Commencing a claim for LAD: Writ or Originating Summons (OS)

CASE NAME AND CITATION:

Insun Development Sdn Bhd v Azali b. Bakar [1996] 2 MLJ 188

COURT AND JUDGES:

Federal Court (Kuala Lumpur)

Lamin PCA, Edgar Joseph JR and Mohd Dzaiddin FCJJ
Civil Appeal No 02-348-1994 (11 May 1996)
Appeal from: Originating Summons No 24-541 of 1993 (High Court, Johor Bahru)

PARTIES:

Respondent: Azali bin Bakar

Appellant: Insun Development

MATERIAL FACTS:

This is an appeal from the judgment of the High Court, Johor Bahru, ordering that judgment
be entered in favour of the plaintiff Azali bin Bakar, the purchaser (‘the purchaser’) under a
sale and purchase agreement dated 12 December 1984 (‘the agreement’) of a single-storey
dwelling house (‘the house’) to be erected by the defendant Insun Development Sdn Bhd, the
corporate licensed developer (‘the vendor’). The agreement was in the form prescribed in the
Schedule to the Housing Developers (Control and Licensing) Regulations 1982 (‘the 1982
Regulations’).

The defendant is a housing developer and duly licensed under the Housing Developers
(Control and Licensing) Act 1966. By a sale and purchase agreement dated December 12,
1984 ('SPA') the defendant agreed to sell a piece of land on Lot no. 26298 together with a
single storey terrace house ('the said house') to be erected by the defendant in a housing
estate known as Taman Puteri Wangsa in the Mukim of Tebrau, Johor Bahru for the sum of
RM49,725.00 (see exhibit ‘A’ to encl. 2). The plaintiff as the purchaser of the said house
together with the land thereon took a loan from the Government of Malaysia in January 1987
and has been paying the government a sum of RM310.25 a month by way of interest and
settlement to the date of the filing of the OS totalling RM24,207.30. Furthermore, he had
also paid a total sum of RM5,513.35 towards disbursements, legal costs and insurance to
purchase the said house and the land.
By clause 18(1) of the SPA the defendant agreed to complete the said house and deliver
vacant possession to the plaintiff within twenty-four (24) calendar months of the date of the
SPA, that is, on December 11, 1986. By clause 18(2) of the SPA the defendant also agreed
to pay liquidated damages calculated at the rate of 10% per annum of the purchase price to
be calculated on a daily basis in the event the defendant fail to deliver the said house within
the time stipulated in clause 18(1) thereof.

By way of originating summons (OS) dated 31st July 1993 for the declaration as to the
entitlement to liquidated damages from 12 December 1986, alternatively under Housing
Developers (Control & Licensing) Act 1966 and the 1982 Regulation. Up to the time of the
filing of the OS the defendant failed to complete and deliver vacant possession of the said
house to the plaintiff. Instead, the defendant requested the plaintiff to enter into a new
agreement whereby he has to forego the claim for LAD (see exhibit ‘C’ in encl.7). The LAD up
to the date of the OS is RM32,946.78 and continues to run on a daily basis at the rate of
RM13.62 per day. The plaintiff quite naturally refused to enter into a new agreement as
requested by the defendant. However, on March 24, 1994 (after the filing of the OS) the plaintiff
received from MBf Property Services Sdn. Bhd., agent of the defendant asking the plaintiff to
pay the balance of the purchase price of RM29,308.00 and to take delivery of the vacant
possession of the said house (see exhibit ‘A’ in encl. 8).

Summary of Facts:

The buyer (the respondent) signed a sale and purchase agreement with the developer (the
appellant) on 12 December 1984 for a single-storey house to be built by the developer. The
agreement followed the standard format in Schedule E of the Housing Developers (Control
and Licensing) Regulations 1982. Clause 18 of the agreement stated that the developer must
deliver vacant possession of the house within 24 months, and if the developer fails to do so,
they must immediately pay liquidated damages calculated daily at 10% per year on the
purchase price.It is agreed that the house was only completed and ready for delivery on 25
March 1994, meaning the developer delayed delivery from 12 December 1986 to 25 March
1994.

