Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd
Civil Appeal No. 02(i)-70-08/2022(W) | Federal Court
Summary
The recent Federal Court decision in the case of Obata-Ambak on 26 July 2024 clarified the application of the Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor [2020] 1 MLJ 281 (FC) decision, determining that it should be applied prospectively rather than retrospectively.
The Ang Ming Lee Case and Its Impact
In the Ang Ming Lee case, the Federal Court concluded that the Minister of Housing and Local Government could not delegate the authority to grant extensions of time to developers under the Housing Development (Control and Licensing) Act 1966 (“Act”) to the Controller of Housing. As a result, Regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989, which allowed the Controller to issue such extensions, was deemed ultra vires.
Prior to this clarification, the Ang Ming Lee ruling was applied retroactively, which led to issues for developers who had previously secured extensions from the Controller. This retroactive application resulted in claims for delay damages against developers, such as those faced by Prema Bonanza Sdn Bhd and Sri Damansara Sdn Bhd, despite their SPAs specifying completion periods that extended beyond the statutory 36 months.
Recent Developments in Obata-Ambak
In its decision on 26 July 2024, the Federal Court in Obata-Ambak unanimously ruled that the Ang Ming Lee decision should only apply from the date of the ruling moving forward. The Court emphasized that homebuyers cannot leverage the Ang Ming Lee decision to retroactively claim delay damages or seek financial gains from developers who had complied with the legal provisions at the time and had acted in good faith.
Conclusion
The Obata-Ambak decision is a significant development in housing development law. By confirming that the Ang Ming Lee judgment applies prospectively, the Court aims to prevent unjust enrichment and ensure fairness, balancing the interests of both purchasers and developers.
Authored by Verene Tan Yeen Yi
