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1 MLJA 19, *; [2007] 1 MLJA 19 2003 LexisNexis Asia (a division of Reed Elsevier (S) Pte Ltd)The Malayan Law

w Journal Articles 2007 Volume 1 [2007] 1 MLJ xix; [2007] 1 MLJA 192007 1 MLJ xix; 2007 1 MLJA 19 2007Article: DELAY IN THE COMPLETION OF A NEW RESIDENTIAL PROPERTY: RIGHTS OF THE PURCHASERChan Wai Meng LLB (Hons) (Malaya), LLM (Malaya)Lecturer, Department of Business Strategy and PolicyFaculty of Business and Accountancy, University of Malayaand Usharani Balasingam LLB (Hons) (Malaya), LLM (Malaya)Lecturer, Taylor s College Subang Jaya

[*19] [Some parts of this paper were presented at the INTI Inaugural Law Conference 2006 which was held from 28-29 August 2006. The theme of the conference was Towards Developing Legal Awareness and Justice in our Malaysian Society . The INTI Inaugural Law Conference was sponsored by LexisNexis]

Introduction According to the statistics issued by the Monitoring and Enforcement Division of the Ministry of Housing and Local Government, there were 261 abandoned housing projects in West Malaysia for the period commencing from the year 1990 to December 2005. 58,685 purchasers were affected . This paper discusses the rights of a purchaser of a residential property that are conferred on him by the Housing Development (Control and Licensing) Act 1966 (Act 118) and its subsidiary legislation. For ease of reference, the Housing Development (Control and Licensing) Act 1966 will be referred to as the Housing Development Act 1966 in this paper.
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In this paper, the writers will emphasis on the issues whether the purchaser has the right to claim for damages and to terminate the sale and purchase agreement when there is a delay in the delivery of vacant possession of the property. The writers will also examine the avenues available to the purchaser if he wishes to initiate legal action against the developer. It will be shown that the position of the purchaser is vulnerable and thus, the writers will conclude this paper with some recommendations to strengthen the purchaser s position. [*20]

Housing Development Act 1966 According to the long title of the Housing Development Act 1966, the Act was enacted to provide for the control and licensing of the business of housing development in West Malaysia and for matters connected therewith. The matters include the protection of purchasers of new residential properties . In fact, the act is a specific piece of legislation to protect house buyers from unscrupulous developers .
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In 2002, the Housing Development Act 1966 was amended to further enhance the protection conferred on the purchasers of new residential properties. The amendments came into effect on 1 December 2002. The Housing Developers (Control and Licensing) Regulations 1989 was also amended at the same time. The Regulations was renamed the Housing Development (Control and Licensing) Regulations 1989. For ease of reference, the amended regulations will be referred to as the Housing Development Regulations 1989 in this paper. There are reports that the Housing Development Act 1966 and the Housing Development Regulations 1989 will be further amended . In this paper, the writers will examine the provisions in the said legislation as at 30 June 2006.
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The Housing Development Act 1966 applies to regulate the business of a housing development in West Malaysia. What is a housing development is defined in s 3 of the Act to mean: Develop or construct or cause to be constructed in any manner more than four units of housing accommodation and includes the collection of moneys or the carrying on of any building operations for the purpose of erecting housing accommodation in, on, over or under any land; or the sale of more than four units of housing lots by the landowner or his nominee with the view of constructing more than four units of housing accommodation by the said landowner or his nominee. Further, the term housing accommodation is also defined in s 3 to exclude an accommodation erected on any land designated for approval for commercial development. Thus, the Housing Development Act 1966 regulates the business of constructing more than four units of housing accommodation on a land designated for or approved for residential purpose. The writers will summarise below some of the features in the Housing Development Act 1966 which were enacted with the intention to protect a purchaser. First and foremost, s 5 of the Act clearly stipulates that only a person who has been licensed by the Controller of Housing may carry on the business of housing development in West Malaysia. One of the current [*21conditio] for the grant of the licence is that the applicant must have deposited at least RM250,000 with the controller . In addition, if the applicant is a company, its minimum issued and paid up capital in cash is RM250,000 . Further, s 6(1)(c), (d) and (e) of the Act provide that the controller will not grant a license if the applicant or the applicant s director, manager or secretary had been convicted of an offence under the Act and sentenced to a fine exceeding RM10,000 or to imprisonment, or had been convicted of an offence involving fraud or dishonesty, or is an undischarged bankrupt. Section 6(1)(f) further provides that the controller will not grant a license to an applicant if any of the applicant s directors or manager had been a director or manager of a licensed housing developer which had been wound up by a court.
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The requirement prescribed in s 6(1)(f) should, among others, reduce the risk of granting a license to an applicant who is managed by one or more persons with a bad track record in the

housing development industry. Another method used to minimize such risk is found in s 7(f) of the Housing Development Act 1966. It provides that a developer is to inform the controller on the progress of the housing project on a semi-annual basis. The progress reports are to be submitted to the controller by the 21st day of January and July respectively. Despite all these measures and close monitoring, there were 261 abandoned housing projects in West Malaysia for the period commencing from the year 1990 to December 2005.

Rights of the purchaser In this section, the writers will discuss the rights of the purchaser of a new residential property to claim for liquidated damages and to terminate the contract of sale. Regulation 11(1) of the Housing Development Regulations 1989 requires a contract of sale for the sale and purchase of a landed residential property to be in the form prescribed in Schedule G. If the subject residential property is a housing accommodation in a subdivided building, the contract is to be in the form prescribed in Schedule H. It is important to note the following. [*22] First, when the Minister of Housing and Local Government amended the Housing Developers (Control and Licensing) Regulations 1989 in 2002, the provisions in both Schedules G and H were also amended. There is an abundance of decided cases pertaining to the predecessors of the current Schedules G and H, but few decided cases on the current Schedules G and H. Caution must be exercised when perusing the former and applying the principles enunciated in the said cases to the current standard contract of sale. As was held by the Court of Appeal in Syarikat Kemajuan Perumahan Negara Sdn Bhd v Lee Cheng & Anor : Whatever principles and propositions enunciated in these cases must be considered in the light of those rules and regulations that were applicable. They cannot be of universal guide for all cases associated with late delivery of vacant possession of houses classified under the Housing Developers (Control and Licensing) Act 1966 except when the appropriate rules and regulations so applied are similar. Thus, one must be cautious when relying on such authorities to support or argue against the scope and extent of ... the said Act. Here, what sauce is good for the goose is not necessarily good for the gander. The respective rules or regulations used in each case must be fully appreciated.
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Secondly, the developer and the purchaser cannot contract out of the Housing Development Regulations 1989 unless the controller has approved it. If they were to do so, the term which is contrary to the prescribed form and which infringes the rights conferred on the purchaser by the Housing Development Act 1966 and its subsidiary legislation, is illegal and against the public policy . Notwithstanding that, the sale is not invalidated and the developer cannot avoid the sale .
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Thirdly, the provisions in Schedules G and H are mutatis mutandis. In this paper, the writers will, unless otherwise stipulated, refer only to the provisions in the form prescribed in Schedule G. [*23]

