PART II : WHEN DOES THE RIGHT OF PURCHASERS TO CLAIM LIQUIDATED ASCERTAINED DAMAGES ACCRUE?

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Introduction

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Last year we published an article entitled, “When Does The Right Of Purchasers To Claim Liquidated Ascertained Damages Accrue?” Please see the link at HL Wong, Soh & Co. | Malaysia Law Firm (hlwong-soh.com)

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There were 2 conflicting Court of Appeal cases, Obata-Ambak and Vignesh Naidu.

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To re-cap, Obata-Ambak held that the purchaser’s rights to claim LAD accrues on the date of the SPA. In contrast, Vignesh Naidu held that the purchaser’s rights to claim LAD only arose on the date he accepted delivery of vacant possession of his property unit.

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The central feature of both appeals was the Federal Court decision of Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan and other appeals [2020] 1 MLJ 281.

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To re-cap, the Federal Court in?Ang Ming Lee?held that regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 (“HDR”) which confers on the Housing Controller the powers to waive or modify any provisions in the statutory contract in Schedule H to the Regulations is ultra vires its enabling legislation, the Housing Development (Control and Licensing) Act 1966. The Housing Controller has no power to waive or modify the 36-months period stipulated in the prescribe statutory contract of sale.

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The parties in Obata-Ambak and Vignesh Naidu obtained leave to appeal to the Federal Court.

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Federal Court decision in Obata-Ambak Holdings

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The Federal Court in the recent unreported decision of Obata-Ambak Holdings Sdn Bhd v Prema Bonanza dated 26.7.2024 held as follows:

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(a)?????????? It is trite that the cause of action for a contract accrues from the date of its breach and the time runs from that breach.

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(b)????????? In the present case, time begins to run at the earliest point the Claimants, Obata and Vignesh could commence action. The cause of action would have accrued from the date of the execution of the SPAs or if there was any breach of the terms of the SPAs.

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(c)?????????? Obata bought 2 parcels of residential units and executed the SPAs on 11.7.2012 and 18.7.2012. The period of completion of the 2 units was extended to 54 months pursuant to Regulation 11 of the HDR. Vignesh executed the SPA on 18.7.2012 expressly stipulating that the completion period for the project was 54 months.

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(d)????????? Both actions were filed in 2020, that is outside the period of limitation. The claims are barred by limitation as the 6 years limitation period had expired. Therefore, Obata’s and Vignesh’s claims must necessarily fail.

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(e)????????? If Ang Ming Lee were to have retrospective effect, there would be serious ramifications and repercussions to the housing industry in Malaysia, in particular, the developers that had placed reliance on the existing law and diligently complied with the laws which were at that time valid.

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(f)??????????? Therefore, the decision of Ang Ming Lee has prospective effect. The principles enunciated in Ang Ming Lee will not apply to extensions granted by the Controller before Ang Ming Lee.

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(g)?????????? Further, based on the facts, if?the appeals were decided in favour of the purchasers it would result in unjust enrichment at the expense of the developers in these appeals, Prema.

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Key takeaways

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For existing legal suits pending in courts now which relied on Ang Ming Lee, in view of the recent Federal Court decision Obata-Ambank, the Plaintiffs should consider withdrawing their claims. Otherwise, the Defendants, being the housing developers, could file an application to strike out the claims or to have the dispute determined based on questions of law under Order 14A of the Rules of Court 2012.

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This material is for general information only and is not intended to provide legal advice. If you have any queries on matters related to the above, please contact the author at [email protected]

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