Ahmad Farid Bin Mohd Fadzuli v Aqrs the Building Company Sdn. Bhd. (JA-22NCvC-55-04/2025)

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1 IN THE HIGH COURT OF MALAYA AT JOHOR BAHRU IN THE STATE OF JOHOR DARUL TA'ZIM MALAYSIA CIVIL SUIT NO. : JA-22NCvC-55-04/2025

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Schedule H, which were prescribed by Parliament for the benefit of purchasers. The Federal Court characterised Act 118 as social legislation enacted to redress the imbalance of bargaining power between developers and purchasers. The Controller's purported extensions under regulation 11(3) were of no legal effect. 28. In UE E&C Sanjia (M) Sdn Bhd v Lee Jeng Yuh & Anor and another appeal [2021] 6 MLJ 864, addressed whether an extension obtained by the developer before the execution of the sale and purchase agreement stands in any different position and held that it does not, the Controller having no power to modify the prescribed period whether the extension was obtained before or after the agreement. 29. The Court of Appeal further held that the timing of the extension makes no difference. The parties cannot validly contract out of the prescribed terms of Schedule H and the developer's argument that the purchaser consented to the extended period by signing the SPA was expressly rejected. 30. Applied to the agreed facts of this case, the consequence is immediate. The JPN letter dated 19 November 2012, on which the 48-month period in the SPA depends, was issued under a regulation which the Federal Court has since held to be ultra vires. Applied to this case, the completion period in clause 25(1) of the SPA rests upon nothing but an extension granted under a regulation which the Federal Court has held to be ultra vires. For the reasons I give below, this Court will not lend its aid to the enforcement of that period as between the Defendant and the Plaintiffs. Accordingly, the 48-month period in clause 25(1) of the SPA, which is dependent on that letter, cannot stand and the standard delivery period under Schedule H is 36 months. Therefore, the contractual deadline for delivery of vacant possession was 14 May 2016 and not 14 May 2017. 31. I have considered the decision of the Federal Court in Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals [2024] 5 MLJ 897. It was not cited by either party, but I am bound to take account of it. The Federal Court there held that the decision in Ang Ming Lee is to operate prospectively and that the principles enunciated in Ang Ming Lee will not apply to extensions granted by the Controller before Ang Ming Lee. The extension in the present case is dated 19 November 2012. On a broad reading, that holding would preserve the extended period notwithstanding the ultra vires character of the regulation under which it was granted. 32. In my judgment the ratio of Obata-Ambak Holdings Sdn Bhd does not require me to enforce the extended period against these Plaintiffs, because the reason for the rule marks its limits. The prospective operation of Ang Ming Lee is a discretionary application of the principle in Re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680, which the Federal Court adopted after weighing "the justice of the case" and in "exceptional circumstances". The exceptional circumstance identified was the protection of the reliance interest of developers "that had placed reliance on the existing law and diligently complied with the laws which were at that time valid". The Court confined that protection accordingly. It observed that the housing legislation exists to protect purchasers from developers "who had promised to deliver their dream houses … within the time as stipulated in the SPA" and it identified, as the very mischief which prompted the requirement of approved extensions, developers who extended the time of completion and delivery of vacant possession without limit, resulting in abandoned projects. 33. The facts of Obata-Ambak Holdings Sdn Bhd lie at the opposite pole from the present. There the purchasers executed the agreements with knowledge of the extended period, vacant possession was delivered, liquidated damages were paid, a full and final settlement was concluded and the claim was for further liquidated damages calculated retrospectively. It was in that setting that the Federal Court held there was "no breach of the terms of the SPA". Here, – (a) there was no delivery of vacant possession at all, whether within 36 months, 48 months, or the more than twelve years that have since elapsed; (b) no liquidated damages were paid; (c) there was no settlement; (d) there is no evidence that the Plaintiffs were aware of the standard period; and (e) the Plaintiffs seek not a further gain but the return of the price of a house they never received. 