Right to claim for liquidated damages Where the new residential property is a landed property, the developer is to deliver vacant

possession of the property to the purchaser within 24 months from the date of the contract of sale . Where the new residential property is a housing accommodation in a subdivided building, the developer is to deliver vacant possession of the property within 36 months from the date of the contract . Where the purchaser had paid the deposit or booking fee prior to the execution of the sale and purchase agreement, time commences from the date of the payment. This was held by the Supreme Court in Faber Union Sdn Bhd v Chew Ngat Shong and was followed by the High Court in Lim Eh Fa & Ors v Seri Maju Padu .
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In Lim Eh Fa, Suriyadi J held that the contract was made on the date the deposit was paid, for on that very date, there was an offer and acceptance. The purchaser was obliged to pay the full purchase price and the developer assumed responsibility to fulfill its part of the bargain to build, deliver and handover vacant possession of the property within the stipulated time. If the date of the signing of the sale and purchase agreement were to be taken as the relevant date when the time started to run for the delivery of vacant possession, the developer could delay signing the agreement. This would prejudice the purchaser s interests. The learned judge explained that r 11(2) of the Housing Developers Regulations 1989 which read, no housing developer should collect any payment by whatever name called except as prescribed by the contract of sale meant that the developer was permitted to accept deposits so long as it was provided for under the sale and purchase agreement. This provision was retained when the 1989 Regulations was amended in 2002. Thus, the developer is to deliver vacant possession of the property within 24 months from the date of the sale and purchase agreement or the date of payment of the deposit, whichever is the earlier. The manner for the delivery of vacant possession of the property is prescribed in cl 24 of Schedule G . The provision reads as follows: Upon the issuance of a certificate by the vendor s architect certifying that the construction of the said building has been duly completed and water and electricity supply are ready for connection to the said building and the vendor has applied for the issuance of the Certificate of Fitness for Occupation from the appropriate authority in compliance with the relevant provisions of the [*24Uniform] Building By-Laws 1984 and the purchaser having paid all monies payable under sub-cl 4(1) in accordance with the Third Schedule and all other monies due under this agreement and the purchaser having performed and observed all the terms and covenants on his part under this agreement the vendor shall let the purchaser into possession of the said property. The delivery of vacant possession by the vendor shall be supported by: a certificate signed by the vendor s architect certifying that the said building has been duly constructed and completed in accordance with all relevant acts, by-laws and regulations and that all conditions imposed by the appropriate authority in respect of the issuance of the Certificate of Fitness for Occupation have been duly complied with; and a letter of confirmation from the appropriate authority certifying that the Form E as prescribed under the Second Schedule to the Uniform Building By-Laws 1984 has been duly submitted by the vendor and checked and accepted by the appropriate authority. Such possession shall not give the purchaser the right to occupy and the purchaser shall not occupy the said property until such time as the Certificate of Fitness for Occupation for the said building is issued. Upon the expiry of fourteen (14) days from the date of a notice from the vendor requesting the purchaser to take possession of the said property, whether or not the purchaser has actually entered into possession or occupation of the said property, the purchaser shall be deemed to have taken delivery of vacant possession.
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The developer is to request the purchaser to take possession of the property. The request must be accompanied by first, a certificate of the developer s architect that the property has been completed in accordance with the relevant laws, and that all conditions imposed by the authority in respect of the issuance of the Certificate of Fitness for Occupation ( the CFO ) have been complied with; and secondly, a certificate from the authority that the developer has submitted an application for the issuance of the CFO of the residential property and the application has been duly checked and accepted by the authority. Upon receipt of the notice, the purchaser has 14 days to take delivery. If the purchaser fails to do so, sub-cl (4) provides that he is deemed to have taken delivery of vacant possession. Clause 23(2) of Schedule G requires the developer to deliver vacant possession within the time stipulated, failing which the purchaser has a right to claim from the developer liquidated damages calculated on a daily basis at the rate of 10% of the purchase price from the expiry of the scheduled date of delivery of vacant possession until the actual date the purchaser takes delivery of vacant possession. The purchaser is not required to prove his actual damage or loss pursuant to s 75 of the Contracts Act 1950 (Act 136, Rev 1974), for cl 23(2) on liquidated damages is mandatory in nature . It will [*25be] shown below that this method for the computation of damages as prescribed in this clause has a bearing on the rights of the purchaser.
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To have a better understanding on the method for the computation of the agreed liquidated damages as prescribed in cl 23(2) of Schedule G, the writers will first, discuss the formula found in the predecessors of the Housing Development Regulations 1989, namely, r 12(1)(r) of the Housing Developers (Control and Licensing) Rules 1970, cl 18(2) of Schedule E to the Housing Developers (Control and Licensing) Regulations 1982, and cl 20(2) of Schedules G and H respectively of the Housing Developer (Control and Licensing) Regulations 1989. They were in pari materia. For ease of reference, the writers will refer to cl 18(2) of Schedule E to the Housing Developers (Control and Licensing) Regulations 1982. This clause was the subject of contention in Insun Development Sdn Bhd v Azali bin Bakar . It read: If the vendor fails to deliver vacant possession of the said building in time, the vendor shall pay to the purchaser liquidated damages to be calculated from day to day at the rate of 10% per annum of the purchase price.
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In Insun Development, the scheduled date for the delivery of vacant possession was 12 December 1986, but the property was completed and available for delivery only on 25 March 1994. There was a delay of more than six years. The purchaser filed his claim against the developer on 31 July 1993. The issue before the court was whether the purchaser was out of time. It would be if the purchaser s cause of action against the developer for liquidated damages arose the day after the expiry of the date scheduled for the delivery of vacant possession. The Federal Court held that in the absence of any express contractual provisions, the purchaser s right to sue for damages accrued on the date of the breach of contract. Since the breach occurred the day after the time limited in the contract of sale for the delivery of vacant possession, the purchaser was out of time. The limitation period had expired. The Federal Court in Insun Development Sdn Bhd distinguished the facts in the case from those in Loh Wai Lian v SEA Housing Corporation Sdn Bhd . In Loh Wai Lian, the parties to
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the contract modified the purchaser s rights in the event of a breach of the contract in such a manner as to postpone the date of accrual of the purchaser s right to sue for damages. The contract of sale in Loh Wai Lian provided a formula for the computation of the agreed liquidated damages which defined its opening and closing dates. The formula read: If the said building is not completed and ready for delivery of possession to the purchaser within the aforesaid period, the vendor shall pay to the purchaser agreed [*26liquidat] damages calculated from day to day at the rate of 8% per annum on the purchase price of the said property from such aforesaid date to the date of actual completion and delivery of vacant possession of the said property to the purchaser. The closing date was the date of the actual completion and delivery of vacant possession of the property to the purchaser. If there was any delay, the purchaser s cause of action for liquidated damages accrued then. Unlike the contract of sale in Loh Wai Lian, the contract of sale in Insun Development did not provide for any closing date in its formula for the computation of liquidated damages. The formula in Insun Development was the formula found in all standard contracts of sale of new residential properties prior to the amendment of the Housing Developer (Control and Licensing) Regulations 1989 in the year 2002. Thus, where the contract of sale of a new residential property was made prior to 1 December 2002 and there was a delay in the delivery of vacant possession of the property to the purchaser, the purchaser s cause of action for liquidated damages accrued on the expiry of the time scheduled in the contract for the delivery of vacant possession. Pursuant to s 6 of the Limitation Act 1953 (Act 254, Rev 1981), the purchaser had to commence action for the damages within six years from the date. He should not wait for the vacant possession of the property to be delivered to him before he commenced action, for the limitation period might have expired by then. If the purchaser failed to file his action within six years from the scheduled date for the delivery of vacant possession, he might be left without any legal remedy. However, the current scenario under the Housing Development Regulations 1989 is different. All contracts of sale of new residential properties made on or after 1 December 2002 adopt the formula prescribed in the contract of sale in Loh Wai Lian for liquidated damages for late delivery of vacant possession. The current cl 23(2) of Schedule G prescribes the date the purchaser takes vacant possession of the property as the closing date for the computation of the liquidated damages. Clause 23(2) reads: If the vendor fails to deliver vacant possession of the said building in the manner stipulates in cl 24 herein within the time stipulated in sub-cl (1), the vendor shall be liable to pay to the purchaser liquidated damages calculated from day to day at the rate of ten per centum (10%) per annum of the purchase price from the expiry date of the delivery of vacant possession in sub-cl (1) until the date the purchaser takes vacant possession of the said building. Such liquidated damages shall be paid by the vendor to the purchaser immediately upon the date the purchaser takes vacant possession of the said building.
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Further, cl 23(2) clearly provides that the developer is liable to pay the liquidated damages to the purchaser only upon delivery of the vacant possession [*27to] the purchaser. Prior thereto, the developer is not liable. Thus, if there is a delay in the delivery of vacant possession, the purchaser s cause of action against the developer for liquidated damages arises only on the date the purchaser takes or is deemed to have taken vacant possession of the said

