Lecture 3 Regulation of Housing Developers (Part 1)

 3.1 Introduction – Relevant Legislation

1. Housing Developers (Control & Licensing) Act 1966 (HDA) with 2015 amendments,
2. Housing Developers (Control and Licensing) Rules 1970: [r.12(1)(r)]
3. Housing Development (Control & Licensing) Act 2007
4. Housing Development (Control and Licensing ) Regulations 1989 with amendments in 2007, 2008
and 2009
5. Housing Development (Tribunal for Homebuyer Claims) Regulations 2002
6. Strata Titles Act 1985 (incorporating 2013 amendments) (w.e.f. 1. 6. 2015)
7. Strata Titles Management Act 2013 (w.e.f. 1. 6. 2015)
8. Strata Management (Maintenance & Management) Regulations 2015 (w.e.f. 2. 6. 2015)
9. Strata Management (Strata Management Tribunal) Regulations 2015
10. Strata Titles (Amendment) Act 2016 (w.e.f. 1.1. 2018)

 The statutes were enacted with 3 objectives:-

(i) To check abuses in the housing industry
(ii) To regulate the activities of housing developers.
(iii) To protect house buyers.
 The HDA does not apply to Sabah & Sarawak.

 Definition
Section 3 of HDA 1966
(a) “Housing development”
Means to develop or construct or cause to be constructed in any manner more than 4
units of housing accommodation and includes the collection of monies 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.
(b) “Licensed housing developer”
Means any housing developer licensed under section 5 to engage in or carry on or
undertake a housing development and includes the holder of any power of attorney
of such housing developer duly created under the Powers of Attorney Act 1949 and
in a case where the housing developer is under liquidation, includes a person or body
appointed by a court of competent jurisdiction to be the provisional liquidator or
liquidator for the housing developer.

(c) “Housing Lot”

Any piece of land surveyed or otherwise, to which a lot number has been assigned to
it and which is subject to the category "building" in accordance with the National
Land Code 1965
(d) Housing accommodation
Includes houses, flats, apartments or partly houses and partly shops or offices.
 Previously it did not include any accommodation erected on any land designated for
or approved for commercial development. Eg. an office and shopping complex with
some units of pent houses. However, 2009 amendments now include such units as
housing accommodation. See s. 3(c)
(e) “Develop”
To construct or cause to be constructed and includes the carrying on of any building
operations for the purpose of constructing housing accommodation in, on, over, or
under any land with the view of selling the same or the land which would be
appurtenant (attached) to such housing accommodation.
(f) “Purchaser”
Means any person who purchases housing accommodation or who has any dealing
with a licensed housing developer in respect of the acquisition of housing
accommodation.

 S.5 HDA
o All housing developers are required to be licensed and under s.7B a licensed housing
developer for the purposes of ss.8, 8A, 11 and 12 includes one whose licence had expired.
 Amendments under Housing Development (Amendment) Regulations 2015

o R.8 (1A) Advertisements shall NOT :

i. Offer free legal services – see Bar Council Rulings 14.18 (2) and (3) & S.84 LPA
1976.
14.18 BCR (2) Where an Advocate and Solicitor acts for a purchaser in the purchase of a housing
accommodation developed under a housing development, he/she shall not receive his/her
remuneration for the transaction from the housing developer, and the developer and the
purchaser shall each pay for the fees of his/her own Advocate and Solicitor.
(3) Where an Advocate and Solicitor or the firm of which he/she is a member either as a
partner or employee is appointed or empanelled as a member of the developer’s panel of
lawyers, he/she shall be deemed to be acting for the developer and he/she shall not act for
any purchaser in respect of any lot in the same phase of the housing development.

Example:

If a Solicitor or his/her firm is appointed or empanelled as a member of the developer’s

panel of lawyers for Phase 1 of a housing development project, he/she may not act for any
purchaser in the said Phase 1. If the Solicitor or his/her firm is no longer appointed or
empanelled as a member of the developer’s panel of lawyers for any subsequent phase of
the same housing development project, he/she may act for any purchaser in any
subsequent phase of the same housing project in which he/she or his/her firm is not a
member of the developer’s panel of lawyers.

(4) When a Solicitor acts for a developer and attests the signature of a purchaser who is
not represented by a Solicitor in the transaction, the Solicitor acting for a developer shall
 in addition to obtaining from the purchaser a certificate signed by the purchaser pursuant
to the proviso of section 84(1) of the Act also inform the purchaser in writing that he/she
is not acting for the purchaser.
S 84 LPA Advocate and solicitor acting for developer not to act for purchaser in housing
development cite
(1) Where an advocate and solicitor acts for a housing developer in a sale of immovable
property developed under a housing development neither he nor any member or assistant
of the firm of which he is a member either as partner or employee shall in the same
transaction act for the purchaser of that property, and a written agreement prepared by an
advocate and solicitor or any member or assistant of the firm acting for the developer in
respect of such transaction shall be scrutinised by an advocate and solicitor acting for the
purchaser:

Provided that if any such written agreement in respect of the transaction is not scrutinised
by an advocate and solicitor acting for the purchaser, the advocate and solicitor acting for
the housing developer shall obtain a certificate signed by the purchaser showing that the
purchaser does not intend to engage an advocate and solicitor to scrutinise the agreement
for him.

