High Court holds management corporation may sue developer for latent defects in condominium

15 October 2021

Dua Residency Management Corporation v Edisi Utama Sdn Bhd & Anor
[2021] MLJU 140

The dispute before the High Court in Dua Residency Management Corporation v Edisi Utama Sdn Bhd & Anor concerned a claim made by a management corporation (“Plaintiff”) against the developer (“First Defendant”) and property manager (“Second Defendant”) (collectively, “Defendants”) of a high-end condominium in relation to latent defects. Various defects in the common property were discovered between 2010 and 2019, which stemmed from leakages of the condominium’s swimming pool. Further inspections revealed that the condominium had latent defects concerning the construction movement joints, swimming pool and open deck.

The Plaintiff pleaded breach of contract, breach of statutory duties and/or negligence against the First Defendant, and breach of contract and/or negligence against the Second Defendant. The High Court judge held, among other things, as follows:

  • There was no legal standing for the Plaintiff to initiate and sustain the cause of action of breach of contract against the Defendants unless the purchasers of the condominium assigned or novated their sale and purchase agreements to the Plaintiff.
  • There is no statutory duty imposed on developers under the Street, Building and Drainage Act 1974 or the Uniform Building Bylaws 1984. Therefore, the First Defendant was not liable to the Plaintiff for breach of contract and breach of statutory duty whatsoever.
  • On policy considerations, the Second Defendant was not liable to the Plaintiff for negligence.
  • The First Defendant was liable to the Plaintiff for negligence in respect of the swimming pool defects only. The First Defendant had failed to ensure that the workmanship of the brushed-on waterproofing system applied was fit and adequate for its purpose to prevent the ingress of water in the swimming pool. As such, the First Defendant was liable to the Plaintiff for rectification of the swimming pool defect in the sum of RM1,675,000 and RM250,000 totalling RM1,925,000.