A Win for Homebuyers: Property Developer Held Liable for Latent Defects in Luxury Bungalows

This case consolidates six related appeals heard together in the Malaysian Court of Appeal. In Sime Darby Property (Bukit Jelutong) Sdn Bhd v Ooi Cheng Huat @ Ooi Peng Huat & Ors & Other Appeals [2026] CLJU 238, the Developer appealed against High Court rulings in favor of six purchasers of luxury bungalows in the “PRIMO Bukit Jelutong” development. The purchasers claimed breaches of their Sale and Purchase Agreements (SPAs) due to patent and latent defects caused by poor workmanship and substandard materials, seeking damages for rectification costs. The core issues revolved around developer liability for defects, the applicability of Defect Liability Periods (DLP), and quantum of damages.

A significant decision that reinforces protections for property purchasers in Malaysia, the Court of Appeal has upheld High Court rulings against Sime Darby Property (Bukit Jelutong) Sdn Bhd in six consolidated appeals. This case underscores the limits of defect liability periods and “as is where is” clauses, sending a clear message to developers about accountability for construction quality.

Background of the Case

The case involves six consolidated appeals arising from disputes over luxury bungalows in Sime Darby’s “PRIMO Bukit Jelutong” development project in Bukit Jelutong, Shah Alam, Malaysia. Marketed as premium properties (with “PRIMO” implying “prime” or “premier”), the bungalows were sold at prices ranging from RM4,502,534.00 to RM5,537,628.00. Sime Darby obtained the Certificate of Completion and Compliance (CCC) on 30 January 2012, with notices of vacant possession (VP) issued on various dates: 22 March 2012 (Suit 43), 29 June 2012 (Suit 44), 7 May 2012 (Suit 45), 27 August 2014 (Suit 46), 29 June 2012 (Suit 47), and 23 September 2015 (Suit 49).

Four purchasers (in Suits 43, 44, 45, and 47, referred to as “STB Purchasers”) entered into Sell-Then-Build (STB) Sale and Purchase Agreements (SPAs) under Schedule G of the Housing Development (Control and Licensing) Regulations 1989 (HDLR), incorporating a statutory 24-month Defect Liability Period (DLP). At the time of signing, these properties were under construction. The remaining two purchasers (in Suits 46 and 49) signed Build-Then-Sell (BTS) SPAs for completed properties, which did not conform to HDLR schedules and included an “as is where is” clause, purporting to limit liability.

Post-delivery, the purchasers discovered numerous patent and latent defects, alleging breaches of the SPAs, the Housing Development Act 1966 (HDA), and HDLR. Claims were filed as originating summons in the Shah Alam High Court in October 2017, seeking damages for rectification. Key allegations included non-compliance with approved plans and substandard construction using poor materials and workmanship, despite the high-end marketing. Defects were categorized into two main groups:

• Air-Conditioning Defects: Under-capacity units, unsuitable pipe insulation leading to condensation (sweating), system imbalance, and related issues like mold and inefficiency. These were deemed fundamental breaches of good workmanship and materials obligations, not attributable to wear and tear, renovations, or maintenance lapses.
• Other Defects: Poor ground preparation causing soil settlement; cracking in walls, floors, and ceilings; water ponding and leakage; substandard timber (e.g., poor-quality Balau wood); faulty electrical and plumbing systems; and structural issues like uneven floors and misaligned fittings.

The purchasers contended that these defects rendered the properties subpar, contrary to the premium pricing and representations. Sime Darby defended by asserting that defects were rectified during the DLP (evidenced by signed Defect Rectification Forms (DRFs) and Feedback Forms (FFs)), the DLP barred further claims, and the “as is where is” basis applied to BTS SPAs.

Court Rulings

High Court

• Key Findings: Sime Darby was liable for breaches of contractual and statutory obligations under the SPAs, HDA, and HDLR. Defects were proven on the balance of probabilities, corroborated by purchaser evidence, genuine DRFs/FFs (indicating initial complaints), and expert opinions. The LHJ applied the “but for” causation test, concluding that defects arose from Sime Darby’s poor workmanship and substandard materials (e.g., under-capacity air-conditioners and unsuitable insulation), not purchaser renovations, maintenance issues, or wear and tear. The 24-month DLP applied only to patent defects (visible/discoverable within the period); latent defects (hidden and manifesting later) remained actionable. The “as is where is” clause in BTS SPAs could not absolve liability for fundamental quality breaches, as it contravened non-derogable HDA protections. Sime Darby’s expert was discredited for inconsistencies and failure to address causation adequately.
• Awards: Rectification costs for air-conditioning defects ranged from RM79,400.00 (Suit 43) to RM110,000.00 (Suit 49); for other defects, from RM680,970.00 (Suit 43) to RM1,126,088.00 (Suit 45). Post-judgment interest at 5% per annum from the decision date until payment. Costs of RM100,000.00 to RM120,000.00 per suit. Claims for loss of use/enjoyment and pre-judgment interest were dismissed, as they were not sufficiently proven or justified.

Court of Appeal

On 9 July 2025, the Court allowed substitution of the appellant from Sime Darby Property Berhad to Sime Darby Property (Bukit Jelutong) Sdn Bhd, pursuant to a Reorganisation Agreement dated 6 June 2024 transferring assets and liabilities. Purchasers filed cross-appeals on dismissed claims but primarily sought to vary quantum and interest. The Court rejected late applications to adduce new evidence alleging bias in Sime Darby’s expert (a former employee of the project architect), as it failed the Ladd v. Marshall test (not fresh, credible, or determinative).

• Key Findings: The Court affirmed the High Court’s decision in full, finding no manifest or plainly wrong errors in fact-finding, evidence appreciation, or legal application. Appellate intervention was restrained, deferring to the trial judge’s assessment of viva voce evidence. Key affirmations included: latent defects claimable beyond DLP under HDA/HDLR protections; inability to “contract out” of statutory duties via “as is where is” clauses; proper application of the “but for” test for causation; and reasonable reliance on purchaser experts for defect existence and quantum (even if not yet incurred, as awards restore to contracted standards). DRFs/FFs did not waive claims for unrectified or latent issues. Cross-appeals were treated as variations, not requiring separate notices, but ultimately dismissed as the High Court’s rulings on loss of use and interest were sound.
• Outcome: All six appeals by Sime Darby dismissed; High Court orders upheld. Costs of RM30,000.00 per appeal (subject to allocator) awarded to the purchasers.

Key Takeaways

1. Developer Liability for Latent Defects: DLPs (e.g., 24 months) cover only patent defects; purchasers can claim for latent defects (poor workmanship/materials) discovered later, reinforcing protections under HDA/HDLR.
2. Limits of “As Is Where Is” Clauses: In BTS SPAs, such clauses do not exempt developers from statutory obligations for fundamental construction quality, preventing “contracting out” of consumer safeguards.
3. Evidentiary Standards: Expert testimonies (e.g., on causation via “but for” test) and corroborative documents like DRFs are crucial; appellate courts defer to trial judges’ fact-finding absent “manifest error.”
4. Quantum Assessment: Rectification costs awarded based on expert estimates even if not yet incurred, prioritizing restoration to contracted standards over strict proof of expenditure.
5. Appellate Restraint: Broad appeals without specific challenges to findings fail; courts emphasize holistic evidence review and public policy protecting homebuyers in premium developments.

For developers, this case highlights the need for rigorous quality control and transparent marketing. For purchasers, it empowers claims against substandard builds, even in high-end projects.