(2) For the purpose of this section a certificate shall not be valid unless it is signed by the
purchaser in the presence of a Commissioner for Oaths who is not an advocate and
solicitor practising in partnership with, or as the employee of, the advocate and solicitor
acting for the housing developer.

(3) The developer and the purchaser shall each pay for the fees of its own advocate and
solicitor.

(4) In subsection (1)-

(a)the term "housing development" has the meaning assigned to it in the *Housing
Development (Control and Licensing) Act 1966 [Act 118]; and

(b)"sale of immovable property" includes the grant of a lease for a term exceeding
three years.

(5) Subsection (1) is without prejudice to any law affecting an advocate and solicitor who
acts for parties where there is a conflict of interest or whenever a conflict of interest may
arise.

(6) An advocate and solicitor who acts in contravention of subsection (1) may be liable to
disciplinary proceedings.

(7) Subsection (1) shall not apply to any transaction where the contract for sale was
entered into before the coming into operation of this Act.

ii. Projected monetary return gains and rental income

iii. Claim any panoramic view
iv. Travelling time from housing projects to popular destinations
 v. Any other particulars which developer cannot genuinely prove.

 Regulation 11 (2) (Collection of payment)

o No PERSON including parties acting as stakeholders shall collect any payment by whatever
name called except as prescribed by the contract of sale.’ With this amendment, no person is
allowed to collect booking fee, deposit, stakeholder sum or any payment from the purchaser
prior to SPA signing.
o Housing Developer is only allowed to withdraw all monies remaining in the Housing
Development Account after CCC has been issued & the Defect Liability Period has expired.

 3.2 Was there a housing development agreement?

City Investment Sdn Bhd v. Koperasi Serbaguna Cuepacs Tanggungan Bhd [1985] 1 CLJ 131
Facts:
 P (purchaser) executed 2 SPA with D (vendor)
 SPA 1 was to buy divided lots for terrace houses to be built thereon
 The D subsequently appointed themselves as developer under the SPA1
 SPA 2 is for the construction of 11 bungalow lots and 14 semi detached houses on the land
 The full price of the land for the terrace lots were paid but not the construction of the terrace
houses as the terrace houses were never built
 D counsel argued that SPA 1 was purely for the sale of land only and therefore was not within the
ambit of the HDA

Held:
 The subsequent building contract should not attempt to evade the HDA & Regulations
 Even otherwise the SPA 1 as it stands comes within the ambit of S 3 of HDA as a housing
developer includes one who is “desirous of undertaking a housing development” and “develop”
includes “land which would be appurtenant to such housing accommodation”
Principle:
If a landowner sells a plot of land and subsequently there is a separate construction agreement for the
construction of houses on the said land and the same party then executes a Sale and Purchase
Agreement (SPA) with a purchaser of a housing unit, this will be regulated by the HDA

Cheong Soo Leong & Ors. v H’ng Ah Ba [2004] 2 CLJ 19

Facts:
 The P entered into a SPA 1 with D for the purchase of land and SPA 2 for the construction of a
semi-detached house thereon
 The P made some payments pursuant to the 2 agreements neither land was transferred nor
house was completed within agreed time
 The P then sued for SP in respect of the 2 agreements + liquidated damages for non-delivery of
the house within the agreed time
 The D said P had defaulted in his progress payments towards the house and therefore building
works had come to a halt for lack of funds
 3 years later the D’s firm applied for a declaration that the 2 agreements were null and void
  The two suits were heard together and the P’s claim was allowed whilst the D firm’s claim was
dismissed
 The D appealed

Held:
i. The firm with the defendants embarked on a project to develop 75 units of houses in which the
P’s house was one of them. As such they were housing developers within S3 HDA
ii. P were entitled to damages for late deliver and were entitled to set off the payments of the
balance of the purchase price against the liquidated damages due. Specific performance of the 2
agreements granted
iii. The claim by the D’s firm instituted 3 years later was nothing more than an attempted escape
route against the P’s legitimate claims

 3.3 Protection of Buyer

Daiman Development S/B v Mathew Lui Chin Teck & Anor. [1981] 1 MLJ 56
Privy Council: A booking pro forma constituted a binding contract

SEA Housing Corpn. S/B v Lee Poh Choo[1982] 2 MLJ 31 [decided prior amendment]
Facts:
 R had sued the A(developer) for breach of contract to complete and deliver a housing
accommodation with IDT within the stipulated 18 months
 The house was only completed after 23 months
 The developer sought to rely on a clause 32 in the SPA which purported to exempt the
developer for non-fulfilment of any terms caused by circumstances beyond their control
FC held:
1. The HDA and the Rules were for the protection of the interests of the public and the developer
could not contract out of these
2. Clause 32 of the SPA was inconsistent with R.12(1)(r) of the Housing Developers (Control and
Licensing) Rules 1970 and therefore void
3. The Respondent was entitled to liquidated damages as per R.12 (1)(r) and was entitled to set
off the withholding of the final instalment payment against the liquidated damages for delay in
completion
Principle:
Whatever stated in SPA (GHIJ), developer cannot exclude themselves from the liability. If developer
refused to refund purchasers, purchasers can apply set off the final instalment payment.

