PUTRAJAYA: Homebuyers can no longer make financial claims against developers for properties that received extensions of time (EOT) before 2020.
A five-member bench of the Federal Court led by Court of Appeal President Tan Sri Abang Iskandar Abang Hashim made the landmark ruling in favor of housing developers who were sued by homebuyers regarding the late delivery of vacant possession.
The other judges presiding were Datuk Hasnah Hashim and Datuk Zabariah Yusoff.
The top court ruled that the Ang Ming Lee (AML) decision made in 2020, which has caused issues for housing developers despite them receiving EOT before the landmark ruling, will apply only to future cases and not to past ones.
In the AML case, the apex court ruled that the minister could not give the Controller of Housing the authority, under Regulation 11(3) of the Housing Development Regulations 1989 (HDR 1989), to extend the property completion period from 36 months to 42 months or more without buyer consent.
The 36-month term applies to strata-titled properties, while the term for landed properties is 24 months.
However, the previous court did not clarify if the EOT granted by the developer, after failing to complete the project by the end of the sales and purchase agreement (SPA), should apply only to future agreements or also to past agreements.
Hasnah when reading the unanimous judgment today said homebuyers cannot use the AML decision as "carte blanche" (unconditional) to seek financial gains from developers who had already been granted EOT before the landmark (AML) ruling.
She said if AML decision were to have a retrospective effect (a change that impacts the past as well as the present and future), it would have serious consequences for the housing development industry and developers, who had always complied with the law as it stood at the time.
She said the court decided that claims for breach of contract must be filed within six years.
She said this period starts from the earliest time the buyer could file the action, either from the date of the Sale and Purchase Agreement (SPA) execution or from the date of the breach of any SPA condition.
In this present suit, Hasnah said the court found that the homebuyers' claim for liquidated damages (LAD) was clearly unsustainable and should be dismissed.
The panel decided that the claim by Obata-Ambak Holdings Sdn Bhd, K Vignesh Naidu, Fong Soo Ken, and Yoa Kian How was barred by the limitation period and should have been filed within six years from the execution of the SPA, which ended in 2018.
The court said a notable fact in the Obata and Vignesh case is that both had already received LAD payments from the developer, Prema Bonanza Sdn Bhd, due to late delivery of vacant possession.
The court also ruled that Fong and Yoa were not permitted to file a side challenge against the housing authority's decision to grant the developer, Sri Damansara Sdn Bhd, an extension to complete its housing project.
In 2012, Obata purchased two luxury apartment units at The Sentral Residences, Kuala Lumpur, from Prema Bonanza for over RM3.78 million.
Under the terms of the SPA, Prema Bonanza was required to deliver vacant possession of the units within 54 months, by December 2016. However, vacant possession was only delivered in February 2017, approximately two months later.