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Messrs Lui & Bhullar
Jul 27

SUCCESSFUL MISREPRESENTATION CLAIMS AGAINST DEVELOPERS IN MALAYSIA

By:


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

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


SUCCESSFUL MISREPRESENTATION CLAIMS AGAINST DEVELOPERS IN MALAYSIA

In a significant legal case in the High Court involving Lakefront Residence Sdn Bhd and 46 home buyers, the principle of "Kata itu kota" — meaning "a man’s word is his bond" — underscores the core issue: alleged misrepresentation ('misrep') by developers.


Case Overview

The dispute centers around the allegation of a developer failing to meet commitments outlined in the SPAs governed by the Housing Development (Control and Licensing) Act 1966 (HDA 1966). These agreements, signed between 2014 and 2020, included Deeds of Mutual Covenants (DMCs).


The "110 Units Promise"

At the heart of the issue is the so-called "110 Units Promise" made by Defendant, which was supposed to ensure the development of 110 exclusive luxury villas. The plaintiffs argue that Phase 2 of the project, initially planned as residential, was later converted to commercial use following planning amendments in 2016 and 2017. To date, only 86 units have been constructed, and the refuse chamber remains incomplete.


Potential Remedies for Misrepresentation

The plaintiffs are seeking various remedies, including:

  • Declarations for the 110 residential units.

  • Injunctions against commercial development in Phase 2.

  • Specific Performance to complete the promised units and refuse chamber.

  • Damages for misrepresentation and breach of contract.


Key Federal Court Rulings

The plaintiffs' case is supported by three crucial Federal Court decisions relevant to misrepresentation by developers:


  1. Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan Dan Kerajaan Tempatan & Anor [2020] 1 CLJ 162 FC - This ruling affirms that the HDA 1966 is social legislation designed to protect house buyers, which is essential in cases of misrepresentation by developers.

  2. PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor And Other Appeals [2021] 2 CLJ 441 FC - Emphasizes that statutory contracts under the HDA 1966 must be interpreted to offer maximum protection for house buyers.

  3. Remeggious Krishnan v SKS Southern Sdn Bhd [2023] 4 CLJ 36 FC - Reinforces the need to interpret HDA 1966 provisions to maximize protection for house buyers.


These rulings underscore the courts' obligation to interpret the HDA 1966 in a way that benefits house buyers, considering the power imbalance between buyers and developers.


Analysis of Disclaimers in Brochures

The defendants attempted to rely on disclaimers in the brochures as a defense. However, these disclaimers were printed in such fine print that they were unreadable without enlargement. This aligns with Toh Shu Hua & Ors v Wawasan Rajawali Sdn Bhd & Anor [2023] 2 CLJ 310, where Akhtar Tahir J ruled that disclaimers in excessively fine print lack legal effect. Marketing promises must be truthful, even with exclusion clauses.


Conclusion

The case highlights the importance of accurate representations and accountability in property development.


The court’s findings support, affirming the legal ineffectiveness of unreadable disclaimers and recognizing the collateral warranty and estoppel against the defendants. The defendants' involvement and misrepresentations underscore the need for developers to uphold their commitments and adhere to legal standards.


This case serves as a crucial example for those seeking legal recourse against misrepresentation by developers, demonstrating the importance of robust legal representation and the application of statutory protections for house buyers.


Please contact us for a free consultation via WhatsApp (+60143000960) or E-mail (admin2@luibhullar.com) for any queries regarding housing development matters.



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