Chinaya Ganggaya v Senthul Raya Sdn. Bhd. [2008] 3 CLJ 23

Facts:
 The P claimed for late delivery of a condominium unit
 In the clause of SPA, D contracted to deliver vacant possession of a condominium unit to the P
 and to complete the common facilities of the property within 36 months, failing which it was
liable to pay liquidated damages to the P
 Vacant possession with completed common facilities was only delivered 7 years later in 2002
 Consequently, the P claimed for payment of liquidated damages in the sums of RM 165,962.89
for the delay.
 The D argued that the P was not entitled to liquidated damages by virtue of S 56 (3) of the
Contract Act 1950 and the doctrine of frustration.
Held:
1. Since the agreement is not an ordinary contract but governed by Schedule H of the Housing
developers Regulations, it follows the clauses in the agreement to deliver vacant possession are
not mere terms of a contract, they are also statutory provisions since they are actually
provisions of Schedule H of the Housing Developers Regulations that had been imposed by law
upon the parties.
2. The D’s argument on S 56(3) CA 1950 is unacceptable because has no relevancy since the right
of the P to liquidated damages is solely governed by Schedule H (22 & 24)

Araprop Development S/B v Leong Chee Kong & Anor. [2008] 1 CLJ 135.
Facts:
 The respondent commenced an action against the appellant in the HC for:
1. A declaration that they were entitled to terminate a sales and purchase agreement (“SPA”)
executed with the appellant for failing to deliver vacant possession of a piece of property
purchased by the respondents from the appellants
2. Recovery of sums paid by them under the SPA
3. Damages for late delivery of vacant possession
 The HC found in favour of Respondents. Appellant appealed

The issues were brought before the COA:

1) Whether the respondents were entitled to terminate the SPA since they had assigned their rights
thereunder to the Malaysia Building Society Berhad (MBSM) by virtue of a loan agreement
taken with MBSB
2) Whether the delay to deliver vacant possession was due to circumstances beyond the
appellant’s control
3) Whether there was waiver and/ or estoppel on the part of the R when they were silent upon the
expiry of the due date for delivery vacant possession on 15 March 1999
COA:
 The absolute assignment did not affect their right to terminate
 The R had the choice of terminating the SPA, alternatively, claiming damages for late delivery
 The delay to deliver vacant possession was not a delay as stipulated by the exclusion clause
in the SPA. (GHIJ allowed late delivery but subjected to situation stated in the schedule itself)
 The delay was under the control of the appellant.
 Silence by itself was not a waiver unless there was an additional factor with the silence that
could be interpreted as a waiver and/or an estoppel.
 There was no act on the part of the R that could be constituted as a waiver or an estoppel.
Audrey Gertrude De Souza v Sunway D'mont Kiara Sdn Bhd [2015] 4 CLJ 853 [CA]
Facts:
 Wrong SPA. Signed ‘H’ instead of ‘G’
 The appellant submitted that under reg. 11(1) of the Housing Development (Control and
Licensing) Regulations 1989 ('the Regulations') the SPA should be in the form prescribed in
Schedule H of the Regulations ('Form H') but the respondent had used the form prescribed in
Schedule G of the Regulations ('Form G'), which was for landed property.
Held:
 Use of Form H instead of Form G was a contravention as to the form of the SPA to be used for
the contract between the parties for the purchase
 However, the contravention did not go to the substance of the contract.
 The mandatory language of reg. 11(1) of the Regulations prescribing the use of Form G or
Form H did not extend to declaring that the contract under any other form other than Form G or
Form H would render it null and void.
 Since the contravention as to the form to be used did not affect the object of the contract
between the parties, the contravention did not render the contract between the parties to
be null and void
 The obvious solution available to the appellant in the present case was to either seek:
1. To terminate the Form H agreement and demand a refund or
2. To execute an agreement in the correct form and to backdate its effectiveness to 29 July
2004 since payments had been paid.
 However, the appellant had observed neither option and refused to make further
payments towards the balance of the purchase price.
 The appealed dismissed because purchaser in breach of the contract

Court has given you options already, if you didn’t exercise either of the options, you are considered as
breached of contract.

