A Landmark Federal Court Decision on Liquidated Ascertained Damages

KUALA LUMPUR – In a landmark decision, the Federal Court has delivered its grounds of judgement in respect of the case of PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Another and 6 other appeals.

It has finally clarified the legal position as to when time starts to run, in respect of vacant possession (VP) of the property. Though this issue had earlier been decided by two Supreme Court cases in Hoo See Sen & Anor v Public Bank Bhd & Anor and Faber Union Sdn Bhd v Chew Nyat Shong & Anor, the legal position had remained unresolved for 32 years before it was re-visited by the Federal Court recently.

The purchasers had paid a booking fee of RM10,000 to the developer earlier but the sale and purchase agreement (SPA) was only executed two months thereafter by the developer. The SPA stated VP to be within 42 months from the date of the agreement. Upon late VP, the purchasers made a claim in the Tribunal for Homebuyers Claim based on the date the booking fee was paid.

The Tribunal awarded the sum claimed by the purchasers. The developer then filed a judicial review application with the High Court, followed by the Court of Appeal, but both were dismissed. The developer then filed an appeal to the Federal Court and the Federal Court held the following:-

Where there is a delay in the VP by a developer to the purchaser in respect of scheduled contracts, the date for calculation of LAD begins from the date of payment of deposit or booking fee or initial fee or expression of intention to purchase and not from the date of the SPA literally.

“We are very pleased with the decision of the Federal court which delivered a final clarity to the issues of LAD. Our firm’s real estate practice has represented many real estate purchasers who are currently claiming for LAD compensation in the courts and this decision has brought some relief to these purchasers who are owed money by the developers” said Casey Goik