By:
Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]
Bryan Lui (Co-Managing Partner) [bryanlui@luibhullar.com]
Chandni Anantha Krishnan (Partner) [chandni@luibhullar.com]
INTRODUCTION AND QUESTION OF LAW
Vide the grounds of judgment of PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor and other appeals, the Federal Court has considered the following question of law:
“Where there is a delay in the delivery of vacant possession by a developer to the purchaser in respect of Schedule G / Schedule H type contracts under Regulation 11(1) of the Housing Development (Control and Licensing) Regulations 1989 (“HDR”) enacted pursuant to Section 24 of the Housing Development (Control and Licensing) Act 1966 (“HDA”), whether the date for calculation of liquidated agreed damages (“LAD”) begins from:
(a) the date of payment of deposit / booking fee / initial fee / expression by purchaser of his written intention to purchase; or
(b) from the date of the sale and purchase agreement,
having regard to the decisions of the Supreme Court in Hoo See Sen & Anor v Public Bank Berhad [1988] 2 MLJ 170 (“Hoo See Sen”) and Faber Union Sdn Bhd v Chew Nyat Shong & Anor [1995] 2 MLJ 597 (“Faber Union”).”
The Federal Court ruled that having read Faber Union and Hoo See Sen, the question of law is very-much decided i.e. the calculation of LAD begins from the date of payment of the booking fee and not from the date of the sale and purchase agreement. The Federal Court further added that this position is cemented by the nature of the HDA and HDR being social legislations. A social legislation is a legal term for a specific set of laws passed by the legislature for the purpose of regulating the relationship between a weaker class of persons and a stronger class of persons.
The Federal Court ruled that when it comes to a social legislation, the Courts must give effect to the intention of Parliament and not intention of parties. During the 3rd Reading of the Housing Development (Control and Licensing) Bill on 25.03.1966, the then Minister of Local Government and Housing, the Honourable Mr Khaw Kai-Boh said “legislative measures should be taken to protect the people from bogus and / or unscrupulous housing developers. Hence this Bill.”
The Federal Court was of the opinion that the context of which booking fees, deposits or any other labels that may be used was one of the main reasons why the HDA was passed. Regulation 11(2) of the HDR prohibits everyone, not just developers, from collecting booking fees. As such, as 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 sale and purchase agreement. Otherwise, it would mean that the Court would condone such illegal conduct of the developer of collecting booking fees.
The Federal Court was also hard on the developers. Developers cannot continue to collect booking fees which is prohibited and call it standard practice and at the same breath boldly demand that the statute be construed in their favour by limiting the commencement period for the calculation of LAD to the printed date of the sale and purchase agreement. Developers must comply with the regulatory regime of the housing legislation. Otherwise, developers must be bound by their illegal conduct.
THE APPEALS
There were three (3) sets of Appeals before the Federal Court:
(a) The first filed by PJD Regency Sdn Bhd, the Developer for the “You Vista” Project. The Respondents were the Housing Tribunal and the purchasers of certain units in the said project (“PJD cases”). The Housing Tribunal calculated LAD from the booking fee date. The High Court and Court of Appeal found that the Housing Tribunal was correct. The Federal Court maintained the position.
(b) The second filed by the purchasers of “Taman Paya Rumput Fasa 2”. The Respondent was GJH Avenue Sdn Bhd, the developer of the Project (“GJH cases”). The Housing Tribunal calculated LAD from the booking fee date. The High Court affirmed the Housing Tribunal’s decision. The Court of Appeal, however, found that the correct date was the sale and purchase agreement date. The Federal Court set aside the decision of the Court of Appeal and restored the decision of the High Court.
(c) The third filed by Sri Damansara Sdn Bhd, the Developer for the “Foresta Damansara” Project (“Sri Damansara cases”). The Housing Tribunal calculated LAD from the deposit date. The High Court and Court of Appeal found that the Housing Tribunal was correct. The Federal Court maintained the position.
Specifically, the Federal Court considered the following question of law in the PJD cases:
“For the purposes of ascertaining the date of completion of common facilities under a statutory agreement prescribed in Schedule H and J of the HDR made pursuant to HDA 1966, whether the relevant date is when the prescribed architect certifies they were completed.”
As the sale and purchase agreement only refers to one type of certification which is the certificate of completion and compliance (“CCC”) and that CCC is a legal requirement imposed by the law such as the Street, Drainage and Building Act 1974 which affords protection to the purchasers that the relevant authorities have approved the construction, the certification shall be in the form of a CCC.
In the Sri Damansara cases, there was a question of law on whether the purchasers were unjustly enriched by the award of the Housing Tribunal. The Developer had provided a 10% rebate on the purchase price of the property. The Developer contended that the LAD ought to be calculated on the rebated purchase price and not the actual purchase price as stipulated in the sale and purchase agreement, which is akin to unjust enrichment.
LAD is prescribed by law and a statutory remedy afforded to purchasers. The Federal Court ruled that there could be no question of unjust enrichment upon an innocent party’s right to enforce his statutory remedy against the party in breach especially considering the developer’s conduct of collecting booking fees is in contravention of Regulation 11(2) of the HDR.
CONCLUSION
The law is now settled.
Where there is a delay in the delivery of vacant possession by a developer to the purchaser in respect of the scheduled contracts under Regulation 11(1) of the HDR enacted pursuant to Section 24 of the HDA, the date for calculation of LAD begins from the date of the payment of deposit / booking fee / initial fee / expression by the purchaser of his written intention to purchase and not from the date of the sale and purchase agreement literally.
The Court will not condone acts of a developer that bypasses statutory regime that is in force to protect the purchasers i.e., the prohibition of collection of booking fees. If developers continue to do so, they must accept the resulting consequence.
Image by MichaelGaida from Pixabay
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