COURT OF APPEAL REAFFIRMS STRONG HOMEBUYER PROTECTION
Few areas of Malaysian law demonstrate the judiciary’s protective instincts more clearly than disputes arising under the Housing Development (Control and Licensing) Act 1966 (“HDA”). For decades, the courts have repeatedly emphasised that the legislation is not merely regulatory in nature. It is a “social legislation” designed to protect homebuyers from the structural imbalance of power that exists between purchasers and housing developers.
For practitioners involved in construction and property litigation, this protective philosophy frequently shapes the outcome of disputes long before the technical merits of the case are fully examined.
The recent decision of the Court of Appeal in Sime Darby Property (Bukit Jelutong) Sdn Bhd (digantikan menurut Perintah Mahkamah Rayuan bertarikh 9 July 2025) v Ooi Cheng Huat @ Ooi Peng Huat (menyaman atas namanya sendiri dan sebagai wasi dan pemegang amanah harta pusaka Linda Patricia Lim Sooi Hong, si mati) & Ors and other appeals [2026] MLJU 347 is a significant reaffirmation of that approach. The judgment provides important guidance on three recurring issues in housing and construction disputes: –
• The extent to which developers may rely on bespoke contractual terms to depart from the statutory framework under the HDA.
• The relationship between the statutory defect liability period and the continuing legal exposure arising from latent defects.
• The evidentiary standards required when litigating claims involving construction workmanship and rectification costs.
This dispute concerned six luxury bungalows within the PRIMO Bukit Jelutong development, each purchased for between RM4.5 million and RM5.5 million.
Despite the premium positioning of the project, the purchasers alleged significant defects affecting both workmanship and building systems. What began as a series of claims for rectification costs ultimately required the Court of Appeal to consider more fundamental questions about the limits of contractual autonomy in a statutory regime built around consumer protection.
TWO TRANSACTION MODELS, TWO LEGAL FRAMEWORKS
Six suits arose from two distinct types of housing transactions.
Four of the properties were purchased while construction was still ongoing under the traditional sell-then-build model. These transactions were governed by the Schedule G statutory form. As mandated under the statutory form, the agreements incorporated a 24-month Defect Liability Period during which purchasers could notify the developer of defects requiring rectification.
The remaining two bungalows were purchased after the houses had already been completed. These transactions followed the build-then-sell model. Instead of adopting the Schedule I statutory form normally associated with completed properties, the developer utilised bespoke Sale and Purchase Agreements containing terms drafted outside the statutory form.
It was within these bespoke agreements that the developer attempted to introduce a clause that would later become central to the dispute.
THE FAILURE OF THE “AS IS WHERE IS” DEFENCE
The developer argued that the completed bungalows had been inspected by the purchasers before the Sale and Purchase Agreements were signed. On that basis, the properties were said to have been sold on an “as is where is” basis. The purchasers, according to the developer, had accepted the condition of the houses and could not later complain about defects.
The Court of Appeal rejected this submission in clear terms.
The Court reaffirmed that the HDA exists precisely because homebuyers typically negotiate with developers from a position of unequal bargaining power. Regulation 11(1B) of the Housing Development (Control and Licensing) Regulations 1989 permits deviation from the prescribed statutory forms only where the substituted terms are more favourable to the purchaser.
An “as is where is” clause does not meet that threshold. Rather than improving the purchaser’s position, such a clause effectively strips away the statutory protections that Parliament intended purchasers to enjoy.
The Court also recognised the practical realities of property transactions. A purchaser conducting a brief inspection of a completed house cannot reasonably be expected to identify concealed construction flaws embedded within the structure of the building, particularly in the context of structural and workmanship issues that may not be readily discoverable.
Even sophisticated purchasers of high-value homes remain laypersons in matters of engineering and construction. Developers cannot contract out of statutory consumer protection through creative drafting.
THE LONG TAIL OF LIABILITY
One of the most significant aspects of this decision concerns the Court’s treatment of latent defects.
Within the development industry, the 24-month Defect Liability Period is often treated as the natural endpoint of a developer’s responsibility. Once that period expires, many assume that the developer’s exposure has effectively come to an end.
The Court of Appeal made it clear that this assumption does not reflect the law.