34. A developer who obtained an extension and then failed to perform has no reliance interest of the kind the prospective operation of Ang Ming Lee was fashioned to protect. To read Obata-Ambak Holdings Sdn Bhd as compelling this Court to enforce, in favour of such a developer and against non-delivering purchasers, a completion period founded on an ultra vires regulation would invert the protective purpose which the Federal Court in that very decision identified. I do not read it as requiring that result. I add that I do not, in this action, set aside the Controller's extension as an administrative act. The Controller is not a party and no such relief is sought. I hold only that this Court will not lend its aid to the enforcement of a contractual completion period whose sole foundation is a regulation declared ultra vires, as between a defaulting developer and the purchasers for whose protection the standard period was prescribed. That is the settled function of the doctrine of illegality explained in Merong Mahawangsa Sdn Bhd & Anor v Dato' Shazryl Eskay bin Abdullah [2015] 5 MLJ 619. 35. Neither party has raised any of this. The Plaintiffs did not plead illegality. They did not cite Ang Ming Lee, nor did they rely on UE E&C Sanjia for the illegality point; the Plaintiffs cited the High Court decision in that litigation only on the question of fundamental breach. The Defendant for its part defended on the footing that the 48-month period was valid, that the JPN extension was good, and that the only question was whether the Defendant's delay beyond the 48-month period was such as to give rise to relief. The Defendant did not address Ang Ming Lee either. 36. I have considered carefully whether to take this point of my own motion or to leave the case to be decided on the issues the parties posed. The omission of any reference to Ang Ming Lee by either party is plain. Whatever the reason, that is for the parties to know. Since this involves a question of law, it does not constrain me, as a trial judge, from applying the law as the Federal Court and the Court of Appeal have declared it. 37. My approach is consistent with the Federal Court's stand in Merong Mahawangsa Sdn Bhd & Anor v Dato' Shazryl Eskay bin Abdullah [2015] 5 MLJ 619, in which the Federal Court reaffirmed that the courts are "bound at all stages to take notice of illegality… even though not pleaded". The Federal Court approved the four propositions of Devlin J in Edler v Auerbach [1949] 2 All ER 692 (as earlier adopted by the Federal Court in Lo Su Tsoon Timber Depot v Southern Estate Sdn Bhd [1971] 2 MLJ 161). The most important of those propositions for present purposes is the fourth, i.e. where the court is satisfied that all the relevant facts are before it and can see clearly that the contract has an illegal object, it may decline to enforce the contract whether or not the illegality was pleaded. Here the material fact, that the contractual completion period was the product of an extension granted under regulation 11(3), is not in dispute and is recorded in the Agreed Statement of Facts. The whole of the relevant circumstances being before me, I am entitled, and bound, to take the point. 38. Closer to the present case, the Court of Appeal in UE E&C Sanjia expressly held that a trial judge is entitled to take the illegality point in a case of this very kind even though it has not been pleaded by either party. The Court of Appeal there, on facts materially identical to those before me (an extension under regulation 11(3) granted before execution of the SPA, a developer relying on the extended period and no plea of illegality by the purchaser), expressly approved the High Court’s course of taking the point of its own motion. The Court of Appeal cited Merong Mahawangsa in support. 39. I am persuaded that I am bound to take the point. To proceed to dispose of the parties' issues on the assumption that the 48-month period in the SPA is enforceable would be to enforce a contractual term that the Federal Court has, in clear and binding language, held to be incapable of enforcement. The position is the more compelling because Act 118 is, as the Federal Court has repeatedly emphasised, social legislation enacted for the protection of purchasers. [See : PJD Regency]. To enforce, as between developer and purchaser, an extended period which the Federal Court has held the developer was never entitled to obtain, would invert the protective purpose of the legislation. I cannot simply ignore this. 40. Based on the above legal principle and from the analysis above, I find that – (a) the completion period in clause 25(1) of the SPA, resting solely upon the extension of 19 November 2012 granted under a regulation held to be ultra vires, will not be enforced by this Court as against the Plaintiffs; (b) the 48-month period in clause 25(1) of the SPA, which depends on it, cannot stand; and (c) the contractual period for delivery of vacant possession is the