Chan Yew Mun & Anor v Faber Union Sdn Bhd [2015] 4CLJ 239, HC
When specifications in the SPA are different from that approved and advertised
Facts:
 By a sale and purchase agreement ('the SPA') the defendant (developer) sold the housing unit to
be built on one of the lots in the project ('the property') to the plaintiffs, a husband and wife.
 On 16 January 2013, the plaintiffs took vacant possession of the property and discovered that
the length of the car porch was shorter than that of reflected in the SPA.
 On 20 June 2013, the plaintiffs submitted a defect list form to the defendant to raise complaints
about defects to the property, including the length of the car porch.
 At the same time, the plaintiffs proceeded to carry out renovation works on the property.
 D claimed that he had notified the plaintiffs stating that the shortening of the length of the car
porch had been agreed to by the plaintiffs by initial on the amended floor plan
  The defendant stated that even if the defendant had breached the SPA as alleged, the plaintiffs
had expressly or impliedly by conduct affirmed the alleged breach and therefore were estopped
from seeking relief to rescind the SPA.
Held:
 Clause 14 of the SPA provides that the defendant shall construct and deliver the property in
accordance to the plans accepted and approved by the plaintiffs as in the SPA and no changes
shall be made without the prior consent of the plaintiffs in writing.
o In this regard, there was no agreement in writing by the plaintiffs to vary the SPA to
shorten the car porch.
o The mere initial or signature of the first plaintiff on the amended floor plan couldn’t be
taken as consent
 When the defendant delivered vacant possession of the property, the plaintiffs discovered that
the car porch was only 6100mm in length, which was very much shorter than that reflected in
the SPA.
 This was a clear breach of a fundamental term of the SPA as well as a breach of the pre-
contractual representations of the defendant.
 The plaintiffs, being the innocent parties to the breach, had the right of election, then and
there, to either terminate the contract or affirm the contract.
 However, the plaintiffs did not elect to terminate the contract upon discovery of the shortage of
the car porch length when vacant possession was delivered on 16 January 2013.
 To the contrary, the plaintiffs engaged the services of an architect to carry out renovation works
to the property and had in fact carried out renovation works to the property with the intention of
using it as their family home.
 This amounted to affirmation of the contract by conduct and the plaintiffs had by conduct
elected not to rescind the contract.
 Having made this election, the plaintiffs would no longer be entitled to rescind the contract on
the basis of breach of contract or misrepresentation. The plaintiffs would have to live with that
election and would only be entitled to damages for breach of contract and not rescission of
the contract.

 Exceptions
 When changes are required by the appropriate authority, authorised under written law to
approve the subdivision of land, building plans or issuing of documents of title.
 However, the onus remains on developers to prove that such changes were unilaterally imposed
by the authorities.
Tan Tien Seng & Anor v Grobina Resorts Sdn Bhd [2005] 7 CLJ 70
Facts:
 A SPA was executed between the P & D in respect of a property ('the unit') in the Condo project to
buy the highest floor of the condo.
 The defendant sent a letter to the plaintiffs informing them that vacant possession of the unit was
ready to be delivered to the plaintiffs.
 The plaintiffs inspected the unit and discovered that there were deviations to the building design
since there was a 17th floor above his unit.
 Subsequently, the plaintiffs terminated the SPA and sought reliefs on the ground that the defendant
had failed to build according to the original building plan and that amendments were made to the
building design without the plaintiffs' consent in writing
 The plaintiffs argued that there was a breach of an essential term of the contract going into the root
thereof.
Held:
 Changes or deviations must be such as may be 'required by the Appropriate Authority'
 Hence, changes and deviations which are brought about by the defendant's own amendment or
made through the defendant's engineer and architect as in the instant case were outside the scope of
cl. 31(b) read with cl. 12 of the SPA.

Lim Siew Lan v Pembangunan Hysham Sdn Bhd & Anor [1999]
Developer failed to build as per specifications
Facts:
 The plaintiff sought to terminate the agreement when the defendants scaled down the development
to exclude the service suites, and reduced the total floor space of the development by about one-
half.
 In response, the defendants argued that cls. 7.2 and 9.1 of the agreement allowed the defendants to
alter the building plans
Held:
 The plaintiff had been induced to enter into the agreement by the defendants' representations
contained in its sales brochure.
o Where a statement is represented in such a way as to represent a fact which induces the
representee to enter into a contract, then such statement intends to have contractual force and
is thus a contractual term.
 In construing the terms and conditions of a contract, the court has to consider the object of the
agreement
 By the agreement, the defendants had covenanted to build six blocks shop office includes service
suites, and as such, a breach of such covenant went to the root of the contract.
 Clauses 7.2 and 9.1 only applied to alterations unilaterally imposed by the appropriate
authority and not to instances where the changes were proposed by the defendants.
o Whilst the defendants could apply for approval of some changes, such changes ought to be
reasonable and ought not to go to the very substance of the contract by altering the concept,
ambit and scope of the development.
  3.4 Consequences of Late Delivery
 Under the HD Regulations Sch. G – completion period for a house is 24 months
 Under Sch. H for an apartment is 36 months.
 On a failure to complete within the stipulated period the Purchaser is entitled to liquidated
damages.
SEA Housing Corpn. S/B v Lee Poh Choo [1982]
Principle:
According to R12(1) of HDR 1970, the purchaser is entitled to the liquidated damages in failure to deliver
vacant possession within the stipulated period
Note: This case was decided before amendment of HDR, R12(1) no longer inside the HDR 1989