residential property . If the purchaser wishes to file an action against the developer in court, he has to do so within six years from that date . This is further reinforced by cl 23(3) of the Schedule G , which reads: 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 building.
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It is submitted that cl 23(2) and (3) of Schedule G presuppose that all new residential properties will be completed. They do not contemplate the abandonment of any housing project. If the developer abandons the project, the purchaser cannot claim for liquidated damages, for vacant possession of the property has yet to be delivered to him. Thus, a developer may avoid paying liquidated damages for late delivery to the purchaser by not completing the property at all or by not delivering vacant possession to the purchaser. It is to be stressed that the purchaser s cause of action against the developer will be triggered only after the developer has requested the purchaser to take possession of the property. In view thereof, it is of utmost importance to study whether the purchaser has any other remedy against the developer. In the following section, the writers will discuss whether the purchaser of a new residential property in an abandoned project may terminate the contract of sale for the sale and purchase of the property.

Right to terminate the sale and purchase agreement Clause 10 of Schedule G to the Housing Development Regulations 1989 provides that the developer has the discretion to terminate the contract of sale if the purchaser, inter alia, fails to pay any of the installments within 28 days from its due date or commits any breach of or fails to perform or observe any material terms or conditions or covenants contained in the contract. A pertinent issue is whether the purchaser of a new residential property is given a similar discretion whether to terminate the contract of sale and claim the refund of all moneys paid thus far in the event the developer fails to fulfill its obligations under the contract.
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A provision which gives the purchaser the right to terminate the contract of sale is s 8A of the Housing Development Act 1966. It provides for the [*28mutual] termination of the contract by both purchaser and developer if the development of the phrase or project has not commenced six months after the execution of the contract provided that the following two conditions are fulfilled. The first condition is that at least 75% of all the purchasers who have entered into contracts of sale to buy residential properties in the phase or project have agreed in writing with the housing developer to terminate the contracts. The second condition is that the termination has been approved by the minister. Upon the termination of the contracts of sale, the developer shall refund all moneys received from the respective purchasers free of any interest. Unfortunately, s 8A applies only where the developer has not commenced the project. Section 8A does not apply where the developer abandons the project after it has started work on it. Apart from s 8A, there is no other express provision in the Act or its subsidiary legislation which gives a statutory right to the purchaser to terminate the contract of sale and claim for the full refund . The writers are not aware of any decided case pertaining to the rights of the purchaser to terminate the contract which is in the form currently prescribed in Schedule G to the Housing Development Regulations 1989. But, there are numerous cases pertaining to his
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position under the previous standard contract of sale and the authorities are consistent. The courts held that the purchaser was entitled to terminate the contract and claim for the full refund of all monies paid by the purchaser to the developer . The writers will discuss two of the cases, namely, Tan Yang Long & Anor v Newacres Sdn Bhd and Thomas a/l Iruthayam & Anor v LSSC Development Sdn Bhd .
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In Tan Yang Long, the purchaser entered into a contract of sale on 18 March 1985. The contract was subjected to the Housing Development Act 1966 and vacant possession of the apartment was to be delivered by 17 March 1988. Time was the essence of the contract. The vacant possession was not delivered on the scheduled date, and the purchaser sent a letter on the first day of each month from October 1988 to February 1989 demanding compensation for late delivery as provided in the contract of sale. The developer ignored the letters and on 3 February 1989, the purchaser s solicitors sent a letter to the [*29develope] to terminate the contract of sale and to demand the refund of all monies paid. The court held that the purchaser could do so. Shanker J held : By February 1989 there was a delay of nearly a year. I regard the total failure of (the developer) to give any credible assurance as to if and when the project would be completed to amount to a renunciation or abandonment of the agreement. Their conduct amounted to a fundamental breach of contract.
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In Thomas a/l Iruthayam & Anor v LSSC Development Sdn Bhd , the purchaser entered into a contract of sale for the sale and purchase of a residential property on 19 June 1996. Vacant possession together with the CFO and with water and electricity supply connected to the property was to be delivered to the purchaser within 24 months. In the event of delay, the developer was to pay immediately to the purchaser liquidated damages calculated from day to day at the rate of 10% per annum of the purchase price. Clause 12(b) further provided that: In the event of a failure and/or default by the vendor(s) to complete the sale of the said property and to deliver vacant possession of the same to the purchaser(s) in accordance with the terms herein, the purchaser(s) shall, without prejudice to the other provisions of this agreement or any other rights and remedies as may be available to the purchaser(s) at law or on equity, be entitled to take such action as may be available to the purchaser(s) at law for specific performance of the terms and conditions herein and the vendor(s) shall reimburse all cost and expenses incurred by the purchaser(s) (including but without limitation the purchaser(s) solicitors" cost on a solicitor-client basis).
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When the developer failed to deliver vacant possession of the property, the purchaser through his solicitors sent a letter of termination of the contract of sale to the defendant. The High Court held that the developer had breached the contract and cl 12(b) of the contract of sale allowed the purchaser to terminate the contract. The purchaser exercised his rights under cl 12(b) when his solicitor delivered the letter of termination to the developer. The court ordered the developer to refund the purchase price received together with interest at the rate of 8% from the date of the originating summons. The court further opined that even if the contract of sale did not provide for termination, s 56(1) of the Contracts Act 1950 allowed the purchaser to do so. The purchaser had an option whether to carry on or avoid the contract when the developer failed to deliver vacant possession within the time stipulated in the contract. Section 56(1) of the Contracts Act 1950 reads as follows: When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at [*30or] before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the