QUESTION OF LAW:

(a) At the high court the court considers whether the OS for a declaratory order is not the
right procedure as it should be by way of a writ for money due?
(b) At the high court the question was whether the right to liquidated and ascertained
damages (“LAD”) is time-barred by virtue of section 6(1)(a) of the Limitation Act 1950?
In the appeal, the question was, having regard to cl 18 of the agreement when did the
purchaser’s right to sue for the agreed liquidated damages for the delay accrue?
DECISION:

Appeal allowed:

(a) The plaintiff used an originating summons to seek a declaration of his right to claim
LAD under a sale and purchase agreement, since the house hadn’t been completed
yet and no specific amount could be claimed. He relied on the Loh Wai Lian case to
show that the right only becomes enforceable upon completion of the house. At the
time, the developer denied his right, which justified court intervention. Later, when the
developer changed stance and admitted the right, the court rejected this inconsistent
position as "blowing hot and cold" and upheld the plaintiff's method of initiating the
claim.
(b) Purchasers right of action for damages for breach of contract following the general rule
accrued on the date of the breach, which in this case was the day after the time limited
under cl 18(2) for the delivery of vacant possession, on 12 December 1986.
Accordingly, the purchaser, having commenced proceedings only on 31 July 1993,
was more than seven months out of time. The purchaser’s claim was therefore statute-
barred under s.6(1) of the Limitation Act 1950, Loh Wai Lian v SEA Housing Corp Sdn
Bhd distinguished.

DETAILED REASONS FOR THE DECISION:

Ground (a)

• The plaintiff contended that he is proceeding for declaratory judgment and/or order
under Order 15 rule 16 of the Rules of the High Court, 1980 which reads –

o “No action or other proceeding shall be open to objection on the ground that a
merely declaratory judgment or order is sought thereby, and the court may
make a binding declaration of right whether or not consequential relief is or
could be claimed.”

• Basis for declaratory judgement: The basis of the plaintiff proceeding by way of
declaration is in order to enforce his right under the SPA and the Housing Developers
(Control and Licensing) Act 1966 and the rules made thereunder as otherwise he has
to wait until the said house is completed and vacant possession delivered.

• According to the counsel for the plaintiff, in view of the judgment of the Privy Council
in Loh Wai Lian v. S.E.A. Housing Corporation Sdn. Bhd. (1987) 2 MLJ 1 (the
factual situation would appear to be quite similar to the present case), that decided that
in such a claim for LAD, the cause of action arises when the building has been
 completed and vacant possession can be given. As the said house was not yet
completed and vacant possession could not be delivered, obviously the plaintiff could
not pray for judgment for a quantified amount.

• Further, the defendant in paragraph 6 of the affidavit of its Chief Executive Officer,
Hezan Shah Haji Abdullah (encl. 6) denied the claim of LAD by the plaintiff as per
paragraph 5 of the plaintiff’s affidavit (encl. 2). In fact, the defendant thought it fit to
request the plaintiff to enter into a new agreement foregoing his claim for LAD (see
exhibit ‘C’ to encl. 7).

• Strangely though, the counsel for the defendant in her written submission at page 3,
stated “the Defendant admits unequivocally the Plaintiff’s right to damages under the
agreement “. It seems clear to me that the defendant is “blowing hot and cold” in
respect of the claim of LAD by the plaintiff. Only now is the defendant contending that
the plaintiff’s claim for declaration would serve no useful purpose and in fact can be
considered as academic as she submitted that the defendant admits unequivocally the
plaintiff’s right to damages under the SPA.