MK Retnam Holdings v Bhagat Singh [1985] 2 MLJ 212

Fact:
 The appellant and the respondent executed a sale and purchase agreement
 Completion date was to be 18 months from the date of the signing of the agreement
 A supplementary agreement was entered into which provided that the house should be completed
within 6 months from the date of the signing of the said supplementary agreement and that the
purchase price to be increased by RM3,580.
 The Judge of first instance granted an order for specific performance of the first agreement and
further ordered statutory indemnity under the Housing Developers (Control and Licensing) Rules
1970 ("the 1970 Rules") and interest on the purchase price on a day to day basis as damages.
 The appellant appealed claiming the learned Judge was wrong in holding that the supplementary
agreement was void and of no effect
SC Held:
 The supplementary agreement should not be allowed to stand as its admitted aim was to defeat the
objects of 1970 Rules
 A developer cannot subsequently increase the purchase price and any subsequent agreement
entered into is void
 R 12 (1)(r) is a statutory remedy providing indemnity for late delivery based on a clear formula of
fixed interest on the total purchase price from the due date of delivery of vacant possession to the
actual date on a daily basis.

Faber Union S/B v Chew Nyat Shong & Anor. [1995] 3 AMR 2094.
Issue:
 In a claim for damages for late delivery, when did time start running?
 Was it from the date the purchaser paid the booking fee or the date the purchaser signed the
SPA?
Held:
 In a claim for damages for late delivery, the time starts running from the date of payment of
the booking fee
(in practice, this date normally will be taken from SPA as it was stated on SPA)
Lim Mewah Development S/B v Dr. Jasbir Singh s/o Harbhajan Singh [1993] 2 AMR 1263
In a claim for a late delivery, there can be no claim for damages for pain, anxiety, distress and
humiliation

Chinaya Ganggaya v Senthul Raya Sdn. Bhd. [2008]

 Cls. 22(2) and 24(2) of the agreement between the parties is very significant.
 What that phrase means is that the right to be paid liquidated damages (LAD) is automatic once
there was a delay by the developer to hand over possession or to complete the common facilities.
 The developer must pay the LAD to the purchaser at once, without further ado, once there was a
delay.

Just as it was thought that damages for late delivery of vacant possession was settled law, read the
case below on creative arguments that it is a penalty clause and therefore unenforceable.
Section 75 When a contract has been broken, if a sum is named in the contract as the amount to be
CA 1950 paid in case of such breach, or if the contract contains any other stipulation by way of
penalty, the party complaining of the breach is entitled, whether or not actual damage or
loss is proved to have been caused thereby, to receive from the party who has broken the
contract reasonable 28 compensation not exceeding the amount so named or, as the case
may be, the penalty stipulated for.

Selva Kumar a/l Murugiah v. Thiagarajah a/l Retnasamy [1995] 1 MLJ 817

Federal Court decision
 Even if breach of a contract was established, there was still a requirement on the claiming
party to strictly prove the damages it has suffered, despite the fact that the contract contained
an agreed liquidated damages clause.

Johor Coastal Development Sdn Bhd v. Constrajaya Sdn Bhd [2009] 4 CLJ 569
Facts:
 The appellant and the respondent entered into two identical sale and purchase agreements ('the
SPA')
 The purchase price was to be paid by six instalments.
 The respondent made the initial payment of 12% and then made subsequent payments
amounting to 50% of the purchase price.
 After that the respondent defaulted in payments. The appellant terminated the SPA and
forfeited all moneys paid as per the terms of the SPA.
 The respondent commenced an action against the appellant to recover the moneys paid.
HC:
 Ordered the appellant to refund all the moneys as actual damage was not proved and so it
could not be determined whether the moneys paid was a reasonable compensation as
envisaged by s. 75 of the Contracts Act 1950 ('CA').
Appellant appeal to the Court of Appeal
COA:
 Allowed the appeal in part
 The COA held that the appellant was entitled to forfeit 12% of the purchase price as deposit
but must refund the balance as actual damage was not proved.
FC: (Majority)
 The appellant could not retain the moneys paid as reasonable compensation without proof of
loss or damage as envisaged by s. 75 CA.
 In Selva Kumar it was held that actual damages or reasonable compensation must be proved
in accordance with the principles set out in Hadley v. Baxendale.
 Selva Kumar was still good law

Cubic Electronics Sdn Bhd (In Liquidation) v. Mars Telecommunications 4 Sdn Bhd [2019] 2
CLJ 723
FC: The position on LD clauses recognized in Selva Kumar would no longer be applicable
Facts:
 Before the exercise could be carried out, the plaintiff offered to purchase the properties from
Defendant for RM90 million, with an earnest deposit of RM1 million which the plaintiff paid
('the first earnest deposit').
 The defendant accepted the plaintiff's offer
 The plaintiff requested for extension of time on three different occasions and on each
occasion, the plaintiff had to pay to the defendant further earnest deposits
 For the third extension, the plaintiff was required to pay late-payment interest of RM40,000
('the interest').
 At all material times, the plaintiff was cautioned by the defendant that the earnest deposits
would be forfeited 'as liquidated damages and not by way of penalty' if the plaintiff failed to
meet the deadline for the execution of the SPA.
 The plaintiff made a final request for another extension and defendant refused.
 The defendant then returned the plaintiff's cheque and informed the latter that the first to
fourth earnest deposits ('the earnest deposit sums') plus the interest, amounting to
RM3,040,000, were forfeited.
 The properties were subsequently sold to a third party.