essence of the contract. Section 56(1) of the Contracts Act 1950 applies where time is of the essence of the contract. In Thomas a/l Iruthayam, time was of the essence of the contract. Thus, according to Suriyadi J, even if the contract of sale did not specifically give the purchaser a right to terminate the contract, the purchaser has an option whether to carry on or avoid the contract when the developer failed to deliver vacant possession within the time stipulated in the contract. Thus, the purchaser could also sue to terminate the contract under s 34 of the Specific Relief Act 1950 (Act 137, Rev 1974). It is submitted that the principles enunciated by the courts in Tan Yang Long & Anor v Newacres Sdn Bhd and Thomas a/l Iruthayam v LSSC Development Sdn Bhd are still applicable to the standard contracts of sale of new residential properties in the form currently prescribed in Schedule G. The writers reasons are as follows. First, the general principles in the law of contracts should apply if they are not contrary to the purpose and spirit of the Housing Development Act 1966. Secondly, since the Housing Development Act 1966 was enacted to protect the purchaser, the purchaser should continue to enjoy the rights conferred on him by other legislations. In City Investment Sdn Bhd v Koperasi Cuepacs Tanggungan Bhd , the Privy Council held that the Housing Development Act 1966 and the Housing Developers (Control and Licensing) Regulations 1970 were designed to improve and supplement common law remedies and do not expressly or by implication deprive a litigant of a contractual remedy which is not dealt with under the rules . As was held by the High Court in Chye Fook and Anor v Teh Teng Seng Realty Sdn Bhd , the purchaser should not be deprived of his rights under the Contracts Act 1950. If the legislature intended otherwise, the legislature would have clearly provided so in the Housing Development Act 1966. The court in Chye Fook also held that the purchaser s entitlement to liquidated damages if the developer failed to complete within 24 months did not in any way take away the rights of the purchaser to rescind the contract .
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However, it must be stressed that the purchaser must exercise his option to terminate the contract of sale within a reasonable time, particularly where the developer has not abandoned the project, but instead has continued with the construction work after the expiry of the scheduled time for delivery of vacant possession. In Cheah Khoon Tee v Crimson Development Sdn Bhd , the developer failed to deliver vacant possession of the property within the time stipulated in the contract of sale. After 18 months of delay, the purchaser filed [*31an] application to terminate the contract of sale pursuant to s 56 of the Contracts Act 1950. Steve Shim J held as follows : The passive conduct or silence and inactivity on the part of (the purchaser) for a period of 18 months or thereabout, must, in the absence of any cogent explanation, be regarded as unreasonably long, suggesting, quite conceivably, that (the developer) could continue with the construction work on (the residential property) indefinitely upon the expiry of the completion date or encouraging (the developer) to think that it would be given time indefinitely and not to be cut off without further notice. Such further notice appears to relate to giving a fresh limit with a proviso that failure to comply therewith would result or deem to result in the contract being cancelled ... ... In the instant case, no notice of any fresh limit had been given by (the purchaser) to (the developer). There is sufficient evidence that (the developer) had continued with the construction work ... well after the expiry of the completion date. In the circumstances, I am of the view that (the purchaser has) waived (his) rights to rely on time being of the essence of the agreement and are therefore estopped from terminating or
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rescinding the said agreements. This would effectively mean that (the purchaser s) remedy ... is to sue (the developer) for liquidated damages. The next issue is whether the purchaser has any right to claim damages upon the termination of the contract of sale. Following the Privy Council s decision in Muradlihar Chatterjee v International Film Co Ltd , an innocent party who exercises his right to terminate the contract under either s 40 or s 56(1) of the Contracts Act 1950 may avail himself to the remedy prescribed in s 76 of the Act. The Federal Court in Apex Pharmacy v Chee Chin held that s 76 applies when a person avoids the contract under s 56(1). Section 76 of the Contracts Act 1950 reads, a person who rightly rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract .
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In Chye Fook & Anor v Teh Teng Seng Realty Sdn Bhd , the court held that following s 76 of the Contracts Act 1950, the purchaser who avoids the contract, is entitled to compensation for any damage which he has sustained through the non-fulfillment of the contract. This includes the right to the refund of all moneys which he has paid under the agreement and all other damages which is calculated following the formula laid down in s 74 of the Act. The purchaser can claim compensation for any loss or damage caused to him which naturally arose in the usual course of things from the breach of the contract, or which the parties knew, when they made the contract, to be likely to result from the breach of it. [*32]
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Another important issue is whether the purchaser who has rightfully terminated the contract of sale may claim for the liquidated damages pursuant to cl 23(2) of Schedule G in lieu of the damages calculated pursuant to s 74 of the Contracts Act 1950. The High Court in Kang Yoon Mook Xavier v Insun Development Sdn Bhd held that the purchaser could do so. However, it is submitted that this cannot be generalized. In Kang Yoon Mook Xavier, the contract of sale was in the form prescribed in Schedule E to the Housing Developers (Control and Licensing) Regulations 1982. The prescribed formula for liquidated damages did not provide a closing date and thus, the purchaser could sue for the liquidated damages immediately upon the expiry of the scheduled date for the delivery of vacant possession. He did not need to wait for the delivery of the vacant possession of the property to him.
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As discussed above, the formula for liquidated damages which is currently prescribed in Schedule G to the Housing Development Regulations 1989 clearly provides that a purchaser cannot proceed against the developer for the liquidated damages before he takes vacant possession of the property . The provision in cl 23(3) is found in all contracts of sale of new residential properties which are made on or after 1 December 2002. Thus, if the contract of sale between the purchaser and developer is made on or after that date and the contract is terminated at the option of the purchaser under s 76 of the Contracts Act 1950, the purchaser cannot claim for liquidated damages pursuant to cl 23(2) of Schedule G . He has to prove his loss under s 74 of the Contracts Act 1950. However, if the contract was made before 1 December 2002, the purchaser could claim for the liquidated damages stipulated in the contract of sale instead of damages calculated pursuant to the formula prescribed in s 74 of the Contracts Act 1950.
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Where the purchaser has charged the property or assigned his rights In most cases, the purchaser of a new residential property takes a loan to finance his purchase.

As security, the purchaser creates a charge over the property where a separate document of title to the property has been issued. Where there is no separate document of title to the residential property, the purchaser assigns his rights under the contract of sale to his financier pending the issuance of the separate title to the property and the creation of a charge in favour of the financier. [*33] In this section, the writers will first, discuss whether the purchaser who has created a charge or an assignment in favour of the financier may instruct the financier to stop remitting the progress payments to the developer; and secondly, examine whether the said purchaser has any right to institute action against the developer.