On ground (b):

• It is a well-established legal principle that if a contract does not clearly state otherwise,
a buyer’s right to sue for damages begins from the date the contract is breached (see
p. 196H). This follows earlier cases such as Nasri v Mesah [1971] 1 MLJ 32, Reeves
v Butcher [1891] 2 QB 509, and Gibbs v Guild (1881–1882) 8 QBD 296.
• However, the parties to a contract are allowed to change or delay when their right to
sue starts by including specific terms in the contract (see p. 196I). In this case, clause
18(2) of the agreement included a formula to calculate liquidated damages, and it
clearly specified the start date for the delay (terminus a quo), but did not specify the
end date (terminus ad quem). Because of that, the general rule applies.
• Therefore, the buyer’s right to sue for damages began on the day after the agreed
time for delivering the house under clause 18(2), that is, on 12 December 1986.
Since the buyer only started legal action on 31 July 1993, which is more than seven
months after the six-year time limit, the claim is barred by limitation under section
6(1) of the Limitation Act 1953 (see p. 197G–I). The earlier case of Loh Wai Lian v
SEA Housing Corp Sdn Bhd [1987] 2 MLJ 1 does not apply here due to different facts.
CASE NAME & CITATION
PJD Regency Sdn Bhd v Lee Kok Seng dan Lain-lain [2022] MLJU 2282
COURT AND JUDGES
MAHKAMAH TINGGI (KUALA LUMPUR)
LATIFAH MOHD TAHAR H
GUAMAN SIVIL NO WA-12ANCVC-43-02 TAHUN 2022
23 September 2012
PARTIES
Defendant: PJD Regency Sdn Bhd
Plaintiff: Buyers (Lee Kok Seng and others)
MATERIAL FACTS
The defendant is the developer of a housing project called “You Vista” located in Cheras,
Selangor. The plaintiffs are purchasers of units in that project. They filed a representative
action under Order 15 Rule 12 of the Rules of Court 2012, suing on their own behalf and on
behalf of 23 other purchasers.

Each plaintiff had paid a booking fee and signed a Sale and Purchase Agreement (SPA)
with the developer. Under Clause 25 of the SPA, vacant possession was to be delivered
within 42 months of the SPA date. Failure to do so would entitle the buyers to liquidated
damages (LAD) at 10% per annum calculated daily. For common facilities under Clause 27,
LAD is calculated at 10% per annum based on the final 20% of the purchase price.

Upon issuance of the Certificate of Completion and Compliance (CCC), the developer
issued vacant possession notices, but the buyers only took possession after 14 days from
the notice dates, as detailed in a schedule.

The plaintiffs claim that the amendments made by the developer to Clauses 25 and 27 of the
SPAs were invalid and illegal under the Housing Development (Control and Licensing)
Act 1966 and 1989 Regulations. They argue the SPA should reflect the standard 36-month
delivery period under Schedule H, and that the developer breached the agreement by failing
to deliver vacant possession and complete common facilities within that timeframe.

As a result, they claim LAD for the delay, based on the timeline under the unamended version
of the SPA.

The developer’s defence is that it had obtained a valid extension of time (EOT) from the
Controller of Housing (Jabatan Perumahan Negara) under Regulation 11(3), extending the
delivery period from 36 to 42 months. This extension was reflected in the SPA, which the
plaintiffs signed with full knowledge of the extended delivery period.
The developer also claims:

• Some plaintiffs took possession within the 42-month period.

• Others were paid LAD in 2017 under settlement agreements, which they accepted and
signed, waiving further claims.

• Therefore, under Section 64 of the Contracts Act 1950, the plaintiffs are estopped from
pursuing new claims after accepting the settlements.

The developer applied to strike out the plaintiffs’ claim under Order 18 Rule 19 of the ROC
2012, arguing:

• The plaintiffs have no reasonable cause of action.

• The action is frivolous, vexatious, an abuse of court process, and statute-barred under
Section 6(1) of the Limitation Act 1953, since the agreements were signed in
2012/2013.

• The plaintiffs used the wrong procedure by filing a writ action instead of a judicial
review, as the claim challenges an administrative decision (the EOT approval).

