The future development of housing law remains uncertain. The recent Federal Court decision in Obata Ambak v Prema Bonanza highlights a potential shift from prior judicial interpretations that prioritized maximum protection for homebuyers.
Upcoming cases and legislative changes may play a crucial role in shaping the landscape of housing development law and determining the balance between developers and homebuyers.
ISSUES | OBATA (77 page summary) FC (2024) | ANG MING LEE FC (2019) | PJD REGENCY FC (2021) | SK SOUTHERN FC (2023) | HDA 1966 |
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Presiding Judges | Y.A.A. Tan Sri Datuk Amar Abang Iskandar Bin Abang Hashim, PMR,
Y.A. Dato’ Zabariah Binti Mohd Yusof, HMP,
Y.A. Dato’ Sri Hasnah Binti Dato’ Mohammed Hashim, HMP, Y.A. Datuk Harmindar Singh Dhaliwal. HMP, and Y.A. Datuk Abdul Karim Bin Abdul Jalil, HMP.
| TENGKU MAIMUN TUAN MAT CJ;
AZAHAR MOHAMED FCJ;
ALIZATUL KHAIR OSMAN FCJ;
IDRUS HARUN FCJ; | TENGKU MAIMUN TUAN MAT CJ;
NALLINI PATHMANATHAN FCJ;
ABDUL RAHMAN SEBLI FCJ;
ZABARIAH MOHD YUSOF FCJ; MARY LIM FCJ | VERNON ONG LAM KIAT FCJ;
ZALEHA YUSOF FCJ;
HARMINDAR SINGH DHALIWAL FCJ | N/A |
Social Legislation | [130] In its wisdom the Legislature enacted the HDA and the Minister in charge of Housing and Local Government made the Regulations pursuant to the HDA prescribing the standard form of agreement and the requirement for approval before any changes could be made to the prescribed agreement. Until Ang Ming Lee, approval was mandatory before any amendments or variations could be implemented. Some applications were allowed and some were not. This was to ensure that any extended time of completion will be regulated and monitored to ensure that housing developers will deliver vacant possession. In the appeals before us the developers had sought for approval prior to executing the SPAs.
[131] The Federal Court in Dream Property Sdn Bhd v. Atlas Housing Sdn Bhd [2015] 2 MLJ 441 recognised the principle of unjust enrichment under Malaysian law. The Federal Court said that the most important question to ask is whether it is unjust for the plaintiff to retain the benefit and considered both the English approach and the civilian.
[132] Have the purchasers/house buyers benefitted pre-Ang Ming Lee? In this regard it is important to keep in mind of the facts that the purchasers, Obata and Vignesh had agreed to the extended completion period in the respective SPAs, vacant possession was delivered and LAD fully paid by the developer and they have accepted the LAD payment as full and final settlement. They did not suffer any losses. No doubt there was a delay but they have benefited from the approved extended time of completion; the certainty of payment of LAD and the delivery of vacant possession of the property that they had purchased. If the appeals are decided in favour of the purchasers it would result in unjust enrichment at the expense of the developers, in these appeals, Prema. | [37] The object of the Act has been highlighted in a string of authorities. In S.E.A. Housing Corp Sdn Bhd v. Lee Poh Choo [1982] CLJ 355; [1982] CLJ (Rep) 305; [1982] 2 MLJ 31, Suffian LP said at p. 311 (CLJ); p. 34 (MLJ): It is common knowledge that in recent years especially when the government started giving housing loan making it possible for public servants to borrow money at 4% interest to buy homes, there was an upsurge in demand for housing, and that to protect home buyers, most are whom are people of modest means, from rich and powerful developers, Parliament found it necessary to regulate the sale of houses and protect buyers by enacting the Act. [38] In the case of Sentul Raya Sdn Bhd v. Hariram Jayaram & Ors And Other Appeals [2008] 4 CLJ 618; [2008] 4 MLJ 852, Gopal Sri Ram JCA (as he then was) speaking for the Court of Appeal said: The contract which has fallen for consideration in the present case is a special contract. It is prescribed and regulated by statute. While parties in normal cases of contract have freedom to make provisions between themselves, a housing developer does not enjoy such freedom. Hence parties to a contract in Form H cannot contract out of the scheduled form. Terms more onerous to a purchaser may not be imposed. So too, terms imposing additional obligations on the part of a purchaser may not be included in the statutory form of contract. [39] The Federal Court in Veronica Lee Ha Ling & Ors v. Maxisegar Sdn Bhd [2009] 6 CLJ 232, reiterated the object of the Act by making the following observation: Now, cl. 23 is part of a statute based contract. In this country, the relationship between a house-buyer and a licensed developer is governed by the Housing Developers legislation. Its object is to protect house buyers against developers. A developer must execute the agreement set out in the schedule to the relevant subsidiary legislation. He cannot add other clauses in it.