(a) Right to stop payment? Before the developer transfers the property to the purchaser to enable the purchaser to create a charge in favour of his financier, the developer will require the financier to give an undertaking to remit the loan sum progressively to the developer in accordance with the contract of sale. Likewise, where there is no separate document of title to the property, the developer will require the financier to give a similar undertaking in consideration of the developer giving its consent to the assignment. A pertinent issue is whether the purchaser may restrain his financier from fulfilling its obligations under its undertaking to the developer, that is, to restrain the financier from releasing the loan progressively to the developer. This issue is critical where there is a delay in the completion of the property and the anticipated liquidated damages exceed the balance of the purchase price for the property. This was the scenario in Hoo See Sen v Public Bank Bhd & Anor and the Supreme Court granted an injunction against the financier to restrain it from paying the developer. The injunction was granted despite the fact that the financier would commit a breach of its undertaking to the developer. According to Salleh Abas LP, there was no provision in the contract between the purchaser and his financier which either authorized or imposed an obligation on the financier to give an undertaking to the developer to pay any moneys due from the purchaser to the developer. Instead, it was expressly provided in the contract that the financier s authority to disburse the loan to the developer was for the benefit of the purchaser. The payment of the balance of the purchase price to the developer when the developer was under an immediate obligation to pay a bigger sum of moneys to the purchaser could not in any circumstances be for the benefit of the purchaser.
40

Further, the purchaser had assigned only his rights regarding the property and under the contract of sale to the financier. The purchaser s duties and liabilities under the contract of sale, which included the payment of the balance of the purchase price, remained with the purchaser. Thus, under no circumstances was the financier bound or even authorized to make such payment. In fact, the financier was an agent of the purchaser in the matter of disbursing the loan. The financier held the loan sum on behalf of the [*34purchase] and was bound to release the money only when authorized to do so, and it must be for the benefit of the purchaser. However, it is submitted that the principle in Hoo See Sen may no longer applies for the

following reasons. First, in Hoo See Sen, the Supreme Court held that the release of the moneys could not benefit the purchaser for the developer was under an immediate obligation to pay a bigger sum of moneys to purchaser. This will not be the position under the current standard contract of sale unless the developer has delivered vacant possession of the property to the purchaser. As discussed above, cl 23 of the present Schedule G provides that the developer is obliged to pay the liquidated damages only after the delivery of vacant possession of the property to the purchaser. On the other hand, the purchaser is obliged under cll 4 and 9 to pay the purchase price progressively upon receipt of the notice that a particular stage of works has been completed. Even though there is a delay in the completion of the property and vacant possession has not been given to the purchaser, the purchaser has to pay the progressive payments within 21 days of notice. If he fails to do so, an interest of 10% will be levied on the unpaid installment. Secondly, the Supreme Court in Hoo See Sen held that the financier was the purchaser s agent in the matter of disbursing the loan. Thus, a financier could use the principles of agency to protect itself. Since s 183 of the Contracts Act 1950 provides that an agent is not personally bound by a contract with a third party where the agent made the contract on behalf of his principal, the financier should expressly state in its undertaking to the developer that the undertaking is given on behalf of the purchaser. Then, the developer cannot sue the financier on the undertaking which the financier issued on behalf of the purchaser. Further, to avoid the effect of the decision in Hoo See Sen that the financier was not authorized to give an undertaking to the developer, a financier may require the purchaser to expressly authorize the financier to give the required undertaking to the developer. This method of protection will also comply with the principle in Perdana Merchants Bankers v Abdul Rahim bin Abdul Hamid . In Perdana Merchants Bankers, the High Court held that even though a financier owes a fiduciary duty to its borrower and is duty bound to execute its duties and responsibilities with reasonable care and skill based on the principle of constructive trustee, the principle of constructive trustee is not absolute. The principle is limited by the terms of the agreement between the financier and the borrower. If there are clear terms regarding an issue, the terms should be enforced. If the financier has acted within the terms, then the question of the financier s failure to discharge its duty as a constructive trustee does not arise. [*35]
41

In conclusion, if the purchaser wishes to restrain the financier from fulfilling its undertaking to the developer, the purchaser will have to obtain an injunction against the financier. This is due to the change in the method on the computation of liquidated damages and the methods which the financier may use to circumvent the effect of Hoo See Sen v Public Bank Bhd & Anor.

(b) Right to institute action against the developer? Prior to the amendment to the Housing Developers (Control and Licensing) Regulations 1989 in the year 2002, an important issue was whether such an assignment in favour of the financier was an assignment under s 4(3) of the Civil Law Act 1956 (Act 67, Rev 1972). If it was, then the right to sue the developer on the contract of sale was vested with the financier. The purchaser had no right to sue the developer on the contract of sale. However, if the assignment took effect in equity, the right to sue the developer remained with the purchaser.

Thus, whether the purchaser had a right to sue the developer on the contract depended on whether he had created an assignment under s 4(3) of the Civil Law Act 1956. And whether an assignment under s 4(3) of the Civil Law Act 1956 had been created depended on the terms of the instrument creating the assignment. As Seah FJ said in Nouvau Mont Dor (M) Sdn Bhd v Faber Development Sdn Bhd : It is plain that in every case of this kind, all the terms of the instrument must be considered; and whatever may be the phraseology adopted in some particular part of it, if, on consideration of the whole instrument, it is clear that the intention was to give a charge only, then the action must be in the name of the assignor. While, on the other hand, if it is clear from the instrument as a whole that the intention was to pass all the rights of the assignor in the debt or chose in action to the assignee, then the case will come within (s 4(3) of the Civil Law Act 1956) and the action must be brought in the name of the assignee.
42

Unfortunately, the status of an assignment created in favour of the financier as security for the loan granted to the purchaser was uncertain. There were conflicting decisions on whether the assignment was an assignment under s 4(3) of the Civil Law Act 1956 or an assignment in equity even where the assignment clauses were similarly worded . In Nouvau Mont Dor (M) Sdn Bhd v Faber Development Sdn Bhd, the Federal Court held that the assignment was an assignment under s 4(3) of the Civil Law Act 1956. But, the Federal Court s decision was not followed by the Court of Appeal in Philleo Allied Bank (Malaysia) Bhd v Bupinder Singh a/l Avtar Singh & Anor despite the doctrine of stare decisis. [*36]
43 44

To overcome this unhappy state of events, a new provision was included in Schedule G when the Housing Developers (Control and Licensing) Regulations 1989 was amended in 2002. The new cl 7 of Schedule G reads: The purchaser shall be entitled on his own volition in his own name to initiate, commence, institute and maintain in any court or tribunal any action, suit or proceeding against the vendor or any other person in respect of any matter arising out of this agreement unless a contrary intention is expressed in any agreement, assignment or charge between the purchaser and the financier in which case the prior written consent of the financier must first be obtained.
45

Clause 7 provides that the purchaser may institute an action against the developer in respect of a matter arising out of the contract of sale unless a contrary intention is expressed in any agreement, assignment or charge between the purchaser and the financier. If there is a contrary intention expressed in the document, the purchaser must obtain the prior written consent of the financier before he institutes an action against the developer. Thus, whether the purchaser may proceed against the developer where he has assigned or charged the property to his financier depends on the terms of his contract with his financier. It is submitted that inevitably, a financier will require the purchaser to obtain its prior written consent. This is to protect the financier s interest as a lender. If the purchaser has defaulted on his loan, the financier may require the liquidated damages for late delivery or any refund of the purchase price be used to settle wholly or in part the loan given to the purchaser. Further, if the purchaser is given an absolute right to initiate action against the developer, he may exercise his right to the detriment of the financier. The purchaser may terminate the contract of sale in the event of a breach by the developer , and thus wipe out the security for the loan.
46

Avenues available to the purchaser In this section, the writers will discuss the avenues available to the purchaser who wishes to initiate an action against the developer. The avenues are first, the Housing Legal Clinic; secondly, the Tribunal for Homebuyer Claims; and thirdly, the courts.