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Schedule H standard of 36 months from the date of the SPA, namely up to 14 May 2016. 41. Accordingly, the SPA, having been entered into and performed on the strength of an extension which the law does not recognise, is unenforceable to the extent of its extended-period terms. 42. I find that, the agreement having been discovered to be unenforceable in its protective-period terms by reason of the operation of the Federal Court's decision in Ang Ming Lee, the Defendant, which has received the advantage of progress payments amounting to RM 1,190,343.00 against a contractual price of RM 1,700,490.00, is bound under section 66 of the Contracts Act 1950 [Act 136] to restore it. The recoverability of the Early Bird Rebate of RM 85,024.50, which was not a sum received by the Defendant, rests on a distinct basis which I address below. 43. Section 66 of Act 136 provides – “When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it”. 44. I am conscious that the case law has on occasion considered whether restitution under section 66 of Act 136 is conditioned on the payer's lack of awareness of the illegality at the time of contracting, in particular in cases where the payer is implicated in or knowingly party to the illegal arrangement. [See : Lee Jeng Yuh & Anor v. UE E&C Sanjia (M) Sdn Bhd & Another Case [2021] 1 MLRH 341 and UE E&C Sanjia]. I make three observations on that line of authority as it bears on the present case. 45. Firstly, on the facts of this case the illegality is not the Plaintiffs' illegality at all. It is the Defendant's. The void instrument is the JPN extension which the Defendant applied for, the Defendant obtained, and the Defendant inserted into the standard SPA. The Plaintiffs are not the procurers of the illegality. They are its intended beneficiaries, since the protective period prescribed by Schedule H was prescribed for them. The doctrine of in pari delicto, which underlies the awareness inquiry in the case law on section 66 of Act 136, does not naturally apply here. The parties are not equally at fault. The law identifies the purchaser as the protected class. 46. Secondly, no evidence has been led at trial on the Plaintiffs' awareness or otherwise of the standard 36-month period at the time they signed the SPA in 2013. The point was not pleaded. PW1 was not asked about it. The witnesses for the Defendant were not asked about it. There is no evidence on the record either way. The absence of evidence is the consequence of neither party having put the issue in play. In the particular factual setting of a Schedule H sale by a developer to lay foreign purchasers, where the prescribed contractual form is presented to the purchasers in the developer's office and the prior administrative communications with the Ministry are matters peculiarly within the developer's knowledge. The absence of evidence cannot in fairness be treated as evidence of the Plaintiffs' positive knowledge of the standard 36-month rule. The natural and probable inference, in the absence of evidence to the contrary, is that the Plaintiffs accepted the contractual period as the Defendant presented it to them. 47. Thirdly, section 66 of Act 136 by its terms does not condition restitution on positive proof by the payer of his or her ignorance of the illegality. The provision operates by reference to the discovery that the agreement is void and imposes on the recipient of any advantage thereunder the obligation to restore it. The protective purpose of the Act 118 would be undermined if a purchaser were required, as a precondition to restitution, to prove a negative, that he or she did not know what the law prescribed at the time of contracting. I am satisfied that, on the facts of this case and on the application of section 66 of Act 136, in the particular context of housing development under

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Schedule H, restitution is not defeated by the absence of evidence on the Plaintiffs' awareness. 48. I therefore conclude that the Plaintiffs are entitled to restitution under section 66 of Act 136 of the advantages received by the Defendant under the SPA. Limitation 49. The Defendant pleaded that the action is barred by limitation under section 6(1)(a) of the Limitation Act 1953. Having decided this case on the ground that the agreement is unenforceable in its extended-period terms and that the Plaintiffs are entitled to restitution under section 66 of Act 136, I do not treat limitation as falling away with the other pleaded issues. A limitation defence, if made good, would defeat the very claim I have found to be established and it must therefore be determined. 50. The Defendant contends that the cause of action accrued on the execution of the SPA on 15 May 2013, alternatively on the contractual date for delivery, so that the Writ filed on 30 April 2025 is out of time. I do not accept that the six-year period is to be reckoned in that way for the claim on which this action succeeds. The claim I have upheld is not a claim in contract for damages for late delivery. It is a claim in restitution under section 66 of Act 136, which by its terms is engaged "when an agreement is discovered to be void". The advantage the Defendant is bound to restore became recoverable upon the discovery that the agreement was unenforceable in its protective-period terms and that discovery is a consequence of the declaration of the law in Ang Ming Lee, delivered on 26 November 2019. The cause of action in restitution accrued no earlier than that date. The Writ having been filed on 30 April 2025, the action is within six years and is not barred. 