KUALA LUMPUR: The Real Estate and Housing Developers' Association (Rehda) said the Federal Court ruling to not allow restrospective claims against property developers who acquired extensions of time (EOT) for project completion, has averted what otherwise would have been detrimental to the industry.

A five-member bench of the Federal Court led by Court of Appeal President Tan Sri Abang Iskandar Abang Hashim ruled on Friday, that a November 2019 decision which deemed the provision of allowing the Controller of Housing to grant EOT illegal, would only apply to future cases and not to past ones.

The ruling was made with regards to a suit brought by homebuyers of two developers Prema Bonanza Sdn Bhd and Sri Damansara Sdn Bhd, whose appeal was allowed.

Following the 2019 decision, the homebuyers sued the two companies for delivering vacant possession after more than 36 months, despite the signed sales and purchase agreements' stipulation that an EOT had been obtained for completion to be between 42 and 54 months.

In a statement, Rehda president Datuk Ho Hon Sang said the balanced and fair decision removes the cloud of uncertainties in the determination of delivery period of properties, encouraging property developers and related industry players in their effort to provide housing to the rakyat.

"The ruling is particularly a reprieve for the industry, as it is now established that the regulation 11(3) which was declared ultra vires in case of Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor case in 2020 will not have retrospective effect, which otherwise would have been detrimental to the industry," he said.

As an association representing housing developers in Malaysia, Ho said Rehda has continuously encouraged member and non-member developers to adhere to the law, both at the state and federal levels.

"These two developers (Prema Bonanza and Sri Damansara) have fulfilled their obligations, according to the terms of the contract in the development of their respective projects and the ruling on Friday was a recognition of that."

"We would also like to reiterate that we are not in favour of unnecessary extension of time unless for very valid reasons, developers must honour the terms in the contracted sales to deliver within the time allowed by the law," he added.

Ho said another point of law which was affirmed by the Federal Court was that the Second Actor Theory applies, where second actor who had relied on the first actor's action albeit being unlawful, which is the execution of the letter to grant extension by the controller, should not be penalised.