• They also failed to name necessary parties such as the Minister or Housing Controller.

• The plaintiffs’ conduct, signing the SPA with amendments and accepting LAD
payments, amounts to estoppel.

Accordingly, the developer contends the suit is unsustainable and should be dismissed.

QUESTIONS OF LAW

(a) Whether the plaintiffs used the correct mode (writ action vs judicial review);
(b) Whether the right parties were named in the suit;
(c) Whether the claim is barred by limitation;
(d) Whether estoppel or section 64 of the Contracts Act 1950 applies.

DECISION
At this stage, the court does not assess the full merits of the plaintiff’s claim. The only question
is whether the claim is reasonable, valid, and sustainable. The court found that the plaintiffs
had shown a reasonable cause of action and that the developer failed to show the claim was
clearly unsustainable or an abuse of process. The court affirmed the Sessions Court’s decision
from 25 January 2022, dismissed the defendant’s appeal, and ordered the developer to pay
costs of RM3,000.00 subject to allocated fees.

DETAILED REASONS FOR THE DECISION

The High Court reviewed the reasons given by the Sessions Court Judge in the earlier decision
and found no reason to interfere with that decision made on 25 January 2022.

Legal Principles for Striking Out

The court confirmed the established principle that a pleading or claim can be struck out in the
following circumstances:

• (a) In plain and obvious cases;

• (b) Where there is no reasonable cause of action;

• (c) To avoid unnecessary trials with no prospect of success; or

• (d) If the claim is scandalous, frivolous, vexatious, or there is no sustainable

defence.

The court referred to the case Bandar Builder v United Malayan Banking Corp, where it
was emphasized that the summary process of striking out should only be used when it is
clearly obvious that the claim is unsustainable on its face, and not by doing a deep analysis
of the documents or facts.

Defendant’s Four Main Grounds for Striking Out:

1. Whether the plaintiffs used the correct mode (writ action vs judicial review);

2. Whether the right parties were named in the suit;

3. Whether the claim is barred by limitation;

4. Whether estoppel or section 64 of the Contracts Act 1950 applies.

Court’s Findings:

[1] On the Mode of Action:

• The court followed the Federal Court decision in Ang Ming Lee which held that the
Housing Controller has no power to grant extensions of time (EOT) for delivery of
vacant possession. Since the law is clear and binding, buyers can bring civil claims in
court to enforce their rights. The plaintiffs’ use of a writ action is therefore correct,
not judicial review.

[2] On Failure to Name Necessary Parties:

• The claim is based on the SPA between the plaintiffs and the developer. Under the
doctrine of privity of contract, only parties to a contract need to be named. So, there
 is no need to include the Ministry or Housing Controller as they are not parties to
the SPA.

[3] On Limitation Period:

• The court found that the cause of action arose only upon delivery of vacant
possession and completion of common facilities, as stated in clauses 25(3) and
27(3) of the SPA. Since the plaintiffs received vacant possession on 6 February 2017,
and filed the suit on 7 June 2021, the claim was within the 6-year limitation period
and therefore not time-barred.

[4] On Estoppel and Section 64 Contracts Act:

• The LAD claim is a statutory right under Schedule H of the 1989 Regulations, made
under the Housing Development Act. Statutory law overrides general contract law
(like s.64 Contracts Act). However, this issue may still be further argued during trial.

Summary: whether to start with Writ or Originating Summons (OS)?

Generally, LAD claims should be commenced by Writ, as they involve substantial disputes of
fact (e.g., actual delivery dates, extension of time, terms of SPA, estoppel, etc.).
However, OS may be suitable only in limited situations, e.g., purely declaratory relief sought
before vacant possession is delivered, and no factual disputes exist.

