Malaysia’s Apex Court Rules in Favor of Housing Developers

Published On: July 31, 20241.9 min read

A landmark construction decision in Malaysia was delivered by Malaysia’s apex court on 26.7.2024, ruling in favor of housing developers. Our firm’s Construction Department attended the decision at the Federal Court on behalf of our client.

For years, developers were impacted by the 2019 apex decision in Ang Ming Lee, which held that the Minister for Housing cannot delegate the power to waive or modify any provision in the statutory sale and purchase agreement (SPA) for housing development to the Controller of Housing. This led to numerous cases where homebuyers sued developers for liquidated damages (LD) due to late delivery.

The Federal Court clarified Ang Ming Lee and ruled in favor of developers on several issues. The decision is summarized as follows:

Ang Ming Lee does not apply retrospectively, i.e., extensions of time (EOT) granted by the Controller of Housing before Ang Ming Lee remain valid. The Court found that applying Ang Ming Lee retrospectively would cause great injustice, as developers had complied with valid laws at the time.
Where purchasers received a benefit at the developer’s expense under the SPA, it would be unjust to allow claims for LD. The purchasers knew the delivery period was 54 months, the property was delivered, and LD was paid. The Court stated that awarding claims to home buyers in this instance would result in unjust enrichment at the developer’s expense.
The Court found that the purchasers’ LD claims were time-barred. The cause of action began from the SPA signing date and lapsed 6 years later.
An innocent party can rely on an unlawful administrative decision, and strangers to the decision cannot make collateral attacks. Thus, the developer (innocent party) can rely on the unlawful administrative decision (EOT granted by the Controller of Housing), while homebuyers (strangers) cannot challenge the developer based on the EOT.

The Court explained that Ang Ming Lee was a placebo for issues with EOTs in the housing industry. Despite Ang Ming Lee’s validity, there is a need for an “antidote” to address any negative side effects.

For more information about this legal update, contact our Construction and Engineering department: Oon Thian Seng, Ezra Voon, Crystal Choong (T S Oon & Partners), and Benedict Eoon (Oon & Bazul LLP).