HC:
 This prompted the plaintiff to commence an action at the High Court against the defendant,
seeking a declaration that the termination of the SPA was wrongful and invalid and for the
 return of the earnest deposit sums forfeited
 The High Court dismissed the plaintiff's claim

COA
 On appeal, the Court of Appeal ruled that the forfeiture of the earnest deposit sums, plus the
interest, was impermissible but allowed the defendant to forfeit the first earnest deposit.
 The Court of Appeal opined that:
- When the parties entered into the agreement, it was only RM1 million that was
agreed as the earnest deposit; and
- Not only did the defendant fail to prove it suffered any damage, it had also failed to
prove that the earnest deposit sums forfeited was reasonable compensation in
accordance with s. 75 of the Contracts Act 1950 ('the Act').
 D appealed to FC
FC:
 Allowing appeal and setting aside order of Court of Appeal; reinstating order of High Court
but for different reasons
 The onus was on the plaintiff to show that the forfeiture of the additional earnest deposit
was excessive. However, the plaintiff had not adduced any proof showing that the forfeited
payments were exorbitant or unreasonable.
 It only insisted that it should be entitled to a refund because the defendant had not proved
actual loss or damage.
 Since there was no real argument from the plaintiff on the reasonableness, or otherwise, of the
forfeiture clause, the plaintiff had not discharged its burden of proof. The forfeiture of the
additional RM2 million amounted to reasonable compensation.
Federal Court decision in Cubic Electronics had concluded that
 For liquidated damages clause, proof of actual loss is not mandatory.
 Where the terms of a contract provide for liquidated damages clauses, there is no longer a
strict requirement to prove all of the loss suffered by the innocent party.
 The onus was on the defaulting party to show that the liquidated ascertained damages clause
was unreasonable.

Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui & Another [RAYUAN SIVIL NO: W-01(A)-
218-03/2018] CA grounds of judgment dated 26 July 2019
Facts:

 The dispute was between the developer and the purchaser of a condominium.
 The purchaser brought a claim against the developer before the Tribunal of Homebuyers
Claims for damages for late delivery of the property.
 This arose from a SPA governed by HDA
 The purchaser had not filed any documents to support the quantum for the damages.
 The Tribunal gave an award in favour of the purchaser for the liquidated ascertained damages
of just over RM32,000.00
 The developer applied to the Kuala Lumpur High Court for judicial review of the Tribunal’s
decision.
  The High Court dismissed the judicial review application and the developer appealed to the
Court of Appeal.
Issue: Whether there is a need to prove actual loss where there is a liquidated ascertained damages
clause.
COA:

 The Court of Appeal set out this methodology when assessing compensation under a liquidated
damages clause:

 If there is a stipulated sum as agreed damages, there is a presumption that it is a penalty.

If the defaulting party agrees to the clause, there is no issue.
 If the defaulting party objects to the clause, the innocent party has an obligation to prove
loss and damages.
 If the innocent party does not succeed, the courts have a statutory discretion to provide
reasonable compensation as opposed to nominal damages. In addition, the sum awarded
cannot exceed the stipulated sum.
 In exercising discretion, the Courts can take into account market or industry practice or
the Courts should give due weight to the agreed terms and the liquidated sum stipulated
unless there are compelling reasons not to do so.
 Finally, as a matter of policy, the Courts should not put the innocent party to struct proof
at the expense of the public purse to benefit the defaulting party. Like in cases of a major
construction contract, it will take much of Courts’ time and expense for the innocent
party to prove his damages. It is best for the Court to deal with the issue of
compensation summarily to satisfy itself that the stipulated sum is reasonable according
to market practice.

 The Court of Appeal also commented that the trilogy of cases of Selva Kumar, Johor Coastal
and Cubic Electronics had caused confusion in this area of the law.
 The three cases dealt with mixed jurisprudence related to prepaid payments and post payment
as to damages.
 Therefore, the Court of Appeal held that these three cases had no relevance to the facts of this
case as well as to the interpretation of section 75 of the Contracts Act 1950.
 In the end, the Court of Appeal dismissed the appeal.
Effect:
In applying the methodology of Macvilla in the future, it appears that there may be uncertainty in
whether strict proof of loss is still required and how should the Courts interpret reasonable
compensation. This is more so with the apparent application of assessing reasonable compensation in
a summary way only.