Type of claim Suitable mode When Cases

Declaratory relief only (rights Originating When Plaintiff only Insun Development Sdn
under SPA not yet matured or Summons seeks to establish a Bhd v Azali bin Bakar1
contested) legal right to LAD
without claiming
specific amount
yet.
Mixed factual and legal Writ of Summons Complex cases PJD Regency Sdn Bhd
disputes (e.g., limitation, where disputed v Lee Kok Seng dan
estoppel, SPA terms, delay facts require full Lain-lain2
justification) trial.

1
[1996] 2 MLJ 188
2
[2022] MLJU 2282
EVALUATION WHEN SHOULD WE USE WRIT OR OS FOR THIS TYPE OF CLAIM:

1. Where the plaintiff seeks a declaration of legal rights

a. The plaintiff is not yet in a position to claim a specific sum of money (e.g.
because the house is not complete, and LAD is not yet calculable.)
b. The plaintiff seeks a declaratory order to affirm legal entitlement (e.g. to LAD
under the SPA and Housing Developers Act.
2. When There is No Material Dispute of Facts
a. The case primarily involves interpretation of contracts or statutory rights, and
the facts are largely agreed upon or undisputed.
b. The issue is legal, not factual — e.g., whether LAD is payable in principle.
3. To Resolve Future Uncertainty or Legal Ambiguity
a. When the plaintiff faces uncertainty about a future right (e.g., the right to claim
LAD after completion).
b. Based on Zamir on Declaratory Judgments, declaratory relief can be used to
remove a cloud over future rights — such as entitlement to LAD once vacant
possession is delivered.
4. When the Defendant Denies or Disputes the Right
a. At the time of filing, the developer denied the plaintiff’s right to LAD — this
created a real legal issue that justified seeking a declaration. OS is appropriate
where the defendant is challenging the existence or validity of the plaintiff’s
entitlement.

When Commencement by OS is Not Appropriate:

1. Where the Plaintiff Seeks Only a Money Judgment

a. If the plaintiff’s claim is for a fixed and quantified amount of money (e.g.,
RM35,000 LAD), and the house has already been completed and delivered,
then OS is not suitable. In that case, the correct mode is writ of summons,
which involves pleadings and possibly trial.
2. Where There are Material Disputes of Fact
a. If there are substantial factual disagreements (e.g., whether the property is
delivered, who caused the delay), then OS is inappropriate. Such cases require
witness evidence, which is only allowed in writ proceedings.
3. Where the Right is Admitted by the Defendant
a. If the defendant unequivocally admits liability (e.g., to pay LAD), then there’s
no dispute to be resolved, and a declaration serves no useful purpose.The
action may then be seen as academic or unnecessary.
FROM ANG MING LEE3 TO OBATA-AMBAK4

1. Background: What is the Ang Ming Lee Decision?

Key Holding (2020, Federal Court):

• In Ang Ming Lee, the Federal Court ruled that the Housing Controller has no legal
power under Regulation 11(3) of the Housing Development (Control and Licensing)
Regulations 1989 to grant extensions of time (EOT) to developers to deliver vacant
possession.
• Why? Because Regulation 11(3) was found to be ultra vires (i.e., beyond the powers)
of the Housing Development (Control and Licensing) Act 1966 (HDA).
• The Act does not give the Controller authority to vary or extend rights under the
standard Sale and Purchase Agreement (SPA) mandated under the law (i.e., Schedule
H).

Legal Consequence:

• Any EOT given by the Housing Controller is invalid.

• Purchasers who received delivery later than the statutory period (e.g., 36 months) are
entitled to claim Liquidated Ascertained Damages (LAD).
• Developers cannot rely on EOT letters from the Controller as a defence.