[40] The Act being a social legislation designed to protect the house buyers, the interests of the purchasers shall be the paramount consideration against the developer. Parliament has entrusted the Minister to safeguard the interests of the purchasers and the Minister has prescribed the terms and conditions of the contract of sale as per Schedule H. We find no contrary indication in the language, scope or object of the Act that such duty to safeguard the interests of the purchasers may be delegated to some other authority.
[41] The legislative intent that the duties shall remain with the Minister, may be discerned from ss. 11 and 12 of the Act. Under s. 11, whilst the Controller is given the power to investigate on the reason why a licensed housing developer is unable to meet his obligation to the purchasers, or is about to suspend his building operations or is carrying on his business detrimental to the interests of the purchaser, it is the Minister who is empowered to give directions and to take such other measures for purposes of safeguarding the interests of the purchasers and for carrying into effect the provisions of the Act. Likewise under s. 12 which provides for the powers of the Minister to give general directions as he considers fit, to the licensed housing developer for purposes of ensuring compliance with the Act. Such directions, which shall be given in writing, are binding on the developer. | [1] The phrase "social legislation" attached to the Housing Development (Control and Licensing) Act 1966 ("HDA 1966") and its ensuing subsidiary legislation ie, the Housing Development (Control and Licensing) Regulations 1989 ("HDR 1989") is not merely a fanciful label. In disputes between home buyers and housing developers, its significance lies in the approach taken by the courts to tip the scales of justice in favour of the home buyers given the disparity in bargaining power between them and the housing developers.
[33] With the greatest of respect, it is our view that the submission is untenable. When it comes to interpreting social legislation, the State having statutorily intervened, the courts must give effect to the intention of Parliament and not the intention of parties. Otherwise, the attempt by the Legislature to level the playing field by mitigating the inequality of bargaining power would be rendered nugatory and illusory.
[34] We find considerable support for this assertion in the judgment of this court in Hoh Kiang Ngan (supra ), at p. 707 (CLJ); p. 387 (MLJ): Now, it is well-settled that the Act is a piece of beneficent social legislation by which Parliament intends the prevention and speedy resolution of disputes between employers and their workmen. In accordance with well-settled canons of construction, such legislation must receive a liberal and not a restricted or rigid interpretation. (emphasis added)
[35] At p. 708 (CLJ); p. 388 (MLJ), this court cited with approval the following dictum of Bhagwati J in Workmen of Indian Standards Institution v. Management of Indian Standards Institution (1976) 1 LLJ 36 at p. 43, with which we agree and adopt, as follows: [I]t is necessary to remember that the Industrial Disputes Act 1947 is a legislation intended to bring about peace and harmony between management and labour in an 'industry' so that production does not suffer and at the same time, labour is not exploited and discontented and, therefore, the tests must be so applied as to give the widest possible connotation to the term 'industry'. Whenever a question arises whether a particular concern is an 'industry', the approach must be broad and liberal and not rigid or doctrinaire. We cannot forget that it is a social welfare legislation we are interpreting and we must place such an interpretation as would advance the object and purpose of legislation and give full meaning and effect to it in the achievement to (sic) its avowed social objective. (emphasis added)
[36] From the above, we would summarise the principles on the interpretation of social legislation as follows: (i) Statutory interpretation usually begins with the literal rule. However, and without being too prescriptive, where the provision under construction is ambiguous, the courts will determine the meaning of the provision by resorting to other methods of construction foremost of which is the purposive rule (see the judgment of this court in All Malayan Estates Staff Union v. Rajasegaran & Ors [2006] 4 CLJ 195; [2006] 6 MLJ 97). (ii) The literal rule is automatically displaced by the purposive rule when it concerns the interpretation of the protective language of social legislation. (iii) For the avoidance of doubt, it is important to emphasise that even where a term or provision of a social legislation or a statutory contract enacted thereunder is literally clear or unambiguous, the court no less shoulders the obligation to ensure that the said term or provision is interpreted in a way which ensures maximum protection of the class in whose favour the social legislation was enacted.
