In Poey Yee Meng & Ors v Tropika Istimewa Development Sdn Bhd & Anor [2026] 8 MLJ 40, the High Court heard a suit brought by 134 purchasers against, inter alia, a developer and a proprietor, concerning their purchases of leases of parcels of stratified housing accommodation in a development project known as “The Meridin @ Medini” in Johor, which operates under the Medini Private Lease Scheme.
In the suit, the purchasers primarily claimed liquidated and ascertained damages (“LAD”) for late delivery and that they were sold leases in contravention of, inter alia, the National Land Code. They further claimed that the developer and proprietor be compelled to execute such instruments as may be relevant to have the purchasers registered as proprietors of the parcels with freehold status and if this could not be done, they were entitled to return their parcels and be refunded the full purchase price with interest.
Court’s Decision
Upon the applications by the developer and proprietor to strike out the action against them, the High Court allowed the said applications, concluding that the action was obviously unsustainable and an abuse of the Court’s process.
The Court held, inter alia, as follows:
- The limitation of six years for the purchasers’ causes of action ran from the date of execution of the Sale and Purchase Agreements (“SPAs”) and had set in by the time the action was filed and thus, were time-barred.
- The SPAs clearly provided that the purchasers were purchasing leases and they had all taken delivery of vacant possession of their parcels. The purchasers persisted with their LAD claims which could only be grounded upon the SPAs being valid save as to challenging the timeline for delivery of vacant possession. Thus, the purchasers, having elected to affirm the validity of the SPAs, and even sought for their purchases of leases to be converted from leasehold to freehold, were clearly estopped from challenging the validity of the SPAs.
- Having entered into SPAs for the purchase of parcels of leases and having paid the purchase price and taken vacant possession of the same, it was apparent that what the purchasers were seeking was to utilise the Court’s process to rewrite the terms of their SPAs and the bargain they had made. This was not only frivolous and vexatious, but also an abuse of the Court’s process.
- The SPAs were for the sale of parcels with leases of more than three years and they were registrable when the separate strata titles were issued. For each and every SPA entered into with two or more persons, the parcels were being held pursuant to a trust deed declaring themselves to be trustees holding the lease jointly on trust for each other. Therefore, contrary to the purchasers’ contention, there would be no contravention of section 225(2) of the National Land Code when the strata titles are eventually issued and they are registered as trustees.
Further, the High Court, in dismissing the purchasers’ claims, affirmed the following principles established by the Federal Court in Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd & Other Appeals [2024] 5 MLJ 897:
- The Court noted that the Controller of Housing had granted an extension of time for the project from 36 to 48 months in 2013. Following Obata-Ambak, the Federal Court decision of Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan Dan Kerajaan Tempatan & Anor And Other Appeals [2020] MLJ 281 – which challenged such extension – only applies prospectively. Therefore, the extension granted in this case remains valid.
- The Court affirmed that any challenge to a Controller’s decision to vary statutory terms must be made via judicial review. As the purchasers failed to bring such a challenge within the required timeframe, they were out of time to dispute the extension.
- Following the principles in Obata-Ambak, the Court affirmed that “where an innocent party had relied on an earlier decision made by a public authority that was subsequently declared ultra vires, the Second Actor Theory is applicable and should be the perfect and preferred antidote”. Here, the Court applied the Second Actor Theory to protect the actions taken by the developer and proprietor in securing all the necessary approvals, endorsements and exemptions from the relevant authorities.
The purchasers did not appeal against the High Court’s decision. Consequently, the contractual arrangements and the underlying structure of the development remain valid and enforceable.
This decision provides critical guidance by, inter alia, reinforcing the principle that parties are bound by the commercial bargains they strike, upholding the Second Actor Theory to protect the actions taken by parties in reliance on authorities’ approvals, and affirming the legal framework for the Medini Private Lease Scheme.
This publication is for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. If you have any queries, please contact the author, Freddy Choy Kay Chun (freddy@rdl.com.my), or our Partners: Ng Sai Yeang (nsy@rdl.com.my), Mark Yu Kee La Brooy (marklabrooy@rdl.com.my), Teoh Chye Yi (chyeyi@rdl.com.my), or Noor Azanida Binti Alladin (azanida@rdl.com.my).