The Housing Legal Clinic The Housing Legal Clinic was established with the objective to provide advice and help solve the problems faced by purchasers, particularly those who cannot afford legal advice or counsel, against housing developers. The function of [*37the] Housing Legal Clinic is to give views, advice and ways of resolving the dispute between the purchaser and developer. If both parties do not agree with the Housing Legal Clinic s views, they may settle their dispute through the Tribunal for Homebuyer Claims or the court . The respective jurisdictions of the Tribunal and the court are discussed below.
47

The Tribunal for Homebuyer Claims One of the effects of the amendments to the Housing Development Act 1966 in 2002 was the establishment of the Tribunal for Homebuyer Claims pursuant to s 16B of the Act.

(a) Jurisdiction The Tribunal for Homebuyer Claims may hear a claim from a person who has purchased a residential property directly from the developer as well as the person who has purchased a residential property from the original purchaser .
48

The first condition is found in s 16N(2) of the Housing Development Act 1966. It provides that the jurisdiction of the Tribunal is limited to a claim that is based on a cause of action arising from the contract of sale between the claimant and the developer. According to the Federal Court in Westcourt Corp Sdn Bhd v Tribunal Tuntutan Pembeli Rumah , it is immaterial that the contract of sale was made before the tribunal was established on 1 December 2002. However, it is of utmost importance that there must exist a contract between the claimant and the developer. This leads to the issue whether a subsequent purchaser from the original purchaser, has locus standi to lodge his claim against the developer with the tribunal. It appears that he does not unless he has entered into a contract of sale with the developer. It appears to be insufficient that he has entered into an agreement with the original purchaser to purchase the said property.
49

The second condition is also found in s 16N(2) of the Housing Development Act 1966. The claim must be filed not later than 12 months from the date of the issuance of the CFO of the property or the expiry date of the defect liability period as set out in the contract of sale. It is submitted that the provision is ambiguous. It is uncertain whether the limitation period for a claim on liquidated damages is 12 months from the date of the issuance of the CFO, and the

limitation period for the non-rectification of any defect is 12 months from the expiry date of the defect liability period. This is because [*38the] limitation period as prescribed in s 16N(2) could also be interpreted to mean that the limitation period for any claim against the developer is 12 months from the date of the issuance of the CFO or the expiry of the defect liability period, whichever is the later. The third condition is that the claim does not exceed RM25,000 unless both developer and purchaser have agreed that the matter be heard by the tribunal . However, if the claim exceeds RM25,000 and the developer does not agree to have the matter heard by the tribunal, the purchaser may still lodge his claim with the tribunal. Upon the lodgment of the claim, he is deemed to have abandoned his claim for the sum in excess of RM25,000 and has discharged the developer of the amount so abandoned .
50 51 52

(b) Salient features The purpose of the establishment of the Tribunal for Homebuyer Claims is to simplify the settlement of claims made by a purchaser against the developer. It is to benefit many purchasers because it provides for an easier and cheaper means of dispute resolution . The writers will discuss some of the salient features of the tribunal.
53

Section 16N of the Housing Development Act 1966 provides that the tribunal shall assist the purchaser and the developer to negotiate a settlement if the circumstances are appropriate. Further, since most of the issues raised are not complex issues of law, both developer and purchaser shall not be represented by an advocate and solicitor. The only exceptions are where in the opinion of the tribunal, the matter in question involves complex issues of law and one party will suffer severe financial hardship if he is not represented by an advocate and solicitor . However, if one party is allowed to be represented by an advocate and solicitor, then the other party shall also be so entitled. This is to ensure that neither party to the proceedings would be substantially disadvantaged. With regard to the procedure, s 16AE provides that subject to the provisions in the Housing Development Act 1966 and any regulations made under the Act, the tribunal shall adopt such procedure as it thinks fit and proper. This is further reinforced by s 16AE of the Act which provides that the proceedings of the tribunal or award or other document of the tribunal shall not be set aside or quashed for want of form. However, it must be noted that the Minister of Housing and Local Government has made regulations pertaining to the procedure of the tribunal, the forms to be used, and the fees payable. They are found in the Housing Development (Tribunal [*39for] Homebuyers Claims) Regulations 2002 which also came into effect on 1 December 2002.
54

Section 16Y of the Housing Development Act 1966 further requires the Tribunal for Homebuyer Claims to make its award without delay and, where practicable, within sixty days from the first day of the hearing. Such award shall be deemed to be an order of a magistrate s court and can be enforced accordingly . Thus, if the developer fails to comply with the award, the purchaser may execute the award by applying to the magistrate s court in which the award was recorded, for a writ of seizure and sale or execution against the developer. The purchaser can also petition to wind up the developer.
55

Section 16AD further protects the purchaser by providing that any person who fails to comply with an award made by the Tribunal within the period specified in the award commits an

offence and shall on conviction be liable to a fine not exceeding RM5,000 or to imprisonment for a term not exceeding two years or to both. If the offence is a continuing offence, the offender shall also be imposed with a fine not exceeding RM1,000 for each day or part of a day during which the offence continues after conviction.

The court If the purchaser s claim is outside the jurisdiction of the Tribunal for Homebuyer Claims, he may file his claim in a court. If the amount of his claim does not exceed RM250,000, he is to file his claim with the Sessions Court. He must comply with the court procedure prescribed in the Rules of the Subordinate Courts 1980 (PU(A) 328/80). If the purchaser is claiming for an amount exceeding RM250,000 or for specific performance, the purchaser is to file his claim with the High Court. He must also comply with the court procedures as prescribed in the Rules of the High Court 1980 (PU(A) 50/80). Pursuant to s 6 of the Limitation Act 1963, the purchaser must file his claim within six years from the date his cause of action against the developer accrues. If the cause of action pertains to the liability of the developer for late delivery of vacant possession, the limitation period is six years from the date he takes vacant possession of the property . If the cause of action pertains to the failure of the developer to rectify the defects, the limitation period is six years from the expiry of the time given to the developer which is 30 days from the purchaser s notification . [*40]
56 57

Recommendations In this concluding section of this paper, the writers will propose some reforms to the Housing Development Act 1966 and its subsidiary legislation to enhance the protection of a purchaser of a new residential property.