2. Aftermath of Ang Ming Lee

Implications:

• Courts started siding with buyers in subsequent cases such as:

o Alvin Leong Wai Kuan v Menteri Kesejahteraan Bandar
o PJD Regency v Tribunal Tuntutan Pembeli Rumah
• The approach focused on strict enforcement of Schedule H and maximum buyer
protection.
• Notwithstanding the above, the subsequent Court of Appeal decision in Bludream City
Development Sdn Bhd v Kong Thye & Ors and Other Appeals5 upheld the Minister’s
authority to grant a 17-month extension for the completion of service apartments,
clarifying that while the Ang Ming Lee decision affirmed that the Controller cannot

3
Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan Dan Kerajaan Tempatan & Anor And Other
Appeals [2020] 1 MLJ 281
4
Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd Appeal No. 02(i)-70-08/2022 (W)
5
[2022] 2 CLJ 829
 extend the completion period under the statutory SPA, it did not negate the Minister’s
power to modify or vary the terms of the statutory SPA.

3. The Obata & Vignesh Decision (2023/2024)

Different Facts:

• In Obata & Vignesh, the EOT was granted before the SPA was signed.
• The SPA itself stated 54 months as the completion period (longer than Schedule H).
• Buyers signed the SPA knowingly, and received LAD as per the extended terms.
• Later, buyers tried to claim additional LAD arguing that the 54-month term was unlawful,
relying on Ang Ming Lee.

4. Federal Court in Obata & Vignesh: Two Major Clarifications

(1) Limitation Period:

• The buyers filed the claim in 2020, but the SPA was signed more than 6 years earlier.

• The Federal Court said: if the cause of action accrued more than 6 years before
filing, then the claim is time-barred under Section 6(1)(a) of the Limitation Act
1953.

• Therefore, the buyers could not benefit from Ang Ming Lee, because they were out
of time.

(2) Prospective Overruling:

• The Federal Court ruled that Ang Ming Lee only applies prospectively (i.e., from
the date of that judgment onward — 2020).

• If the EOT was granted before Ang Ming Lee, it is not invalidated retroactively.

• Reason: Retrospective invalidation would have serious consequences:

o Developers relied on existing regulations in good faith.

o Thousands of projects and SPAs would become subject to litigation and

uncertainty.

In effect: Developers who received EOT before Ang Ming Lee are protected from past
claims challenging the EOT, but not for EOTs granted after 2020.

Ang Ming Lee sets the principle that Controller has no power to alter statutory SPA. Obata &
Vignesh limits the effect of Ang Ming Lee by (1) requiring timely claims (within 6 years), (2)
preventing retrospective invalidation of older EOTs.
Tips:

• Check data of EOT and date of SPA

• Check when vacant possession was delivered
• Verify whether limitation period has expired
• Determine if Ang Ming Lee applies based on timeline
Limitation Period Issue:

• When does the limitation period begin for LAD claims for late delivery of vacant
possession?
o Answer: The 6-year limitation period begins to run at the earliest point the
purchasers could commence legal action, which is either from the date of
execution of the SPAs or from the date of any breach of the SPA terms, rather
than from the expiry of the 36-month period prescribed under Schedule H of
the HDR6.

Unjust Enrichment Issue:

• Can the purchasers claim LAD retrospectively relying on Ang Ming Lee?
o Answer: No, the purchasers should not be allowed to claim LAD relying on Ang
Ming Lee, as allowing such claims retrospectively would result in unjust
enrichment. This is especially so when the purchasers were fully aware of and
accepted the terms of the SPA with the extended period, and had benefited
from the delivery of vacant possession, and accepted LAD payments.
Furthermore, the developers had not acted in any way unconscionably or to
the detriment of the interest of the purchasers.

Prospective Overruling Issue:

• Should the ruling in Ang Ming Lee be applied prospectively or retrospectively?

o Answer: The ruling in Ang Ming Lee should be applied prospectively.
Retrospective application could have severe consequences for the housing
industry. Therefore, to avoid significant disruption, an order invaliding
legislation should generally take effect only prospectively, unless there is an
overring public interest necessitating retrospective application. Consequently,
with the Federal Court’s affirmation that the Ang Ming Lee decision should
apply prospectively, all extensions granted before this decision remain valid
and enforceable.

6
Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd Appeal No. 02(i)-70-08/2022 (W)