 Vacant Possession
South East Asia Brickworks S/B v Maria Antoinette [1979] 2 MLJ 46
Issue:
In a claim for late delivery the question was whether vacant possession meant practical completion
as per architect’s certificate or with issue of the Certificate of Fitness for Occupation (CFO) ***CFO
already replaced CCC***
Held:
 It would be unreasonable to impose a further condition on the developer to hand over vacant
possession with CFO, so delivery of vacant possession would be effective with the architect’s
certificate of practical completion
BUT
 Later the law was amended under Sch G of HDR 1989 to require that delivery of vacant
possession shall be with:
1. Issuance of Certificate of completion and compliance (CCC) by architect / engineer
2. Connection of water and electricity supply
3. Strata title / already applied for the ST but pending for issuance
4. Handling over the key
5. Free from encumbrances

 Housing Development (Control & Licensing) (Amendment) Regulations 2015, came into force on
01/07/2015 –
o A new Schedule H contract of sale
 New clause 27(1)(b)
 Developer shall let purchaser into possession of the parcel upon, inter alia, the
issue of a separate strata title to the parcel by the appropriate authority.
 New clause 28(1)
 If strata title not issued for any reason not attributable to the developer, he may
apply to Controller for a certificate. Application for certificate must be
submitted before expiry of 36 months.
 Required to prove:
(i) Notified PTG and JUPEM of superstructure stage within 2 weeks
(ii) Timely application to PTG for subdivision
o New amendment to S. 7 HDA requires developer to:
 Inform the Controller of the progress achieved by him in relation to the issuance of
the CCC
 Exercise all such diligence as may be required to ensure that vacant possession of the
house is made simultaneously with the issuance of CCC
 Hand over title to the house

 Defect Liability Period

 R.25(1): 24 months
Fong Wan Reality v PJ Condominium S/B [2010]10 CLJ 112
Purchaser has the right to sue on latent defects not outwardly discoverable

TTDI Jaya Sdn Bhd v Yew Hong Teng and Another CA [2017] 1 CLJ 436
Facts:
 The P accepted vacant possession of the property and after inspection, submitted a complaint
form detailing 160 defects to the D
 Remedial works were carried out but the P were not satisfied and refused to accept satisfactory
repairs
 The property was registered in the name of P
 5 years after, the P sued for a declaration that the D failed to deliver the vacant possession
within stipulated date under SPA + refund of purchase price + damages
Issue: Can there be rescission after delivery of vacant possession has been accepted and transfer
registered in the name of buyer?
Held:
 If it was true that there was a total failure of consideration, a reasonable purchaser would
have rejected the property and exerted his rights for a rescission of the SPA but not wait
for several years to elapse before deciding to rescind the SPA and/or proceeded to fill up
the complaint form to complaint about the defects to rectified by the defendant.
 The plaintiffs' claim for rescission of the SPA was unsupported by contemporaneous
documents and/or evidence. The plaintiffs claim was an afterthought as they
(i) Submitted the complaint form in response to the notice issued by the defendant
that the property was ready for delivery of vacant possession;
(ii) Continued to repay the housing loan to their financier until the loan had been
fully-paid and discharged form had been signed;
(iii) Paid all outgoings such as quit rent of the property, as required by the SPA;
(iv) Consented for their names to be registered in the issue document of title to
signify that they were the registered owners of the property.
 The plaintiffs could not, at this stage, claim that there was total failure of consideration
especially when they had sat on their rights to pursue a claim for rescission.
 Therefore, they were estopped from denying that they had taken vacant possession of the
property pursuant to the SPA.
 The plaintiffs were deemed to have taken vacant possession of the property after receiving
the defendant's notice.

 Abandoned project and Termination

S 8A A purchaser shall at any time be entitled to terminate the sale and purchase agreement if
(1) (a) the licensed housing developer refuses to carry out or delays or suspends or ceases
work for a continuous period of six months or more after the execution of the sale and
purchase agreement;
(b) the purchaser has obtained the written consent from the end financier; and
(c) the Controller has certified that the licensed housing developer has refused to carry
out or delayed or suspended or ceased work for a continuous period of six months or
more after the execution of the sale and purchase agreement.
(2) (2) For the purpose of paragraph (1)(b), no end financier shall unreasonably withhold its
written consent to the termination of the sale and purchase agreement.
(3) (3) In the event that the purchaser exercises his right to terminate the sale and purchase
agreement under subsection (1), the licensed housing developer shall within thirty days
of such termination refund or cause to be refunded to such purchaser all monies received
 by the licensed housing developer from the purchaser free of any interest.
S 18A Offences relating to abandonment of housing development by a licensed housing
developer
(1) Any licensed housing developer who abandons or causes to be abandoned a housing
development or any phase of a housing development which it is engaged in, …. shall be
guilty of an offence and shall, on conviction, be liable to a fine not less than RM
250,000/- and not more than RM500,000/- or to imprisonment for a term not exceeding
three years or to both.
(2)…, "abandons" means refuses to carry out or delays or suspends or ceases work
continuously for a period of six months or more or beyond the stipulated period of
completion as agreed under the sale and purchase agreement.”