Extension of the Housing Development Act 1966 The Housing Development Act 1966 provides for the control and licensing of the business of housing development in West Malaysia only. It is proposed that the Act should be extended to cover the whole of Malaysia. It is also proposed that the definition of housing accommodation and housing development be reviewed. Currently, the development of residential units on any land designated for or approved for commercial development is not regulated by the Act. Further, if the number of residential units developed or to be developed is not more than four, the development is not regulated by the Act. It is immaterial that the development is carried out on a land designated for or approved for residential development. To protect a purchaser of a new residential unit, it is proposed that the definition for housing accommodation be widened to include an accommodation erected on any land designated for or approved for commercial development. This is important in the light of the trend to build and sell service apartments, ie housing accommodations on land designated for commercial development. It is also proposed that the terms housing development should also be extended to include

situations where any person erect a housing accommodation with the intent to sell it at a profit.

Defects liability period The writers have highlighted that the delivery of vacant possession of the property to the purchaser does not mean that the purchaser may occupy the property. This is because the developer may deliver vacant possession without obtaining the CFO. It is sufficient for the developer to prove that it has submitted an application for the CFO to the relevant authority. However, cl 26(1) of Schedule G provides that the defects liability period will expire 18 months after the purchaser has taken delivery of vacant possession. As the purchaser cannot occupy the property before the issuance of the CFO, the purchaser may not discover the defects. Thus, it is proposed that the defects liability period should commence only upon the issuance of the CFO.

Delivery of vacant possession As the purchaser cannot occupy the property before the issuance of the CFO, he will continue to suffer loss in the form of payment of rental or loss in rental income . The possibility of the delay in the issuance of the CFO is recognized, [*41for] s 16N of the Housing Development Act 1966 provides that the limitation period to file a claim with the Tribunal for Homebuyer Claims is 12 months from the date of the issuance of the CFO of the property or the expiry date of the defect liability period . As the defects liability period will expire only 18 months after the purchaser has taken delivery of vacant possession , the Regulations thus recognizes that the issuance of the CFO may be delayed for more than six months after the delivery of vacant possession of the property to the purchaser.
58 59 60

Thus, it is proposed that Schedule G to the Housing Development Regulations 1989 be amended to provide that the developer may deliver vacant possession only after the CFO has been issued. In the event this proposal is not feasible, the Housing Development Regulations 1989 should be amended to require the developer to pay to the purchaser liquidated damages from the scheduled date of delivery of vacant possession until its actual delivery or the issuance of the CFO by the relevant authority, whichever is the later.

Accrual of cause of action for liquidated damages Further, it is noted that the purchaser s cause of action to claim for liquidated damages for late delivery accrues only on the date the purchaser takes delivery of vacant possession. It appears that if the project is abandoned, the purchaser s cause of action will never arise. In view of this, it is suggested that the purchaser s cause of action should accrue on the delivery of vacant possession or the certification by the Minister for Housing and Local Government pursuant to s 11(1)(ca) of the Housing Development Act 1966 that the developer has abandoned the project, whichever is the earlier.

Right to terminate It is proposed that the standard contract of sale provides that where the minister has certified that the project has been abandoned, the purchaser has the right to terminate the contract of sale and claim for the amount paid thus far to the developer under the contract. The unfortunate purchaser should also be entitled to claim damages for his loss arising from the breach by the developer. It is also proposed that the standard contract of sale provides that where the developer fails to deliver vacant possession within the contracted time, [*42the] purchaser has the right to terminate the contract after giving sufficient notice to the developer. Currently, the purchaser has to rely on the rights conferred on him under the Contracts Act 1950.

Tribunal for Homebuyer Claims The Tribunal for Homebuyer Claims was established to benefit a purchaser of a new residential property who has a claim against the developer. However, reforms in the following areas are desired.

(a) Limitation period Currently, the limitation period to lodge a claim with the Tribunal for Homebuyer Claims is 12 months from the date of the issuance of the CFO of the property or the expiry date of the defect liability period as set out in the contract of sale. As discussed above, this provision causes some uncertainty and thus, should be clarified. Further, it is submitted that the prescribed limitation period is too short and should be reviewed. It is noted that the limitation period prescribed in the Limitation Act 1953 is six year from the date of the breach.

(b) Position of a subsequent purchaser The term homebuyer was defined to mean the person who purchases a new residential property from the developer as well as the person who purchases the property from the original purchaser. However, s 16N(2) of the Housing Development Act 1966 provides that only a person who has entered into a contract of sale with the developer has locus standi to institute action against the developer at the tribunal. If that is so, the purpose of the wide definition given to the term homebuyer , that is, to extend the jurisdiction of the tribunal to the subsequent purchaser, is defeated. The doctrine of privity still applies to prohibit the subsequent purchaser who has no contractual relationship with the developer from taking action against the developer. To protect the subsequent purchaser against the developer, s 16N(2) should be reviewed and amended to allow the subsequent purchaser to sue the developer even though he has not entered into a contract with the developer. The doctrine of privity should not apply to the subsequent purchaser.

Stricter conditions for licence The minimum issued and paid-up capital of a licensed housing developer is only RM250,000. The developer must also have deposited at least RM250,000 with the Controller of Housing. The writers submit that the minimum requirements should be reviewed. The minimum issued and paid-up capital should be based on the value of the project. This is to ensure that a developer has sufficient working capital to carry out a housing project to completion. [*43The] minimum amount of deposit with the Controller should also be based on the value of the project to ensure that the developer is committed to complete the project. In the event the project is abandoned, the Controller can forfeit the deposit and use the moneys to complete it. According to the secretary-general of the Homebuyers Association of Malaysia, Mr Chang Kim Loong, the Government has allocated RM2 billion to revive abandoned projects .
61

The writers also propose that where the applicant of a developer s license is a company, the controller may require the applicant s shareholders and officers to guarantee the completion of the project and pay the liquidated damages to the purchasers in the event of delay. This is to overcome the doctrine of corporate personality and the doctrine of privity. Under the doctrine of corporate personality, a company is a separate legal entity from its shareholders and officers. Under the doctrine of privity, the purchaser may claim for liquidated damages from only the developer. Thus, unless the corporate veil is lifted, the purchaser cannot sue the developer s shareholders and officers. As was held by the Court of Appeal in Law Kam Loy & Anor v Boltex Sdn Bhd & Ors , the court will lift the corporate veil only where special circumstances exist indicating that the company is a mere facade concealing the true facts. Thus, it is unlikely the court will lift the veil of incorporation of a developer to require its shareholders or officers to pay damages to the purchasers of the project in the event there is delay in the delivery of vacant possession.
62

The guarantee by the developer s shareholders and officers that they will pay the liquidated damages to the purchasers will increase the purchasers chances of receiving due compensation when there is a delay in the delivery of vacant possession. This is particularly so where the project is abandoned, for it is unlikely that the developer has the funds to satisfy any judgment awarded against it. However, the developer s shareholders and officers may have the financial means to satisfy the awards. Therefore, to ensure commitment on the part of the developer s shareholders and officers to complete the project, it is proposed that the Controller should have the discretion to require the applicant s shareholders and officers to provide a guarantee. The Controller may enforce the guarantee on behalf of the affected purchasers. [*44] Return to Text

n 1http://www.kpkt.gov.my/kpkt/main.php?Content=sections&SectionID=149 (Accessed on 25 August 2006)

n 2As per Lord Oliver of Aylmerton in Loh Wai Lian v SEA Housing Corporation Sdn Bhd [1987] 2 MLJ 1, at p 1.

