Justice Hasnah Hashim, delivering the court’s unanimous decision, held that the house buyers’ suits to recover liquidated ascertained damages (LAD) were obviously unsustainable and ought to be struck out.
She also said that the suits – brought by Obata-Ambak Holdings Sdn Bhd, K Vignesh Naidu, Fong Soo Ken and Yoa Kian How – were time-barred and should have been filed within six years of the execution of the sale and purchase agreements (SPA), which ended in 2018.
“The intriguing facts in Obata and Vignesh’s cases were that both of them have received LAD payments from developer Prema Bonanza Sdn Bhd for the late delivery of vacant possessions,” Hasnah said.
The judge also said Fong and Yoa could not be allowed to mount a “collateral challenge” on the controller of housing’s decision to grant developer Sri Damansara Sdn Bhd an extension of time to complete its housing project.
Hasnah also pointed out the extension of time was granted before Fong and Yoa signed their SPA.
Also on the panel hearing the appeal were Court of Appeal president Abang Iskandar Abang Hashim, and Justices Zabariah Yusoff, Harmindar Singh Dhaliwal and Abdul Karim Abdul Jalil.
In 2012, Obata purchased two luxury apartment units at The Sentral Residences, Kuala Lumpur from Prema Bonanza for more than RM3.78 million.
Under the terms of the SPAs, Prema Bonanza was required to deliver vacant possession of the units within 54 months, that is by December 2016. However, vacant possession was only delivered in February 2017, about two months later.
In 2020, Obata-Ambak filed its lawsuit claiming that the prescribed 54-month period was null and void based on a 2019 Federal Court ruling in the case of “Ang Ming Lee & 34 others vs the housing and local government ministry”.
In Ang Ming Lee’s case, the apex court had quashed the controller’s decision to lengthen the handover date on grounds that he had no power to grant the extension of time.
However, Obata’s lawsuit was struck out by the High Court in 2021 on grounds that it was time-barred. The decision was upheld by the appeals court in 2022, giving rise to one of the present appeals.
Meanwhile, Vignesh, who also owns a unit at The Sentral Residences, sued Prema Bonanza for RM392,021.92 for late delivery of vacant possession.
The High Court struck out his suit, but the ruling was reversed by the Court of Appeal in 2022, giving rise to another of the present appeals. In its decision, the Court of Appeal said the decision in Ang Ming Lee’s case could be applied retrospectively to cover house purchases before 2019.
In the third case, Sri Damansara was appealing the High Court and the Court of Appeal’s refusal to quash an award by the house buyers’ tribunal requiring the developer to pay Fong and Yoa RM39,327.10 for late delivery of their unit in Foresta Damansara Condominium.
Not applicable to prior purchases
Addressing the applicability of Ang Ming Lee’s case to the present appeals, Hasnah said that the principles laid down could not be applied retrospectively to cover house purchases made before the decision was handed down.
She said that the case nullified Regulation 11(3) of Housing Development (Control and Licensing) Regulations 1989 which gave the controller power to grant extensions of time to developers to complete their projects.
“At that time, when the extensions of time were granted, the law was still valid.
“Any changes to the law does not affect cases that came before 2019,” Hasnah said.
She said the previous Federal Court would have explicitly indicated if the 2019 case could be applied retrospectively.
“If we were to say the 2019 case can be applied retrospectively, it will have devastating consequences on the housing industry.
“This case is not a ‘carte blanche’ (for house buyers) to enjoy a financial windfall,” Hasnah added.