The Palace of Justice building in Putrajaya, which houses the Federal Court. (The Edge filepix by Zahid Izzani)

KUALA LUMPUR (July 25): Come Friday (July 26), the Federal Court will deliver an important decision which would affect homebuyers and developers alike, on whether the decision made by the apex court in the Ang Ming Lee and Another vs the Housing and Local Government Ministry and the Controller of Housing case has a retrospective effect or otherwise.

In the Ang Ming Lee case, the apex court ruled in 2020 that the minister had no power to delegate to the Controller of Housing, pursuant to Regulation 11(3) of the Housing Development Regulations 1989 (HDR 1989), to waive the time period of completion of the property from 36 months to 42 months or more, without obtaining consent from the purchasers.

The term of 36 months applies to strata titled properties, while for landed properties, the term is 24 months.

However, the highest court of the land did not rule whether the extension of time (EOT), as in the Ang Ming Lee case where the developer applied it after failing to complete the project before the expiry of the sales and purchase agreement (SPA), was applicable only prospectively before the signing of the SPA, or retrospectively.

So far, the courts below have ruled that they are bound by the Ang Ming Lee case in saying that the controller does not have the power to give EOT either prospectively or retrospectively, even after the SPA has been signed.

Some of the affected developers claim otherwise, saying that it should not be applied retrospectively, as the 36-month period is possibly insufficient for completion of such projects, due to the land condition, strict working hours and other factors, and hence, the approval given to complete the project beyond that period by the authorities before it began, is legitimate.

Hence, the outcome of three cases on Friday, namely that of: Ombak-Ambak Holdings Sdn Bhd vs Prema Bonanza Sdn Bhd, Prema Bonanza Sdn Bhd vs KN Vignesh Naidu, and Sri Damansara Sdn Bhd vs Housing Tribunal and two others, for which, in all three cases, the EOT (from 36 months had been extended to 42 months or 52 months) was given before the signing of the SPA. This is why the decision on Friday would likely be widely watched.

Prema Bonanza is the developer of the housing project known as The Sentral Residences, centrally located near KL Sentral, while Sri Damansara is the developer for the Foresta Damansara condominium located near Kota Damansara, Selangor.

The decision will be delivered by a five-member bench led by Court of Appeal president Tan Sri Abang Iskandar Abang Hashim, which may revisit the Ang Ming Lee case which had been decided by a bench led by Chief Justice Tun Tengku Maimun Tuan Mat.

Nineteen different law firms, who are not parties in the suit, have applied to be watching briefs or observers in the matter, as the outcome may affect their clients in ongoing cases.

Central to the issue is certainly the liquidated ascertained damages (LAD) claimed by the homebuyers, purportedly for late delivery of the property, despite being granted the EOT by the government before the SPA was signed.

The EOT in Prema Bonanza’s case was given in 2010, due to complexity in completion of the said projects, while the SPA was formulated in 2012. This was informed to the homebuyers.

Normally, the LAD would be calculated following late delivery of the properties, but in the Ang Ming Lee case, some homebuyers are claiming it from the 36-month period, and hence this leads to questions over the EOT, if given retrospectively from the SPA, would result in more costs to be paid by developers, while resulting in unjust enrichment of homebuyers.

In light of the multifarious issues which are of public importance that arose in the appeals, the Attorney General, through Senior Federal Counsel Liew Horng Bin, was invited by the Federal Court to appear as amicus to assist the court on the legal effect of the Ang Ming Lee decision.

Prema Bonanza was represented by Messrs Chee Hoe & Associates, while Messrs Norendra & Yap appeared for Sri Damansara.