[37] Having regard to the above principles, we cannot apply the literal rule to arrive at the simplistic conclusion that the date of calculation of the LAD runs from the date printed in the scheduled contract. Our reluctance to do so does not mean that we are "rewriting" the bargain between the parties, instead we are construing the scheduled contract in accordance with the statutory protections afforded by Parliament. At this juncture, it is perhaps appropriate that we analyse the legal developments in respect of booking fees to appreciate the intention of Parliament with respect to such a practice.
[40] The Bill was passed and it now exists as the HDA 1966. Speaking specifically in the context of booking fees, deposits or any other labels that may be used, it is quite clear that this very issue was one of the main reasons why the HDA 1966 was passed. The Honourable Minister's words - "legislative measures should be taken to protect the people from bogus and/or unscrupulous housing developers. Hence this Bill." - speak for themselves. [49] Given the clear legislative intent, it follows that we are unable to read the scheduled contracts in these appeals literally. The legislative aim here is that any payment collected must be in accordance with the terms of the statutory contract of sale. Accordingly, to give effect to this legislative intent and in light of the collective status of the HDA 1966 and HDR 1989 as social legislation, it follows that where this illegal practice of booking fee is afoot, the date of the contract cannot be taken to mean the date printed in the scheduled contracts. Otherwise, this court would be condoning the developers' attempt in this case to bypass the statutory protections afforded to the purchaser by the legislative scheme put in place. [130] The courts will not countenance the bypassing of statutory safeguards meant to protect the purchasers. To that extent, where the developers act in contravention of the law, they have to accept the resulting consequences. | Per Harmindar Singh Dhaliwal FCJ delivering the judgment of the court: (1) The HDA was enacted as a piece of social legislation to protect house buyers. With that in mind, any term or provision in the statute must be interpreted in a way which ensures maximum protection for the house buyers against the developer. It was therefore imperative that ss. 16M and 16Q of HDA be interpreted in such a way as to provide protection of house buyers in keeping with the intention of Parliament. Section 16M of the HDA provides that the Tribunal shall have the jurisdiction to determine a claim where the total amount in respect of which an award of the tribunal was sought did not exceed RM50,000. However, s. 16Q of the HDA provides that the claims may not be split, nor more than one claim brought, in respect of the same matter against the same party for the purpose of bringing it within the jurisdiction of the Tribunal. (paras 14 & 15 ) [14] In any discussion on the HDA 1966, it is necessary to allude to the purpose and objective of the legislation. It is beyond doubt that the HDA 1966 was enacted as a piece of social legislation to protect house buyers. With that in mind, any term or provision in the statute must be interpreted in a way which ensures maximum protection for the house buyers against the developer. (See Ang Ming Lee & Ors v. Menteri Kesejahteraan Bandar, Perumahan Dan Kerajaan Tempatan & Anor And Other Appeals [2020] 1 CLJ 162and PJD Regency Sdn Bhd v. Tribunal Tuntutan Pembeli Rumah & Anor And Other Appeals [2021] 2 CLJ 441; [2021] 2 MLJ 60). [15] It is therefore imperative that ss. 16M and 16Q of HDA 1966 be interpreted in such a way as to provide protection of house buyers in keeping with the intention of Parliament. Now, s. 16M of the HDA 1966 provides that the Tribunal shall have the jurisdiction to determine a claim where the total amount in respect of which an award of the Tribunal is sought does not exceed RM50,000. We noted that the words "a claim" and not "all the claims" are used in this section. However, s. 16Q of the HDA 1966 provides that the claims may not be split, nor more than one claim brought, in respect of the same matter against the same party for the purpose of bringing it within the jurisdiction of the Tribunal. We also noted that the word "matter", instead of "property" or "housing accommodation", has been used in this section, the significance of which will become apparent in the discussion that follows.
| HOUSING DEVELOPMENT (CONTROL AND LICENSING) ACT, 1966(Act 118) Date of coming into force: 29 August 1969 [P.U.(B) 212/69]. Revised 1973 w.e.f.16 August 1973(Amended by Act A1289 w.e.f 12 April 2007)
PREAMBLE First enacted 1966 (Act No. 38 of 1966) Revised 1973 (Act 118 w.e.f.16 August 1973)
An Act to provide for the control and licensing of the business of housing development in Peninsular Malaysia, the protection of the interest of purchasers and for matters connected therewith.
