PUTRAJAYA (July 26): The Federal Court on Friday unanimously decided that the Ang Ming Lee decision made by the apex court in November 2019, which has been bugging housing developers over the years despite gaining extension of time (EOT) prior to that landmark ruling, is applicable prospectively and not retrospectively.
The unanimous decision was made by a five-member bench led by Court of Appeal President Tan Sri Abang Iskandar Abang Hashim, but the brief grounds were read for two hours by Federal Court judge Datuk Seri Hasnah Mohammed Hashim.
Hasnah said homebuyers cannot rely on the Ang Ming Lee decision as a "carte blanche" in order to make financial gain against developers who had obtained EOT prior to that landmark decision.
The other judges who sat in Friday’s proceedings were Federal Court judges Datuk Zabariah Mohd Yusof, Datuk Harmindar Singh Dhaliwal and Datuk Abdul Karim Abdul Jalil.
In the Ang Ming Lee decision, a five-member bench then led by Chief Justice Tun Tengku Maimun Tuan Mat decided that the minister had no power to delegate the Controller of Housing pursuant to Regulation 11 (3) of the Housing Development Regulations 1989, to waive the time period of completion of property from 36 months to 42 months or more, without obtaining consent from the purchasers, and that provision had been struck out.
In the present case against developers Prema Bonanza Sdn Bhd and Sri Damansara Sdn Bhd, whose appeal was allowed by the apex court on Friday, they were sued by homebuyers for delivering vacant possession after more than 36 months, despite the sales and purchase agreements (SPAs) having stipulated completion in between 42 and 54 months after the granting of an EOT.
Prema Bonanza is the developer of The Sentral Residences, a serviced residential tower close to Kuala Lumpur Sentral, while Sri Damansara is the developer of the Damansara Foresta condominium near Kota Damansara, Selangor.
Prema Bonanza obtained an EOT for the project for up to 54 months in 2010, because of the complexity, limited working hours, and location of the project. Sri Damansara was given an EOT of up to 42 months.
However, following the Ang Ming Lee decision that declared as illegal the provision of allowing the Controller of Housing to grant EOT, strata housing projects are required to be completed within 36 months, while landed property is given 24 months from the signing of the SPA.
Applying Ang Ming Lee decision retrospectively may lead to administrative chaos
Hasnah in the apex court’s decision said that the bench was not there to depart or review the Ang Ming Lee decision, but to refine it further.
She added that the bench disagreed with the homebuyers’ counsel (imposing the Ang Ming Lee decision retrospectively), as that would make EOT granted to developers illegal within the meaning of the law.
“The bench is not persuaded by the submissions advanced by the homebuyers. A new declaration of the law should be applied prospectively, and this is to curb [homebuyers] from enjoying further financial gain.
“The court agrees with the Attorney General’s Chambers’ submissions, made by senior federal counsel Liew Horng Bin, that to allow it retrospectively would result in serious ramifications on the validity of the previous law and potentially lead to administrative chaos,” Hasnah said.
“The decision of Ang Ming Lee is applied prospectively, as applying it retrospectively would be a great injustice to the housing industry in principle,” the Federal Court judge added.
The apex court was answering the question of whether the housebuyer should enjoy a benefit from the developer, as a result of the payment of an LAD to the purchaser, even though the developer had duly adhered to the extended time period of delivery, as agreed to by the purchaser and the developer in the SPA.
Hasnah said the homebuyers’ action was premeditated following the Ang Ming Lee decision, as they filed the suit after that apex court decision.
Hence, this apex court bench agreed with the developers’ lawyers that the homebuyers’ action in filing the suit could be seen as unjust enrichment.
Hasnah said the housebuyers had already agreed to receive payment of liquidated ascertained damages (LAD) from the developers via two settlement letters, but then filed the action to pursue more.
The LAD obtained by Obata-Ambak Holdings Sdn Bhd for two units at The Sentral Residences was RM10,017.53 and RM16,891.51 respectively, while two purchasers of Damansara Foresta obtained RM41,134.22 in LAD, after bringing the matter to the Housing Tribunal despite them already obtaining a RM63,598 discount on the property.
Hasnah said the homebuyers were not entitled to use the Ang Ming Lee court decision for unjust enrichment, when they were fully aware of the SPAs they signed in 2012 (before the Ang Ming Lee decision).
"They were fully aware of the completion period of the properties and the extension given, as stipulated in the SPAs," the judge said.
On the issue of the limitation period, Hasnah and the bench ruled that it is trite that a claim is founded on a breach of contract, and that the claim must be filed within six years from the date of the execution of the SPA.
Following this, Hasnah ruled that the claim made by Obata-Ambak in 2020 was filed out of time, and hence, it was not entitled to make the claim.
Prema Bonanza was represented by Lai Chee Hoe and Ooi Xin Yi, while Sri Damansara was represented by Datuk Lim Chee Wee, Dhirene Rene Norendra, Raphael Kok, Emily Ho and Saroop Rampal.
Obata-Ambak was represented by Datuk Low Jee Han and Chan Kim Weng, while the two Sri Damansara homebuyers were represented by Datuk Wong KL Wong and Wong Ren Xinn.
Nineteen law firms held a watching brief for other developers and homebuyers.