n 3Hariram a/l Jayaram & Ors v Sentul Raya Bhd [2003] 2 MLJ 22, and SEA Housing Corporation Sdn Bhd v Lee Poh Choo [1982] 2 MLJ 31, at p 34.

n 4The Star, 23 June 2006, at p N4.

n 5Section 6(1)(a) and (b) of the Housing Development Act 1966. However, there is a proposal to exempt an applicant from placing the deposit with the controller if the applicant adopts the build-then-sell concept. It is submitted that such minimum requirement should be raised. The minimum deposit should be based on the value of the project.

n 6Section 6(1)(a) of the Housing Development Act 1966. However, it is submitted that such minimum requirement should be raised. The minimum paid up capital should be based on the value of the project. Another alternative is to require the applicant to provide a performance bond of an ascertained percentage of the value of the project.

n 7[2006] 1 MLJ 150, at p 157.

n 8See the Federal Court decisions in SEA Housing Corporation Sdn Bhd v. Lee Poh Choo [1982] 2 MLJ 31, at p 34 where Suffian LP held that contracting out in favour of the weaker party - ie the purchaser - might be countenanced by the courts ; and City Investment Sdn Bhd v Koperasi Serbaguna Cuepecs Tanggungan Bhd [1985] 1 MLJ 285, at p 290. See also the Supreme Court s decision in Rasiah Munisamy v Lim Tan & Sons Sdn Bhd [1985] 2 MLJ 291, at pp 295-296, where Mohamed Azmi SCJ held that although the agreement did not comply with the provisions in the Housing Developers (Control and Licensing) Regulations 1970, the purchaser could enforce his rights under the agreement because he belonged to a class of persons for whose protection the statutory requirement was imposed. See also SY Kok, Law Governing the Housing Industry: A Postscript [1999] 2 MLJ cxxxi.

n 9Kang Yoon Mook Xavier v Insun Developers Sdn Bhd [1995] 2 MLJ 91.

n 10Clause 23(1) of Schedule G to the Housing Development Regulations 1989.

n 11Clause 26(1) of Schedule H to the Housing Development Regulations 1989.

n 12[1995] 2 MLJ

n 13[2002] 7 MLJ 262, at p 266.

n 14See also cl 27 of Schedule H to the Housing Development Regulations 1989.

n 15Brisdale Resources Sdn Bhd v Law Kim[2004] 6 MLJ 76, at pp 81-82; and Sakinas Sdn Bhd v Siew Yik Hau & Anor [2002] 5 MLJ 497, at pp 515-516.

n 16[1996] 2 MLJ 188.

n 17[1987] 2 MLJ 1.

n 18Clause 26(2) of Schedule H to the Housing Development Regulations 1989.

n 19See the above discussion on when the purchaser is deemed to have taken vacant possession of the property.

n 20Section 6 of the Limitation Act 1953.

n 21See cl 26(3) of Schedule H to the Housing Development Regulations 1989.

n 22Clause 10 of Schedule H to the Housing Development Regulations 1989.

n 23However, it is noted that s 16Y(2)(c) of the Housing Development Act 1966 provides that the Tribunal for Homebuyer Claims may set aside the contract of sale, wholly or in part.

n 24See Kang Yoon Mook Xavier v Insun Development Sdn Bhd [1995] 2 MLJ 91; Thomas a/l Iruthayam and Anor v LSSC Development Sdn Bhd [2005] 4 MLJ 262; Tan Yang Long and Anor v Newacres Sdn Bhd [1992] 1 MLJ 289; Chye Fook and Anor v Teh Teng Seng Realty Sdn Bhd [1989] 1 MLJ 308; Sim Chio Huat v Wong Fed Fui [1983] 1 MLJ 151.

n 25[1992] 1 MLJ 289.

n 26[2005] 4 MLJ 262.

n 27[1992] 1 MLJ 289, at p 295.

n 28[2005] 4 MLJ 262.

n 29[1988] 1 MLJ 69, at p 72.

n 30[1989] 1 MLJ 308, at p 310.

n 31[1999] MLJU 108.

n 32[1999] 8 CLJ 79, at pp 84-85.

n 33AIR 1943 PC 34.

n 34[1984] 2 MLJ 287.

n 35[1989] 1 MLJ 308, at p 311.

n 36Clause 26(2) of Schedule H to the Housing Development (Control and Licensing) Regulations 1989.

n 37[1995] 2 MLJ 91.

n 38See the discussion above.

n 39Clause 26(2) of Schedule H to the Housing Development (Control and Licensing) Regulations 1989.

n 40[1988] 2 MLJ 170.

n 41[2001] 2 MLJ 711.

n 42[1984] 2 MLJ 268, at p 270.

n 43See Ahmad Moosdeen, On Assignment as Security and s 4(3) of the Civil Law Act 1956, [2001] 4 MLJ cxciii, and Baljit Singh Sidhu, Assignment as Security for Loan to Buy

Property: Absolute or By Way of Charge Only? [2001] 4 MLJ ccxxi.

n 44[1999] 3 MLJ 157.

n 45Clause 7 of Schedule H to the Housing Development Regulations 1989.

n 46See the discussion above.

n 47See website http://www.kpkt.gov.my/kpkt[lowbar]en/main.php?Content=sections&SectionID=5 (Accessed on 4 June 2006)

n 48See the definition of homebuyer in s 16A of the Housing Development Act 1966.

n 49[2006] 1 MLJ 339.

n 50Section 16M of the Housing Development Act 1966.

n 51Section 16O of the Housing Development Act 1966.

n 52Section 16P of the Housing Development Act 1966.

n 53Parliamentary Debates, Dewan Rakyat, 11 October 2001, column 79.

n 54Section 16U of the Housing Development Act 1966.

n 55Section 16AC of the Housing Development Act 1966.

n 56Clause 23 of Schedule G and cl 26 of Schedule H to the Housing Development Regulations 1989.

n 57Clause 26(1) of Schedule G and cl 30(1) of Schedule H to the Housing Development Regulations 1989. Clause 26(1) of Schedule G also provides that if the developer fails to rectify the defects after due notice, the purchaser may effect the repairs and recover the costs from the developer s solicitors who hold 5% of the purchase price as stakeholders.

n 58See Sakinas Sdn Bhd v Siew Yik Hau & Anor [2002] 5 MLJ 497, pp 515-516.

n 59See the discussion above.

n 60According to The Sun on 8 May 2006, the Ministry of the Housing and Local Government may extend the defect liability period to 36 months. This can be done by amending Schedules G and H to the Housing Development Regulations 1989.

n 61The Star, 5 June 2006, at M.

n 62[2005] MLJU 225. LOAD-DATE: 11/06/2009


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