EKOVEST CAPITAL SDN BHD v 1. ) CHONG SEW MAY 2. ) CHONG CHEE SIEN

Case Significance

Confirms that in a house purchasers' claim against a developer the cause of action accrues on the receipt of vacant possession under the relevant sale and purchase agreement clause, so that an action commenced within six years of that date is not barred by section 6 of the Limitation Act 1953.

This High Court decision in Kuala Lumpur concerns cross-appeals from a Sessions Court judgment in a housing-development dispute, turning principally on limitation and the point at which the purchasers' cause of action accrued. The appellant, a company that was the developer of a housing project, appealed against the Sessions Court's decision after a full trial, and the respondent purchasers filed a cross-appeal. For convenience the Court referred to the parties as they had been below, the developer being the defendant and the purchasers the plaintiffs. A central issue was whether the purchasers' claim was barred by limitation under section 6 of the Limitation Act 1953. The Court held that the purchasers were not defeated by limitation because their cause of action began to run from the date on which vacant possession was received, by reference to clause 25(3) of the sale and purchase agreement, and that the action had accordingly been filed within the six-year limitation period. Having rejected the limitation defence and considered the parties' submissions on the merits, the Court dismissed the developer's appeal with costs and allowed the purchasers' cross-appeal with costs. The effect was to uphold the purchasers' claim while revising the outcome in their favour on the matters raised in the cross-appeal. The decision illustrates the importance of correctly identifying the accrual date of a cause of action in a claim by house purchasers against a developer, and confirms that where the relevant contractual term ties accrual to the receipt of vacant possession, the limitation clock runs from that date rather than from some earlier point, so that an action commenced within six years of vacant possession is not time-barred. The Court's reasoning underscores the practical importance of the accrual date to house purchasers, whose complaints about a development frequently surface only once they take possession, and confirms that where the contract fixes the trigger for the cause of action at the receipt of vacant possession, a developer cannot rely on earlier events to shorten the limitation period and shut the purchasers out.