51. I am conscious that in Obata-Ambak Holdings Sdn Bhd the Federal Court held that a purchaser's cause of action for liquidated damages accrued on the execution of the sale and purchase agreement and declined to fix accrual at the date of Ang Ming Lee. That holding was directed to a claim in contract for liquidated damages founded on the terms of a subsisting agreement; the purchasers there sued upon the agreement. It does not govern the accrual of a claim in restitution under section 66, which arises upon the discovery that the agreement is void, not upon its execution. 52. The Defendant's limitation plea is in any event difficult to reconcile with its own contention that the action is premature because vacant possession has not been delivered. The Defendant cannot consistently maintain both that the Plaintiffs sued too late and that they sued too early. That tension reinforces my conclusion. 53. I therefore hold that the action is not barred by limitation. The Thirteen Pleaded Issues 54. Save for limitation, which I have determined above, the remaining pleaded issues proceed on the footing that the agreement is enforceable in its extended-period terms. Given my finding that it is not, those issues do not arise, and I make no findings on them. Quantum And Relief 55. I turn to the form and quantum of the relief. The Defendant's Statement of Account dated 24 June 2025 (Common Bundle pp 104- 105) records – (a) RM 170,049.50 paid directly by the Plaintiffs to the Defendant; (b) RM 1,020,293.50 disbursed by CIMB Bank Berhad to the Defendant; and (c) RM 85,024.50 representing the Early Bird Rebate of 5% given by the Defendant. 56. The total of (a), (b) and (c) is RM 1,275,367.50. Of that total, the cash sum received and now held by the Defendant is RM 1,190,343.00 [being (a) + (b)]. The Early Bird Rebate at (c) was, on the Defendant's own characterisation, a discount. It was not paid in money to the Defendant. PW1 in his evidence accepted that the Defendant's figures are to be preferred over the figures pleaded in the Statement of Claim. I adopt them. 57. The sum of RM 170,049.50 at (a) was paid by the Plaintiffs out of their own pocket. It is an advantage received by the Defendant from the Plaintiffs within the meaning of section 66 of Act 136. The Plaintiffs are entitled to its return. 58. The sum of RM 1,020,293.50 at (b) was disbursed by CIMB Bank Berhad to the Defendant. It is an advantage received by the Defendant from the Plaintiffs (through their financier) under the SPA, and the Defendant is bound under Section 66 of Act 136 to restore it. The Plaintiffs in their pleaded relief seek a refund of this sum to themselves. This sum was not paid by the Plaintiffs from their own pocket; it was advanced by CIMB and remains the subject of the loan which the Plaintiffs are repaying by instalments. The Plaintiffs' restitutionary interest in respect of it is met by orders (c) and (d) below, which restore to them the instalments they have paid and will pay to CIMB, together with any redemption penalty. To order in addition the direct repayment of the RM 1,020,293.50 to the Plaintiffs would be to permit double recovery. The Defendant's obligation to account for this sum, whether to the Plaintiffs or to CIMB under the Letter of Undertaking, is subsumed in those orders and, so far as it concerns the Bank, lies beyond the parameters of this action. 59. The Defendant submits that this portion should be paid directly to CIMB by reason of the Letter of Undertaking dated 23 January 2018. The Plaintiffs have also drawn the Court's attention to the High Court decision in Lee Keow Chuang, where on similar facts against this same Defendant a direct payment to CIMB was ordered. I do not adopt that course. CIMB is not before me. I cannot make orders touching a party that has not been heard. The Plaintiffs’ liability to CIMB on the loan and the Defendant’s obligations to CIMB under the Letter of Undertaking, are matters between those parties and the Bank and lie beyond the parameters of this action. 60. The Early Bird Rebate of RM 85,024.50 at (c) requires separate consideration. As I have found, the rebate was a discount and was not a sum of money received by the Defendant. It is therefore not recoverable as an advantage received within the meaning of section 66 of Act 136. The question is whether it is nonetheless recoverable upon the rescission of this agreement. The Defendant submits that it is not, because it never came out of the Plaintiffs' pocket. The Plaintiffs submit, on the strength of the Federal Court in PJD Regency, that a rebate of this character is in substance a discount which reduces the price the purchaser is required to bear, that the developer at fault should not be permitted to manipulate the purchase price for the collateral purpose of resisting refund, and that the High Court in Lee Keow Chuang, on facts materially identical to the present and against this same Defendant, included the rebate in the refund (a disposition upheld on appeal). 61. I prefer the Plaintiffs' submission, though I state the basis for it with care. The rebate is not restored to the Plaintiffs as an advantage received by the Defendant under section 66 of Act 136. On that footing it would not be recoverable, since the Defendant did not receive it. It is recoverable because, upon the rescission of a statutory

