“Whether the property developer could be held liable for misrepresentation made by its sales agents regarding a guaranteed rental return scheme which induced the purchasers to buy condominium units”
CASE:
BRIEF FACTS:
- I-Marcom Sdn Bhd was the developer of a condominium project known as “8 Kia Peng” in Kuala Lumpur.
- Resham Singh and his family members were interested in purchasing properties near KLCC for investment purposes.
- A real estate agent introduced the project to them and informed them that the units came with a guaranteed rental return scheme [GRR], meaning the purchasers would receive guaranteed rental income.
- The GRR promised was for 5 years from the date vacant possession was delivered and at 5% per annum based on the purchase price.
- The representations were made by Ms. Beh an Estate Agent and Edward Lim from TE Asia Properties Group Sdn Bhd [TEA] who were apparently the exclusive agent for the project.
- Resham and his family members signed a Details of Purchase form for each unit and the Conditional Ownership Package Plan Forms [COPP] which contained the discounts, alleged representations and details of the property which were filled by Ms. Beh.
- Based on these representations, the purchasers bought four condominium units in the project.
- Later, the promised rental returns did not materialise.
- The purchasers claimed that they were misled by the representations made during the sales process, and they filed a lawsuit against the developer for the losses suffered.
- I-Marcom the developer claimed by a letter dated 10 July 2020 that they had no knowledge of the GRR Scheme and that they had not entered into any GRR Scheme with any purchasers.
- They further claimed that they did not consent or authorise TEA to enter into any GRR Scheme with any purchasers.
DECISION OF THE HIGH COURT (HC)
- The High Court allowed the purchasers’ claim.
- The Court found that the purchasers had relied on the representations made by the agents regarding the rental return scheme when deciding to buy the units.
- The Court held that the developer was responsible for the misrepresentation, as the agents were involved in promoting the project.
- The Court found that the surrounding circumstances indicated that TEA had the authority to act as the agent for I-Marcom the developer.
- As a result, the Court ordered that the purchasers were entitled to damages for the losses suffered.
- The Court ordered the developer to pay about RM400,000.00 to each of the Purchasers.
- The developer appealed against the decision.
DECISION OF THE COURT OF APPEAL (COA)
- The Court of Appeal dismissed the appeal.
- The Court agreed that the purchasers had been induced to buy the properties based on representations about the rental return scheme.
- The Court held that the developer could not avoid liability for the statements made by the agents involved in marketing the project.
- Therefore, the High Court’s decision awarding damages to the purchasers was upheld.
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