The Court drew an important distinction between patent defects and latent defects. Patent defects are those that can reasonably be discovered during inspection within the defect liability period. Latent defects, by contrast, are defects in workmanship or materials that remain hidden and only emerge with the passage of time.
While purchasers must notify patent defects during the defect liability period, the expiry of that period does not extinguish liability for latent defects. Developers remain bound by the fundamental obligation to construct buildings in a good and workmanlike manner.
The practical implication is that a developer’s exposure does not necessarily end upon the expiry of the defect liability period.
LUXURY BRANDING AND COMMERCIAL COMMON SENSE
The litigation also raised issues concerning the air-conditioning systems installed in the bungalows.
The developer argued that the Sale and Purchase Agreements did not expressly specify the cooling capacity required for the properties. According to the developer, the systems installed therefore complied with the contractual requirements.
The Court approached the issue through the lens of commercial common sense. Where a development is marketed as a premium or extravagant residential project, it is commercially implicit that the building systems installed must be suitable for the scale and quality of the property. Mechanical systems that are incapable of adequately cooling large luxury homes cannot realistically be said to meet that standard.
The Court therefore held that the installation of under-capacity air-conditioning systems was inconsistent with the obligation to provide good materials and proper workmanship.
In effect, the developer’s own marketing narrative became part of the legal context within which the contract was interpreted.
EVIDENTIARY LESSONS FROM THE LITIGATION
This decision also offers several practical lessons for parties involved in construction disputes.
The developer attempted to rely on a handwriting expert to authenticate signatures appearing on Defect Rectification Forms. The expert’s report, however, was based only on photocopies rather than original signed documents. The Court declined to accept the evidence, observing that no explanation had been offered for the absence of the originals.
The case serves as a reminder that where authenticity is in issue, original documents remain critically important.
The Court also preferred the evidence of the purchasers’ experts because their conclusions were grounded in physical inspections of the bungalows. By contrast, the developer’s quantum expert had never visited the properties and relied on outdated market rates.
The Court further noted that allegations of forged signatures do not always require expert evidence. Testimony from individuals familiar with the handwriting in question may be sufficient.
As is often the case in construction litigation, the outcome ultimately depended as much on the quality of the evidence as on the legal arguments advanced.
DAMAGES AWARDED AND AFFIRMED ON APPEAL
The Court of Appeal affirmed the High Court’s award of substantial rectification sums across the six suits, including damages for air-conditioning defects and other rectification costs. These ranged from RM33,000 to RM79,400 for air-conditioning defects, and approximately RM509,280 to RM841,060 for other rectification works.
REFLECTIONS FOR THE DEVELOPMENT INDUSTRY
Taken together, this decision strongly reaffirms the judiciary’s continuing commitment to interpreting the Housing Development Act in a manner that robustly protects homebuyers.
The Court of Appeal confirmed that developers cannot sidestep or dilute statutory safeguards through creative drafting, including “as is where is” clauses. This decision also underscores that courts will apply principles of commercial common sense in assessing defects in premium developments.
For developers, the implications are significant. Liability for construction defects may extend far beyond the 24-month defect liability period that many regard as the practical endpoint of their obligations.
For those involved in advising developers, contractors and purchasers in construction disputes, the message from the Court of Appeal is unmistakable. In a statutory regime built around consumer protection, careful drafting alone cannot eliminate risk.
Sound construction practices and rigorous quality control remain the developer’s most reliable safeguards against claims that may surface many years after a project has been completed.
Disclaimer: This article is for general information only and does not constitute legal advice or legal opinion. It should not be relied upon as a substitute for specific legal advice. No person should act (or refrain from acting) based on this article without obtaining advice on the specific facts and circumstances. Halim Hong & Quek does not accept responsibility or liability for any loss or damage arising from reliance on this article. Halim Hong & Quek reserves the right to update, amend or withdraw this article at any time. All rights reserved.
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About the authors
Ankit R. Sanghvi
Partner
Dispute Resolution
Halim Hong & Quek
ankit.sanghvi@hhq.com.my
Chew Jin Heng
Senior Associate
Dispute Resolution
Halim Hong & Quek
jhchew@hhq.com.my
