justice Hasnah held that Obata-Ambak Holdings was not entitled to make a LAD claim from developers as its claim was filed out of time.

She said a claim for LAD must be filed within six years of the SPA agreement.

Lawyers Lai Chee Hoe and Dhirene Rene Norendra represented Prema Bonanza and Sri Damansara, respectively, while lawyer Datuk Low Joo Hean represented Obata-Ambak and Datuk K.L.Wong for Vignesh Naidu, the Housing Tribunal, Fong and Yoa.

Senior federal counsel Liew Horng Bin appeared for the Attorney-General who is acting as amicus curiae.

-- BERNAMA