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Government and Minister’s Indemnity | N/A | N/A | N/A
| N/A | HDA, Section.17. Indemnity and protection against suit and proceedings. No action shall lie against the Government, the Minister, the Controller, Inspector or against any officer of the Government or any person acting under the direction of the Minister, the Controller or Inspector for damages in any civil court for anything bona fide done, ordered or omitted to be done pursuant to this Act; and all actions which may lawfully be brought in respect of anything done, ordered or omitted to be done pursuant to this Act shall be instituted within six months from the date of the act or omission complained of, and not afterwards.
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Limitation and Accrual of the cause of action | [59]Ang Ming Lee did not address the issue of the SPA being time barred pursuant to Section 6(1) of the Limitation Act 1953 as the central issue before the court was whether Regulation 11(3) of the HDR is ultra vires the HD [71]The cause of action accrued when there is a breach of the terms stipulated in the SPA. The SPA executed and accepted by the purchaser expressly stated that the delivery of vacant possession is 54 months. There is no breach of the terms of the SPA. | N/A | N/A | N/A | (Schedule H Clause 26(3)
For the avoidance of doubt, any cause of action to claim liquidated damages by the Purchaser under this clause shall accrue on the date the Purchaser takes vacant possession of the said Parcel
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Prospective or retrospective | [70]Whether a sale and purchase agreement for a housing accommodation of a high rise building between a purchaser and a developer which provides for a period for completion of the housing accommodation extended illegally under the ultra vires Regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 should revert to the 3-year period as provided in the standard Schedule H Agreement?
A: Negative | N/A | N/A | N/A | N/A |
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Unjust Enrichment | [71]Whether a purchaser is to be taken to have enjoyed benefit at the expense of a developer when the developer is required to pay Additional Liquidated Ascertained Damages to the purchaser pursuant to the statutory agreement prescribed under Schedule H of the HDR having duly adhered to the extended time period for delivery of vacant possession and completion of common facilities as agreed by the purchaser and the developer? A: Affirmative [135] Applying the principles as enunciated in Dream Property on the factual matrix of the appeals before us there would be unjust enrichment. In our judgment there would be injustice if the claims for LAD are allowed to be calculated retrospectively. The purchasers would be unjustly enriched if the claims are allowed. | [57] It was submitted for the developer that the purchasers would suffer greater hardship if the project is not completed as compared to not being able to claim for LAD. With respect, we fail to see the merit of this submission. If the developer fails to obtain an extension of time to deliver vacant possession, that in itself does not mean that the developer has failed to complete and hence, have abandoned the project. Whether or not the developer is granted an extension of time does not necessarily determine the fate of the project. The extension of time only determines payment of LAD. In this regard, we must not lose sight of the purchasers' obligations to pay for progress instalment to their respective housing financier and/or payment of rental to their landlord. It is a matter of balancing the commercial interest of a multi-million housing development company against the life-time loan commitment of a purchaser for a basic living necessity. As can be seen from the long line of authorities, it is the interests of the purchasers that prevail over that of the developer. We therefore hold that in allowing the Controller to waive or modify the terms and conditions of the contract of sale and in the process, denying the purchasers' right to claim for LAD as prescribed by the Minister under Schedule H, reg. 11(3) does not comply with the description of the Regulations which is designed to protect the interests of the purchasers. | [119] The learned High Court Judge cited with approval the following passage in Choot Ewe Hin & Anor v. Saujana Triangle Sdn Bhd & Another Case [2017] 1 LNS 355, where Abdul Majid Hj Hamzah JC (as he then was) held, as follows: [36] Returning to the four clauses pertaining to the LAD found in the SPA I agree with the views expressed by the learned author and hold that the doctrine of unjust enrichment has no application to the present case. The Defendant cannot turn around and say that since discount was given the LAD ought to be calculated based on the discounted purchase price. After all the terms of the SPA are statutorily provided for. [120] As we understand it, the High Court essentially held that the sale and purchase agreement having been derived from a statutory contract was not subject to amendment by the parties and that accordingly the developer was bound by the terms of the statutory contract of sale that the LAD shall be calculated from the purchase price. [121] The Court of Appeal dealt with the issue quite simply as follows, per Harmindar Singh Dhaliwal JCA (as he then was): [24] In this context, the