OBATA-AMBAK HOLDINGS SDN BHD vs PREMA BONANZA SDN BHD & OTHER APPEALS

Headnote:(A) Housing Development (Control and Licensing) Act 1966 – Housing Development (Control and Licensing) Regulations 1989 – Regulation 11(3) – Liquidated Ascertained Damages (LAD) – Appeals concerning the validity of extensions of time for delivery of vacant possession – The court ruled that reg 11(3) is ultra vires the HDA, thus invalidating extensions granted under it – The doctrine of prospective overruling applies, preventing retrospective claims for LAD based on the invalidity of the regulation. (Paras 2, 11, 18, 35, 178)

(B) Limitation Period – The court found that the claims for LAD were time-barred as they were filed beyond the six-year limitation period from the date of the Sale and Purchase Agreements (SPAs). (Paras 15, 34, 70, 178)

(C) Unjust Enrichment – The court held that allowing claims for LAD retrospectively would result in unjust enrichment for the purchasers, as they had accepted payments and benefits under the SPAs. (Paras 173, 178)

Facts of the case: The appeals involved purchasers challenging the validity of extensions of time for delivery of vacant possession under SPAs, which were extended from 36 to 54 months. The court found that the extensions were invalid under the ruling in Ang Ming Lee. (Paras 2, 4, 7)

Findings of Court: The court affirmed the lower court's decisions, ruling that the claims were barred by limitation and that the doctrine of prospective overruling applied. (Paras 178)

Issues: The main issues included the validity of the extensions under reg 11(3), the limitation period for claims, and the implications of unjust enrichment. (Paras 11, 15, 173)

Ratio Decidendi: The court emphasized that the invalidity of reg 11(3) does not allow for retrospective claims for LAD, and the limitation period must be strictly adhered to. (Paras 11, 178)

Result: Appeals dismissed for Obata; appeals allowed for Prema and Sri Damansara. (Paras 178)

Legal Category Hierarchy

1. Purchasers challenged developers' extension of time for vacant possession under HDR reg 11(3), claiming LAD for late delivery after executing SPAs with extended periods and accepting LAD as full settlement. (Para 1 , 2 , 4 , 5 , 6 , 7 , 20 , 21 , 40 , 41 , 42 , 43 , 74 )

2. Purchasers argued EOT was ultra vires per Ang Ming Lee and limitation had not expired; developers argued SPA terms were valid, purchasers were estopped, and limitation had expired. (Para 7 , 9 , 23 , 24 , 25 , 26 , 47 , 48 , 66 , 68 , 79 , 80 , 81 , 82 , 84 , 86 , 106 , 107 , 108 , 109 , 110 , 161 , 162 , 163 , 164 , 165 , 166 , 167 , 170 , 171 , 173 , 174 , 175 )

3. Obata's appeals dismissed; Prema's and Vignesh's appeals allowed, High Court reinstated; Sri Damansara's appeal allowed, both lower courts set aside; no costs awarded. (Para 178 , 179 )

4. Is reg 11(3) of the Housing Development (Control and Licensing) Regulations 1989 ultra vires the Housing Development Act 1966, and does the Controller lack power to modify the prescribed Schedule H SPA?

Yes. The Federal court held that s 24 of the HDA does not confer power on the Minister to delegate the power to waive or modify the Schedule H contract of sale to the Controller, making reg 11(3) ultra vires the Act. (Para 60 , 61 , 62 , 63 , 64 , 65 , 104 )

5. When does the cause of action for liquidated ascertained damages accrue and does the six-year limitation period bar claims filed years after the SPA was executed?

The cause of action accrues from the date of the SPA breach. Since the SPAs were executed in 2012 with a 54-month completion period, the six-year limitation expired before the suits were filed in 2020, barring the claims. (Para 68 , 69 , 87 , 88 , 89 , 90 , 91 , 92 , 93 , 94 , 95 , 96 , 97 , 98 , 99 , 100 )

6. Does the Second Actor Theory apply where a developer relied on an EOT granted by the Controller before Ang Ming Lee, which was subsequently declared ultra vires?

