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NO RESTRAINTS ON HOMEBUYERS’ RIGHTFUL CLAIM FOR LAD!

Lui & Bhullar’s Housing Development Miniseries Episode 1

By:

Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]

Bryan Lui (Co-Managing Partner) [bryanlui@luibhullar.com]

Chandni Anantha Krishnan (Partner) [chandni@luibhullar.com]


INTRODUCTION

On 19.04.2021, the High Court vide two Judgments delivered by Quay Chew Soon JC in Leong Keng Chiang v Prema Bonanza Sdn Bhd [Suit No. WA-22NCvC-460-08/2020] and Lam Su See v Prema Bonanza Sdn Bhd [Suit No. WA-22NCvC-418-07/2020] (collectively referred to as “Prema Bonanza”) held as follows:


(a) That the completion period in a Sale and Purchase Agreement (“SPA”) pursuant to Schedule H of the Housing Development (Control and Licensing) Regulations 1989 (“HDR”) cannot be modified and varied.


(b) That the Federal Court decision in Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan Dan Kerajaan Tempatan & Anor And Other Appeals [2020] 1 CLJ 162 (“Ang Ming Lee”) has declared extensions of time pursuant to Sub-regulation 11(3) of the HDR, as illegal and void ab initio.


(c) That a homebuyer is not estopped from claiming Liquidated Ascertained Damages (“LAD”) even if that homebuyer has executed LAD waiver / settlement letters. As the SPA is a statutory contract, estoppel cannot operate against statutory provisions. A homebuyer is entitled to claim for his full LAD amount based on the 36 months completion period as provided by Schedule H of the HDR. Any settlement / waiver that takes away statutory rights of the homebuyer is of no legal effect. The law on waiver and estoppel cannot operate against the HDA.


(d) That the Housing Development (Control and Licensing) Act 1966 (“HDA”) and HDR are social legislations, therefore any unjust enrichment or waiver or estoppel cannot be relied upon to prevent a homebuyer from claiming what he is statutorily entitled to claim under Schedule H of the HDR.


(e) That the High Court is bound by the decision of Ang Ming Lee and the High Court added that it was in full agreement with Ang Ming Lee and did not hesitate to follow the same. Ang Ming Lee has retrospective effect and homebuyers can rely on the same to claim for LAD.



BRIEF FACTS OF PREMA BONANZA

The Plaintiffs in Prema Bonanza executed SPAs with the Defendant on 09.07.2012 for the purchase of condominium units in a housing development project known as Sentral Residences. The SPA was pursuant to Schedule H of the HDR.


The Defendant had obtained an extension of time (“EOT”) pursuant to Sub-regulation 11(3) of the HDR to modify the completion period of the SPA from 36 months to 54 months. The EOT was obtained on 16.12.2010, before the date of the SPA. The SPA reflected the 54 months completion period.


The Plaintiffs argued that the EOT was void, relying on the decision of Ang Ming Lee.


The Defendant argued, amongst others, as follows:


(a) That the Plaintiffs had knowledge and consented to the EOT;


(b) That the Plaintiffs are estopped from filing this claim as they had accepted LAD settlements sums vide LAD waiver and / or settlement letters;


(c) That the Plaintiffs are attempting to unjustly enrich themselves.



DECISION OF THE COURT

In relation to the completion period, the High Court stated that as the SPA is regulated by statute, the Defendant cannot deviate or add or vary any of the terms in the SPA. Reference was made to the Federal Court decision of Ang Ming Lee.


Any inconsistency or contradiction of the terms in the SPA that deviates from Schedule H of the HDR is of no legal purport and does not bind a homebuyer. As such, the Defendant was required to deliver vacant possession of the condominium units within 36 months in accordance to law (Schedule H of the HDR).


Any EOT is granted vide Sub-regulation 11(3) of the HDR and as the Federal Court in Ang Ming Lee declared Sub-regulation 11(3) of the HDR ultra vires the HDA, it must follow that EOTs are null and void.


The Defendant’s argument that the Plaintiffs had consented to the EOT when they executed the SPA was not accepted. The High Court held that it does not make a difference if the EOT was granted before or after the execution of the SPA or that the Plaintiffs ought to have knowledge of the EOT as nobody can consent or waive illegality.


The Defendant’s argument that the Plaintiffs had waived their rights to claim for LAD by reason of accepting settlement sums was also not accepted. The High Court stated that the Plaintiffs should not be deprived of his statutory entitlement to the full LAD amount under the law as the SPA is a statutory contract.


The LAD waiver / settlement letters were calculated based on the 54-month period. This was in violation of Schedule H of the HDR which provides for the formula for calculation based on the prescribed timeline of 36 months.


As such, any purported settlement that takes away the rights of the homebuyers is of no legal purport. A housing Developer cannot rely on such waiver or estoppel to preclude a house buyer from asserting the full extent of his rights as provided under the HDA and HDR. There can be no estoppel against statute. The law on waiver and estoppel cannot operate against the HDA.


The Defendant’s argument that the Plaintiffs are attempting to enrich themselves by claiming for an additional 18 months of LAD having accepted the LAD sums and executing the LAD waiver / settlement letters was not accepted. The HDA and HDR are social legislations. Unjust enrichment or waiver or estoppel cannot be relied upon to prevent a homebuyer from claiming what he is statutorily entitled to claim under Schedule H of the HDR.


The High Court also noted that it was bound by the Federal Court decision of Ang Ming Lee and that Ang Ming Lee had retrospective effect. The High Court referred to the Court of Appeal decision in Abdillah Bin Labo Khan v Public Prosecutor [2002] 3 MLJ 298 wherein it is a fundamental principle that all judgments of a court are retrospective in effect.



CONCLUSION

The major takeaway from the decision of Prema Bonanza is that the Courts are “courts of law and not court of morals”. The Defendant in Prema Bonanza described the Plaintiffs as opportunists. The High Court did not view the Plaintiffs conduct as greedy or mercenary.


If a homebuyer is correct in his contention of the law, he is entitled to succeed. The High Court in Prema Bonanza awarded LAD to the Plaintiffs.


As our title suggests, it seems to flow that since the decision of the Federal Court in Ang Ming Lee, there are no restraints for a rightful LAD claim for homebuyers.



EPILOUGE

If you realize that your SPA does not conform to the statutory 36-month completion period, feel free to use Lui & Bhullar’s LAD calculator at https://www.luibhullar.com/ladcalculator


The LAD calculator will assist you in calculating your rightful LAD claim.


Alternatively, do get in touch with us at admin@luibhullar.com for any queries regarding this Write-Up.



Image by Michal Jarmoluk from Pixabay

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