provisions of the contract of sale admit to no ambiguity as liquidated damages are to be calculated from the agreed purchase price. There was no mention of any rebate in the sale and purchase agreement. It must be borne in mind that the contract of sale was prescribed and regulated by statute and the parties could not import additional clauses into it and especially to remove the protection of home buyers. [25] For the above reasons, we did not think there was any justification for the plea of unjust enrichment. There was, therefore, no error on the part of the Tribunal in the calculation of the liquidated damages. [122] We agree with the views of the High Court and the Court of Appeal. It is a trite principle of law that where a statute prescribes a form under the umbrella of social protection, such provisions may be contracted out of provided that the terms of the agreement are favourable to the purchasers (see Sea Housing (supra ), at p. 34). [123] The express provision of rebates, in our view, is favourable to the purchasers which the developer could have inserted into the sale and purchase agreement. There is an express finding by the Court of Appeal that there were no such terms. Now, even if such terms were included into the contract, for the following reason, we doubt that it would have altered the conclusion on the calculation of the LAD. [124] A rebate is essentially an ex post facto discount. It amounts to refund of monies already paid by the purchaser. The concept behind LAD is to compensate a purchaser for the developer's failure to comply with the statutorily prescribed timeline. It would defeat the purpose of the protection guaranteed by the law if a developer is allowed to cut his losses incurred by the LAD by offsetting it using the purchaser's own money. In our view, such an act amounts to nothing more than an act to manipulate the purchase price for the collateral purpose of having to pay LAD. [125] The LAD prescribed by law is a statutory remedy afforded to the purchasers. There can therefore be no question of unjust enrichment upon an innocent party's right to enforce his statutory remedy against the party in breach. This is especially so considering the developer's own contravention of the law by collecting an initial fee from the purchaser in express contravention of reg. 11(2) of the HDR 1989. [126] We therefore answer the question of whether the award of the Housing Tribunal results in the purchasers being unjustly enriched in the negative. We find no appealable error and we agree with the concurrent decisions of the High Court and the Court of Appeal to uphold the award of the Housing Tribunal. Appeal No. 4 is accordingly dismissed with costs and the orders of the courts below are affirmed.
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Second Actor Theory | [99] The Controller had considered the application for extension and granted the extension as the law at that time was valid. The developer had relied on the decision of the Controller who had granted the extension. Accordingly, we have no difficulty in holding that the Second Actor Theory applies. The question posed is therefore answered in the affirmative. | N/A | N/A | N/A | N/A |
Intent of the HDA:
Initially, it was passed in Parliament with three main objectives: to curb the abuse in the then-nascent housing industry, regulate housing developers' activities, and protect house / homebuyers.
The trilogy of Federal Court cases: Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar Perumahan dan Kerajaan Tempatan & Anor and Other Appeals [2020] 1 CLJ 162, PJD Regency v Tribunal Tuntutan Pembeli Rumah & Anor and Other Appeals [2021] 2 CLJ 441, and Remeggious Krishnan v SK Southern Sdn Bhd [2023] 4 CLJ 36 has created a landmark in interpreting a sale and purchase agreement prescribed under the Housing Development (Control and Licensing) Act 1966 ("HDA 1966") ("Statutory SPA").
The apex court, previously led by Chief Justice Tengku Maimun, affirmed that a Statutory SPA under the HDA 1966, being a social contract and the HDA 1966 as social legislation, must be interpreted to ensure maximum protection for house buyers against developers. This protective approach applies even when a term or provision of the HDA 1966 or the Statutory SPA is clear and unambiguous. In the interpretation of social legislation, it must be construed to provide the maximum protection intended for home buyers under the HDA 1966: PREAMBLE
First enacted 1966 (Act No. 38 of 1966)
Revised 1973 (Act 118 w.e.f.16 August 1973)
"An Act to provide for the control and licensing of the business of housing development in Peninsular Malaysia, the protection of the interest of purchasers and for matters connected therewith."
FC's Decision in OBATA AMBAK:
However, with the new apex court decision in Obata Ambak, there has been a shift. The panel's approach appears to diverge from the principles established in the previous three FC cases.
Conclusion:
It remains to be seen how the law will further develop in the sphere of housing development. The recent shifts in judicial interpretations, as highlighted by the Federal Court decision in Obata Ambak v Prema Bonanza, indicate a potential departure from previous approaches that emphasized maximum protection for house buyers.
Future cases and legislative changes will be crucial in shaping the landscape of housing development law and determining the balance.
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