Justice Evrol Mariette Peters, delivering the unanimous judgment of a three-judge panel, said Lakefront Resident Sdn Bhd was in breach of contract, citing the preamble to the SPAs as the basis for the court’s decision.
She said the preamble had stated in unequivocal terms that the developer
would develop the land as “a housing development known as Lakefront Villa @ Cyberjaya”.
“Under established principles of contractual interpretation, a preamble can create binding contractual obligations,” the judge said, in dismissing the appeal brought by the developer, its parent MCT Bhd and registered landowner, Timeless Hectares Sdn Bhd,
The panel, also comprising bench chairman Justice Supang Lian and Justice Shahnaz Sulaiman, also ordered that appellants pay the respondent buyers RM50,000 in costs.
Delivering the broad grounds of judgment, Peters noted that the developer had secured planning permission to convert 24 of the residential units into a commercial development.
“That was a clear and admitted departure from the contractual promise.
“The existence of a planning permission does not excuse a breach of contract. To hold otherwise would mean that a developer could promise one thing to a home buyer, obtain a planning amendment subsequently, and then claim immunity from its contractual promises,” she said.
Peters said that while permission from the Selangor Appeals Board, constituted under the Town and Country Planning Act 1976, could allow the developer to proceed with commercial construction, it could not override the developer’s private contractual obligations owed to the home buyers.
The judge said damages could not compensate for the loss of amenity, the change in the neighbourhood’s character, and the permanent alteration of the residential environment.
As the High Court had correctly noted, “money could not buy back what was promised”, she added.
Peters also noted that the developer had relied on a disclaimer in the brochure, but it was printed in such minute wording that it could not be read with the naked eye.
“A disclaimer that is not readable provides no notice to the home buyer. It has no legal effect,” she said.
The appellants had also argued that only the Joint Management Body could sue under the Strata Management Act 2013, but Peters said that argument was flawed, as the SPA is an individual contract between each home buyer and the developer.
MCT Bhd — now known as Avalan Berhad — had, at the project’s launch in 2014, issued brochures to potential buyers regarding the project involving the building of 110 exclusive villas valued at between RM1.8 million and RM3.6 million.
In 2017, the developer sought to convert part of the land to commercial use.
In 2021 the Sepang Municipal Council rejected the developer’s submission for planning permission. However, the Selangor Appeals Board allowed its appeal.
The home buyers filed their suit against the three companies the following year.
In 2023, then Judicial Commissioner Leong Wai Hong ruled that the developer was obliged to meet its side of the bargain since it had contracted with the buyers to deliver a residential development with specific features.
Leong accordingly issued a declaration that LakefrontVilla @ Cyberjaya was a residential development project.
He also declared that the project should only comprise residential properties and granted an injunction to restrain the three companies or their agents from proceeding with any commercial development.
Lawyer Ravindran Shanmuganathan and Ameer Hazeem appeared for the home buyers, while Justin Voon and Tan Ko Xin represented the appellants.