Challenging a Grant of Probate should be done by way of a fresh “Probate Action”
02.05.2024
Understanding ESG: A Path to Sustainable Business Practices in Malaysia
24.11.2024
WRITTEN BY
Team IKC
DATE
Since late 2022, we have been rigorously defending against a series of critical disputes involving multiple Liquidated and Ascertained Damages (LAD) claims from purchasers, amounting to over RM10 million.
These disputes arose from the landmark decision by the Malaysian Federal Court in Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals [2020] 1 MLJ 281. The Federal Court invalidated an extension of time granted by the Housing Controller, thereby exposing our client to substantial LAD liabilities.
While we successfully struck out several cases, including Prumillion Investors Sdn Bhd v Country Garden Danga Bay Sdn Bhd [2022] MLJU 2291, Chia Mee Hiong v Country Garden Danga Bay Sdn Bhd [2022] MLJU 2292, Liew Yin Sin & Anor v Country Garden Danga Bay Sdn Bhd [2022] MLJU 2320, Shen Wenli Country Garden Danga Bay Sdn Bhd [2022] MLJU 2317, Toh Cheng Seng v Gountry Garden Danga May Sdn Bhd [2022] MLJU 2318, Xie Shulian v Gountry Garden Danga May Sdn Bhd [2022] MLJU 2230 and Zhang Limin & Anor v Gountry Garden Danga May Sdn Bhd [2022] MLJU 2219, these victories are pending appeals. Unfortunately, we lost the majority of our cases, and our client is held liable for the LAD, despite not being at fault.
“Refining” the Decision of Ang Ming Lee
On 26.7.2024, the Federal Court delivered a landmark decision that “refined’ the decision of Ang Ming Lee, providing significant relief to our client. This decision mitigates the liability for LAD that our client faced, despite having delivered the properties within the agreed period following the extension of time granted by the Housing Controller.
The five-member bench, led by Court of Appeal President Tan Sri Abang Iskandar Abang Hashim, included Dato' Sri Hasnah binti Dato' Mohammed Hashim, Dato' Zabariah binti Mohd Yusof, Datuk Harmindar Singh Dhaliwal, and Datuk Abdul Karim bin Abdul Jalil, delivered the majority Decision as follows:
1. Whether a sale and purchase agreement for a housing accommodation of a high-rise building between a purchaser and a developer 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?
Negative
2. Whether the cause of action for the late delivery liquidated damages shall accrue to the purchaser only upon the expiry of the said 3-year period?
Negative
3. Whether the limitation period of a claim for late delivery liquidated damages shall commence only upon the expiry of the said 3-year period?
Negative
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?
Affirmative
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?
Affirmative
6. When does time for a purchaser’s claim for LAD 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”);
(c) the purchaser claims that the Extended Period deviates from the 36 months prescribed by Schedule H of the HDR; and
(d) the purchaser consequently claims LAD from the developer for that part of the Extended Period which exceeds 36 months?”
Affirmative
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?
Affirmative
8. Whether the Second Actor theory as endorsed by the United Kingdom Supreme Court case of R (Mejera) v Secretary of State for the Home Department [2022] AC 461 has any application where an innocent third party had relied on an earlier decision made by the public authority which was declared ultra vires?
Affirmative
Key Takeaways
1. When a claim is founded on a breach of contract, it must be filed within six years. The time begins to run from the earliest point at which the purchasers could file an action, i.e., from the date of execution of the Sale and Purchase Agreement (SPA). Therefore, the purchasers are time-barred from initiating the action.
2. If the decision in Ang Ming Lee were to have retrospective effect, it would cause serious ramifications and repercussions to the housing industry and developers. Hence, the decision in Ang Ming Lee is applied prospectively.
3. Regarding the question of law on the Second Actor Theory, the first act was the approval of the extension of time by the Housing Controller, while the second act was the developer's reliance on the Controller’s extension. The parties had correctly presumed that the Controller’s extension was validly granted before the decision in Ang Ming Lee.
4. The purchasers cannot rely on the decision in Ang Ming Lee as carte blanche to make financial gain against the developer, who had, at all material times, duly adhered to the extended time period for the delivery of vacant possession and the completion of common facilities as agreed by the purchaser and the developer.
In conclusion, this Federal Court decision finally strikes a balance between the rights of purchasers and developers. It reaffirms that the Housing Development (Control and Licensing) Act 1966 and its regulations are social legislation designed to protect purchasers' interests. However, such legislation should not serve as carte blanche for purchasers to disregard the rights of others, as stated by Justice Evrol Mariette Petters in Country Garden Pacificview Sdn Bhd & Anor v Anand Raj Giri a/l Haripasar Giri [2021] MLJU 1236 (affirmed by the Court of Appeal on 7.2.2023).
Commentary
We are immensely relieved and gratified by the Federal Court's landmark decision, which not only provides significant relief to our client but also sets a crucial precedent for the housing industry.
This ruling vindicates our client's position and ensures fairness by upholding the validity of extensions granted by the Housing Controller at the material time. It marks a pivotal moment in addressing LAD disputes, safeguarding the interests of developers who have adhered to agreed timelines.
Over the past two years, we have worked closely with the client to defend these cases and seek stays on certain judgments, which are heavily contested by the purchasers.
While trials have commenced for some cases, we are actively seeking to have the purchasers withdraw these cases with costs. For those cases pending appeal, we will be updating the respective courts with the Federal Court’s decision and seeking a favourable outcome in our appeals.
Our Managing Partner and Head of Dispute Resolution, Kho Sze Jia, acted for Country Garden in the above disputes. He was assisted by Aik Yin Chien, Ho Chan Chon, Cara Tern and Wong Chuen Zen. Our team can be reached at szejia@ikclaw.com