Yes. The Second Actor Theory applies. A developer who relied on the Controller's validly-granted extension before Ang Ming Lee should not be adversely affected, and purchasers as strangers cannot initiate collateral proceedings to challenge the Controller's decision. (Para 103 , 104 , 106 , 107 , 108 , 109 , 110 , 111 , 112 , 113 , 127 , 128 , 129 , 130 , 131 , 132 , 133 , 134 , 135 )

7. Does the doctrine of prospective overruling apply to Ang Ming Lee, or does its declaration that reg 11(3) is ultra vires apply retrospectively?

Ang Ming Lee applies prospectively only. Retrospective application would cause serious injustice and disruption to the housing industry. The declaration of ultra vires should not invalidate extensions granted before the decision where parties relied on the then-valid law. (Para 137 , 138 , 139 , 140 , 141 , 142 , 143 , 144 , 145 , 146 , 147 , 148 , 149 , 150 , 151 , 152 , 153 , 154 , 155 , 156 , 157 , 158 , 159 , 160 , 161 , 162 , 163 , 164 , 165 , 166 , 167 , 168 )

8. Can purchasers who accepted LAD as full and final settlement and signed waiver letters claim further LAD retrospectively after Ang Ming Lee?

No. Purchasers who accepted LAD and signed settlement letters waiving further claims are estopped from further claims. Allowing retrospective claims would result in unjust enrichment at the developers' expense. (Para 16 , 17 , 27 , 28 , 32 , 33 , 74 , 99 , 170 , 171 , 173 , 174 , 175 , 176 , 177 )

JUDGMENT

Hasnah Mohammed Hashim FCJ:

Introduction

[1] There are five appeals which were heard together, given the commonality of issues in the questions of law raised for our determination. One appeal was filed by the purchaser of the condominium units, The Sentral Residences. The other appeals are appeals filed by the developers of the projects, Prema Bonanza Sdn Bhd (Prema) and Sri Damansara Sdn Bhd (Sri Damansara). The appeals were heard together despite there being different parties involved. We heard oral submissions by all learned counsel representing the respective parties and at the end of those submissions, we indicated that we needed time to consider the respective submissions. We have now reached our decision and what follows below are our deliberations on the issues raised and our reasons as to why we have so decided.

[2] The central issue in all the appeals concerns the payment of Liquidated Ascertained Damages (LAD) as a result of this court's decision in Ang Ming Lee & Ors v. Menteri Kesejahteraan Bandar Perumahan Dan Kerajaan Tempatan & Anor And Other Appeals, 2019 MarsdenLR 2737 (Ang Ming Lee) declaring that reg 11(3) of the Housing Development (Control and Licensing) Regulations 1989 (HDR) is ultra vires the parent Act.

Appeal No: 02(i)-70-08-2022(W) (Appeal No. 70) & 02(i)-71-08/2022(W) (Appeal No. 71)

Obata-Ambak Holdings Sdn Bhd (Obata) v. Prema Bonanza Sdn Bhd (Prema)

[3] Both appeals have identical issues, with similar facts, and arose from the same development project. Appeal No. 70 is an appeal by Obata against the decision of the court of Appeal dismissing the appeal by Obata against the High court's decision which allowed Prema's application under O 14A Rules of 2012 (ROC). Whereas Appeal No. 71 is an appeal by Obata against the court of Appeal's decision which dismissed Obata's application for Summary Judgment under O 14 ROC 2012.

[4] The Appellant, Obata, is the purchaser and owner of a condominium known as The Sentral Residences (the Project). The Respondent, Prema, is the developer of the Project. The Project comprises 2 towers of service apartments and was governed by the Housing Development (Control and Licensing) Act 1966 (HDA) and the HDR. Thus, the agreement was to be executed with potential purchasers as prescribed under Schedule H of the HDR, whereby the time for delivery of vacant possession and completion of common facilities is 36 months.

[5] However, due to the magnitude and the peculiarity of the bespoke design of the Project, Prema applied for modification of the prescribed agreement to vary the prescribed completion period for the Project from thirty-six (36) months to fifty-four (54) months pursuant to reg 11(3) HDR. The Extension of Time (EOT) was granted by the Controller of Housing (the Controller) on 16 December 2010, two (2) years before the execution of the SPA with the purchasers of the Project. Prema obtained the EOT to extend the time period for delivery of vacant possession and completion of common facilities from 36 months to 54 months. The amended approved provisions are as reflected in cls 25 and 27 of the Sale and Purchase Agreements (SPA). It was only after procuring the approval of the EOT and the amended clauses in the SPA that Prema executed the SPAs with its purchasers.

