DEVELOPERS AND PURCHASERS BEWARE: Don’t Let Agents’ Representations Cost You
3 December 2025
DEVELOPERS AND PURCHASERS BEWARE:
Don’t Let Agents’ Representations Cost You
Developers – Even if your contract says, “No party shall represent themselves as an agent of the other party”, it may not shield you from liability.
Purchasers – Even if representations are made by agents on behalf of the developer, it may not always be safe to rely on them.
Recently, in I-Marcom Sdn Bhd v. Resham Singh a/l Naranjan Singh & Ors [2025] MLJU 2923; [2025] CLJU 2328, the Court of Appeal held a developer liable for RM1.65 million in rental losses over 5 years for 4 condominium units, arising from the purchasers’ reliance on representations of a ‘Guarantee Rental Return Scheme’ made by a marketing executive of a company, even though the developer’s contract with the company expressly prohibited its employees from acting as the developer’s agent.
(A) Brief Background
- The appellant was a developer (“Developer”) of a high-end condominium project known as 8 Kia Peng Project at Kuala Lumpur (“Project”).
- The respondent was a purchaser (“Purchaser”) of 4 condominium units. 4 separate Sale and Purchase Agreements (“SPAs”) were executed for the units by the Purchaser and his family (his wife, daughter, and sons) (collectively, the “Parties”).
- The events leading to the dispute began when the Purchaser, who was searching for condominium units near the Kuala Lumpur City Centre (“KLCC”) for himself and his family, was invited by an estate agent he had known for over 15 years (“Beh”) to the sale launch of the Project, during which he was introduced to a marketing executive (“Lim”) from a company presented as the exclusive marketing agent for the Project (“TE”).
- The dispute subsequently arose when Lim (the marketing executive from TE) made several representations to the Parties concerning the Developer’s purported ‘Guarantee Rental Return Scheme’ (“GRR Scheme”). In essence, Lim represented that (a) the Developer is offering a GRR Scheme, (b) the purchase price of the units is slightly higher than the prevailing market price because the Developer had agreed to provide the GRR Scheme to interested purchasers, and (c) under the GRR Scheme, purchasers will receive a guaranteed return of 5% per annum calculated based on the purchase price, for a period of 5 years commencing from the date vacant possession is delivered (collectively, “representations”). Induced by these representations, the Purchaser purchased 4 condominium units and paid the total sum of RM120,000.00 to the Developer as part payment of the purchase price, with the SPAs executed by the Parties accordingly in 2015.
- By 2020, vacant possession was finally to be delivered to the Parties. However, upon receiving a letter from one of the Parties informing the Developer to honour the representations, the Developer replied stating, among others, that it had no knowledge of the GRR Scheme for the Project, had not entered into any GRR Scheme with any purchasers, and had not consented, agreed, or authorised TE to enter into any GRR Scheme with any purchasers (“Letter from the Developer”).
(B) Three Critical Issues
- This article focuses on three key issues that was determined in the appeal which developers and purchasers should be aware of:
(a) Whether Lim and/or TE was an agent of the Developer;
(b) Whether the GRR Scheme was illegal; and
(c) Whether the purported representations were binding on the Developer.
(C) What the Court of Appeal Decided
- Issue (a) – Affirmative
Essentially, the Court held that Lim and/or TE was the Developer’s agent based on the Developer’s conduct surrounding the following documents:
- Underwriting Agreement: Even though TE was an ‘underwriter’ that had agreed to purchase the condominium units at the Project in bulk and was not authorised to represent itself as an agent of the Developer, the agreement was not known to the Parties, and no documentation was produced by the Developer to show that TE had complied with its terms. Accordingly, the agreement carried little to no weight in supporting the proposition that TE was merely an ‘underwriter’.
- Sales Brochure: Under Regulations 5 and 6 of the Housing Development (Control and Licensing) Regulations 1989 (“HDR”), a sales brochure constitutes a form of advertisement that a developer can prepare only after obtaining an advertisement and sales permit from the Controller. In preparing the brochure, the developer must include particulars such as ‘authorized agent’. In this case, the sales brochure, containing all the accurate and required particulars (i.e., permit number, expiry date, and authorised agent), had the effect of the Developer representing to the public that TE was its authorised agent when the brochure was handed over by TE to the purchasers.
- Conditional Ownership Package Plan (“COPP Form”): The COPP Forms were executed in which the Parties had opted for the following conditions – (a) complimentary SPA legal fees, (b) fully furnished condominium units, (c) GRR Scheme, (d) balance of the purchase price to be paid by bank loan, and (e) 10% rebate. The Court found that the Developer had knowledge of the GRR Scheme, as it had complied with all the conditions opted by the Parties except for condition (c).
- Details of Purchase Form: This document was requested by TE to be executed by the Parties together with the COPP Form and handed over to the Developer with a cheque for RM30,000.00 for each of the 4 condominium units, payable to the Developer. The Court found that the cheques which were handed over to Lim would not likely have been provided if TE was not the authorised agent for the Developer.
- Letter from the Developer: In reply to the Party, the Developer did not dispute or repudiate that TE was the exclusive agent and in fact, admitted that TE was its agent.
- Police Report: Lodged by the director of the Developer after vacant possession of the 4 condominium units was delivered to the Parties, the report, while stating that the Developer had no knowledge of the GRR Scheme, admitted that TE was the marketing agent for the Developer before its appointment was terminated around the end of 2015.
- Issue (b) – Negative
The GRR Scheme was held not illegal. The Court held that the Developer’s offer of the GRR Scheme (a promise of a guaranteed rental yield) did not contravene the Housing Development (Control and Licensing) Act 1966 (“HDA”), which is intended to protect house buyers by preventing unconscionable obligations or exclusions placed upon them, because:
- the GRR Scheme did not burden purchasers;
- it operated as a supplementary arrangement that benefited the purchasers; and
- it did not deviate from or alter any clause under the prescribed SPAs in Schedule H of the HDA, and did not undermine the purchasers’ rights.
- Issue (c) – Affirmative
The purported representations were held to be binding on the Developer because:
- the representations made by Lim, an authorised agent of TE (the Developer’s exclusive agent), induced the Parties to enter into the SPAs;
- the offers in the COPP Forms, namely free legal fees, furnishing, discount, and GRR Scheme, were made by the Developer through TE, who had acted and/or been held out as the Developer’s exclusive agent to market and sell the condominium units at the Project; and
- apart from the Parties’ testimony, contemporaneous documents show that TE had apparent and ostensible authority to make representations on the GRR Scheme, which, when acted upon by the purchasers, operated as an estoppel preventing the Developer from denying liability.
(D) Conclusion: Practical Takeaways for Developers and Purchasers
| Developers |
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| Purchasers |
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Note: The Developer has since applied for leave to appeal to the Federal Court.
This article is intended for general information. It should not be regarded as legal professional advice.
| Lam Ko Luen Partner Tel: +603-20311788 (Ext. 243) [email protected] |
Tiffany Tain Teng Associate Tel: +603-20311788 (Ext. 222) [email protected] |