Developer Held Liable for RM1.65M+ Over Agent’s GRR Promise Even When Silent in SPA

A ruling reinforcing principles of agency and misrepresentation in property transactions in I-Marcom Sdn Bhd v Resham Singh Naranjan Singh & Ors [2025] CLJU 23, the Court of Appeal has dismissed the Developer’s appeal and affirmed the High Court’s award of over RM1.65 million in damages, holding the Developer vicariously liable for representations made by its exclusive marketing agent regarding a 5% per annum Guaranteed Rental Return (GRR) scheme, notwithstanding its absence from the statutory Sale and Purchase Agreements (SPAs).

Background of the Case

• Parties Involved: The Appellant was the developer of the high-end “8 Kia Peng” condominium project in Kuala Lumpur. The Respondents were a family of five seeking investment properties near KLCC.
• Key Events: In April 2015, Resham was introduced by a trusted estate agent of over 15 years to a representative of TE Asia Properties Group Sdn Bhd (TE Asia), described as the Developer’s exclusive marketing agent. At a launch event, it was represented to Resham that the project included a GRR Scheme: 5% per annum on the purchase price for 5 years, starting from vacant possession delivery. The units were priced higher to account for this benefit.
• Purchase Process: Induced by these representations, the Respondents paid a RM120,000.00 deposit and signed Details of Purchase Forms and Conditional Ownership Package Plan (COPP) Forms, which outlined discounts, furnishings, legal fees and the GRR Scheme. Four Sale and Purchase Agreements (SPAs) were executed in July and December 2015 for 4 units (38-11, 35-11, 37-11, and 33-11). It was communicated to the Respondent by the agent that the GRR Scheme will be executed upon delivery of vacant possession as the Developer did not want to disclose the scheme to its end-financiers.
• Dispute Arises: In June 2020, upon vacant possession notice, the Respondents demanded the GRR Scheme: “But for the GRR Scheme, we would not have purchased the units”. The Developer denied knowledge of the GRR Scheme, stating that TE Asia was terminated as its agent and wound up, with no authorization for such a scheme.

Developer’s Defence: Developer denied all liability for GRR Scheme, claiming no knowledge, offer, or authorisation as follows:

• • No GRR Offered: The Defendant never offered any GRR Scheme in respect of the Project or any other development; TE Asia was not authorised to make any such representation.
  • TE Asia Not an Agent: TE Asia was engaged solely as an underwriter pursuant to the Underwriting Agreement between the Developer & TE Asia whereby Clause 16 expressly disclaimed any agency, partnership, or representative capacity. TE Asia acted as an independent purchaser of units, not as marketing agent.
  • No Authority for Representations: The Defendant did not prepare, authorise, or have knowledge of the Conditional Ownership Package Plan (COPP) Forms or any associated incentives.
  • Exclusivity of Statutory SPAs: The terms of the transaction were governed exclusively by the four SPAs executed in accordance with Schedule H of the Housing Development (Control and Licensing) Act 1966 and Regulations 1989 whereby no reference was made to any GRR Scheme. Any collateral promise was unenforceable as it sought to vary the statutory contract.
  • Termination of Relationship: Any prior relationship with TE Asia had been terminated and the agency was subsequently wound up.

Court’s Rulings

High Court’s Rulings: The learned Judicial Commissioner rejected the Developer’s defence and allowed the Respondents’ claim with variations to the quantum, after assessing mitigation efforts (e.g., actual rentals earned). Key reasonings are as follows:

1. Proven Misrepresentation & Inducement: The agent did make the GRR representations through many conduct and communication which the Respondents relied entirely on to enter SPAs, but for GRR, no purchase.
2. Apparent Authority of TE Asia: The Underwriting Agreement as a whole showed TE Asia acted as Developer’s exclusive marketing agent. The Developer’s letter to the Respondents admitted prior agency relationship (“we had terminated TE Asia…”). COPP Forms, launch event, and solicitor meeting clothed TE Asia with ostensible authority.
3. GRR Not Illegal Under HDA/HDR: GRR is a collateral benefit, not a variation of SPA terms. The Scheme does not contravene Schedule H or public policy, but instead benefits purchaser.
4. Damages Adjusted for Mitigation: Respondents rented out units and offset actual income.

Damages awarded (5-year GRR shortfall):

• RM403,115.57 to Resham and Kalwant (Unit 38-11)
• RM413,930.13 to Kalwant and Rajash (Unit 37-11)
• RM420,593.80 to Kalwant and Ranita (Unit 35-11)
• RM416,112.09 to Kalwant and Resham Jr (Unit 33-11)

Court of Appeal’s Decision: The appeal by the Developer has been unanimously dismissed, affirming the High Court’s findings and awarded costs of RM20,000 to the Respondents. It was held that:

• TE Asia had acted as the Developer’s marketing agent with apparent authority as there was no denial by the Developer in the letter to reply to the Respondents and the police report that they were the agents of the Developer. Besides the agent’s introduction and COPP Forms, the sales brochures clearly represented to the public that TE Asia is the Developer’s exclusive marketing agent. Purchasers reasonably relied on this which the Developer cannot “clothe agents with authority” then disavow it (citing China Construction Bank v Lee Yow Choy [2016] 2 MLJ 1). No actual appointment document was needed, conduct sufficed on balance of probabilities.
• Representations on the GRR Scheme by the agents were proven and binding on the Developer. The court found that the agent’s promise and reiterations on the 5% GRR were credible and unchallenged. Respondents testified there was an inducement as “but for GRR, no purchase”—corroborated by contemporaneous COPP Forms and deposit payment. This met the tort threshold for misrepresentation (Derby v Weldon [1990] 1 Ch 48, adopted in Malaysian law).
• GRR Scheme is not illegal under the Housing Development (Control and Licensing) Act 1966 (HDA) or Regulations, provided that it does not supersedes the statutory rights in the SPAs and it remains favourable to the purchasers, following PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah [2021] 2 MLJ 60.

The appeal was dismissed as the High Court’s evaluative judgment on facts and evidence showed no appealable error.

Key Takeaways

• Agency and Apparent Authority: Developers can be bound by agents’ representations (e.g., via marketing materials, brochures, or oral promises) if apparent/ostensible authority is established through conduct or documents. Contemporaneous evidence like police reports, letters, and sales forms is crucial in proving agency.
• Collateral Benefits in Property Deals: GRR schemes, as separate incentives benefiting purchasers, are permissible under the HDA provided that they do not contradict statutory SPAs (Schedule H). Such schemes must not impose burdens or subvert consumer protections.
• Misrepresentation Claims: Purchasers must prove inducement and reliance, but courts will scrutinize developers’ denials against evidence. Failure to challenge key witness testimony (e.g., on rebates or furnishings) can weaken defenses.
• Practical Advice for Property Stakeholders: (1) Developers should clearly define agent scopes in agreements and monitor representations to avoid liability. (2) Purchasers are reminded to document all promises outside SPAs. (3) Agents must ensure authorizations are explicit to prevent disputes.

This ruling reinforces protections for property buyers while clarifying boundaries for developers’ incentives.