[6] Obata entered into the SPAs with the approved EOT on various dates which formed the subject matter before the court, namely:

(i) SPA dated 24 July 2012 (Suit 301);
(ii) SPA dated 28 October 2013 (Suit 303); and
(iii) SPA dated 11 July 2012 and 18 July 2012 (Suit 305) − the present appeals before us.

[7] After the Federal court's decision of Ang Ming Lee, Obata commenced proceedings against Prema for the following reliefs:

i. a declaration that any letters given for extension of time pursuant to reg 11(3) of the HDR to deliver vacant possession of the property to the plaintiff and the completion of the common facilities from 36 months to 54 months were inconsistent with the decision of Ang Ming Lee;
ii. a de

Click Here to Read the rest of this document

2024 MarsdenLR 1247

FEDERAL COURT PUTRAJAYA
OBATA-AMBAK HOLDINGS SDN BHD – Appellant
Versus
PREMA BONANZA SDN BHD & OTHER APPEALS – Respondent
[Civil Appeal Nos: 02(i)-70-08-2022(W) 02(i)-71-08-2022(W) 02(i)-72-08- 2022(W) 02(i)-74-08-2022(W) & 01-(f)-1-01-2023(B)]

The court ruled that reg 11(3) of the HDR is ultra vires the HDA, applying the doctrine of prospective overruling, thus barring retrospective claims for Liquidated Ascertained Damages.

Legal Category Hierarchy

Table of Contents

4. Is reg 11(3) of the Housing Development (Control and Licensing) Regulations 1989 ultra vires the Housing Development Act 1966, and does the Controller lack power to modify the prescribed Schedule H SPA?

5. When does the cause of action for liquidated ascertained damages accrue and does the six-year limitation period bar claims filed years after the SPA was executed?

6. Does the Second Actor Theory apply where a developer relied on an EOT granted by the Controller before Ang Ming Lee, which was subsequently declared ultra vires?

7. Does the doctrine of prospective overruling apply to Ang Ming Lee, or does its declaration that reg 11(3) is ultra vires apply retrospectively?

8. Can purchasers who accepted LAD as full and final settlement and signed waiver letters claim further LAD retrospectively after Ang Ming Lee?

2024 MarsdenLR 1247

FEDERAL COURT PUTRAJAYAOBATA-AMBAK HOLDINGS SDN BHD – AppellantVersusPREMA BONANZA SDN BHD & OTHER APPEALS – Respondent[Civil Appeal Nos: 02(i)-70-08-2022(W) 02(i)-71-08-2022(W) 02(i)-72-08- 2022(W) 02(i)-74-08-2022(W) & 01-(f)-1-01-2023(B)]

The court ruled that reg 11(3) of the HDR is ultra vires the HDA, applying the doctrine of prospective overruling, thus barring retrospective claims for Liquidated Ascertained Damages.

Legal Category Hierarchy

Table of Contents

4. Is reg 11(3) of the Housing Development (Control and Licensing) Regulations 1989 ultra vires the Housing Development Act 1966, and does the Controller lack power to modify the prescribed Schedule H SPA?

5. When does the cause of action for liquidated ascertained damages accrue and does the six-year limitation period bar claims filed years after the SPA was executed?

6. Does the Second Actor Theory apply where a developer relied on an EOT granted by the Controller before Ang Ming Lee, which was subsequently declared ultra vires?

7. Does the doctrine of prospective overruling apply to Ang Ming Lee, or does its declaration that reg 11(3) is ultra vires apply retrospectively?

8. Can purchasers who accepted LAD as full and final settlement and signed waiver letters claim further LAD retrospectively after Ang Ming Lee?

Cases Referred (3)

FEDERAL COURT PUTRAJAYA
OBATA-AMBAK HOLDINGS SDN BHD – Appellant
Versus
PREMA BONANZA SDN BHD & OTHER APPEALS – Respondent
[Civil Appeal Nos: 02(i)-70-08-2022(W) 02(i)-71-08-2022(W) 02(i)-72-08- 2022(W) 02(i)-74-08-2022(W) & 01-(f)-1-01-2023(B)]