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Schedule H agreement, the Plaintiffs are to be restored, so far as money can achieve it, to the position they occupied before the contract and the rebate formed part of the price they bore to acquire the contractual benefit which has wholly failed. The observation of the Federal Court in PJD Regency, that a rebate is an ex post facto discount amounting to a refund of monies already paid, although made in the context of the computation of liquidated damages, reflects the same commercial substance, i.e. the rebate is money from the purchaser's side of the bargain. To permit the developer, being the party in default, to retain the benefit of a marketing discount it extended in order to induce the very purchase it then failed to perform would be to allow it to profit from its own breach. In so far as the sum is more properly regarded as a head of loss than as an advantage received, the Plaintiffs are in any event entitled to compensation for it under section 76 of Act 136, which entitles a party who rightly rescinds a contract to compensation for the damage sustained through its non-fulfilment. On either footing the rebate is recoverable and I so hold. 62. The Plaintiffs claim the legal fees of RM 22,226.60 paid to Messrs John Tong, Fahmi & KH Yeoh in connection with the SPA and the loan. The invoice is in evidence at Common Bundle page 19. DW1 confirmed under cross-examination that the bill is genuine. These fees were a direct cost of the transaction. The Plaintiffs are entitled to recover them in restitution as part of the price paid to acquire the contractual benefit which has failed. 63. PW1 in his evidence asked that the court make an order for assessment of the monthly instalments and interest paid by the Plaintiffs to CIMB on the loan throughout the period during which they have had no use of the Property, together with any redemption penalty CIMB may impose upon termination, together with general damages for loss of use and loss of investment opportunity. PW1 explained, that he was unable to calculate the precise figures because the Plaintiffs' liability to CIMB was still running. He asked for an assessment. 64. These heads of loss are real and flow from the position into which the Plaintiffs have been put. They cannot be quantified from the materials before me. Therefore, an assessment of damages is required to ascertain the following – (i) the monthly instalments inclusive of interest paid by the Plaintiffs to CIMB on the loan from the date of disbursement to the date of full satisfaction of the orders made by this Court; (ii) any redemption penalty imposed by CIMB on the early redemption of the loan in consequence of the orders made by this Court; and (iii) general damages for loss of use and loss of investment opportunity in respect of the Property. COURT’S DECISION 65. For the reasons set out above, I make the following orders – (a) A declaration that the 48-month period for delivery of vacant possession in clause 25(1) of the Sale and Purchase Agreement dated 15 May 2013 between the Plaintiffs and the Defendant, being founded on the letter of the National Housing Department dated 19 November 2012 issued under regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 which the Federal Court has held to be ultra vires, is illegal and the said Sale and Purchase Agreement is unenforceable and accordingly rescinded; (b) The Defendant shall pay to the Plaintiffs the sum of – (i) RM 255,074.00, being RM 170,049.50 representing monies paid by the Plaintiffs directly to the Defendant and RM 85,024.50 representing the Early Bird Rebate of 5%; and (ii) RM 22,226.60, being the legal fees paid to Messrs John Tong, Fahmi & KH Yeoh in respect of the said Sale and Purchase Agreement and the loan. (c) The Defendant shall pay to the Plaintiffs all monthly instalments which have been paid by the Plaintiffs to CIMB Bank Berhad until the date of this judgment; (d) Damages to be assessed by this Court in respect of – (i) the general damages; and (ii) the quantum of the monthly instalments under order (c) above and any redemption penalty; (e) Interest at the rate of 5% per annum on the sum awarded under order (b) above from 30 April 2025 until the date of full satisfaction; and on any sum awarded under orders (c) and (d) from the date of the assessment order until the date of full satisfaction; and (f) Costs of RM 80,000.00 to be paid by the Defendant to the Plaintiffs, subject to allocatur. Dated : 9 June 2026 -signed- (DR NORADURA BINTI HAMZAH) Judicial Commissioner High Court Civil 2 Johor Bahru Counsel for the Plaintiffs : : Lim Kim Siong together with Hor Khai Qian Messrs. S.K. Song Counsel for the Defendant : : Vincent Ong together with Carmene Tan Messrs. Tan Norizan & Associates