 Tribunal for Homebuyer Claims Part VI HAD

S 16A Homebuyer - a purchaser and includes a person who has subsequently purchased a
housing accommodation from the first purchaser of the housing accommodation

S 16 (1) Subject to ss 16N and 16O, the Tribunal shall have jurisdiction to determine a claim
M lodged under section 16L where the total amount in respect of which an award of the
Tribunal is sought does not exceed RM 50,000/-

S 16 N – Limitation of jurisdiction
the Tribunal shall have no jurisdiction in respect of any claim-
(a) for the recovery of land, or any estate or interest in land; and
(b) in which there is a dispute concerning-
i. the entitlement of any person under a will or settlement, or on intestacy
(including partial intestacy);
ii. goodwill;
iii. any chose in action; or
iv. any trade secret or other intellectual property right.

(2) The jurisdiction of the Tribunal shall be limited to a claim that is based on a cause of
action arising from the SPA entered into between the homebuyer and the licensed
housing developer which is brought by a homebuyer not later than 12 months from-
a) the date of issuance of the certificate of completion and compliance for the
housing accommodation or the common facilities of the housing accommodation
intended for subdivision, whichever is later;
b) the expiry date of the defects liability period as set out in the sale and purchase
agreement; or
c) the date of termination of the sale and purchase agreement by either party and
such termination occurred before the date of issuance of the certificate of
completion and compliance for the housing accommodation or the common
facilities of the housing accommodation intended for subdivision, whichever is
later.
(3) Notwithstanding subsection (2) no claim shall be affected or defeated on the ground
that no sale and purchase agreement has been entered into between the homebuyer and
 the licensed housing developer at the time when the cause of action accrues if there
exists a previous dealing between the homebuyer and the licensed housing developer in
respect of the acquisition of the housing accommodation.

(4) Nothing in this section shall be deemed to authorize the Tribunal to deal with a claim
arising from personal injury or death.

(5) For the purposes of subsection (1), "land" does not include fixtures.

s. 16 O Notwithstanding that the amount or value of the subject-matter claimed or in issue

exceeds fifty thousand ringgit, the Tribunal shall have jurisdiction to hear and determine
the claim if the parties have entered into an agreement in writing that the Tribunal shall
have jurisdiction to hear and determine the claim.

s. 16Y The Tribunal shall make its award within 60 days of the 1st day of hearing before it.

S 16 Z Reference to a Judge of the High Court on a question of law.

(1) Before the Tribunal makes an award under section 16Y, it may, in its discretion,
refer to a Judge of the High Court a question of law-
(a) which arose in the course of the proceedings;
(b) which, in the opinion of the Tribunal, is of sufficient importance to merit such
reference; and
(c) the determination of which by the Tribunal raises, in the opinion of the Tribunal,
sufficient doubt to merit such reference.

(2) If the Tribunal refers any question of law under subsection (1) for the decision of a
Judge of the High Court, it shall make its award in conformity with such decision

S 16 Decisions / awards of the tribunal are to be final and binding and shall be deemed to be
AC an order of the Magistrates court or Sessions court as the case maybe ( according to its
quantum of jurisdiction) and enforced as such.

Pengkalen Holiday Resort Sdn Bhd V. Perbadanan Pengurusan Paradise Lagoon

Apartment (North) & Anor [2016] 1 LNS 1114
Court Orders Developer To Return RM1.8 Million In Maintenance Charges
Cant find full case

House Buyer Tribunal and Another v Unique Creations Sdn Bhd; Date: 05/03/2014; Suit No:
Civil Appeal No. W-01-503-10
Facts:
 The appellant had bought an apartment unit from the respondent, a housing developer licensed
under the Housing Development (Control and Licensing) Act 1966
 They entered into a sale and purchase agreement (‘the SPA’) in 1997.
 This SPA is governed by the HDA
 Under the SPA, the dateline for delivery of vacant possession by the respondent to the
 appellant is 36 months after the signing of the SPA
 However, in the present case, delivery of vacant possession was only done in delay of 2391
days.
 The appellant claimed for liquidated ascertained damages (LAD) in pursuant to clause 22 of the
SPA
 The respondent refused to pay the LAD claimed by the appellant.
 The appellant, therefore, on 9 May 2007, filed his claim for the LAD before the Tribunal
pursuant to sections 16L, 16M(1) and 16N(2) of the Act.
 Respondent argued: Appellant’s claim exceed the time limitation under S.6 of Limitation Act

The Tribunal rejected the respondent’s contention:

 Made an award in favour of the appellant on the grounds that in the light of section 16N(2) of
the Act, section 6 of the Limitation Act does not apply to the appellant.
 In other words, section 16N(2) of the Act overrides section 6 of the Limitation Act.
Respondent filed judicial review in HC
 HC quashed the award made by tribunal
Appellant appeal to COA
COA Held:
 In our judgment, the correct interpretation of section 16N is that, as long as the claim of the
aggrieved homebuyer is made within 12 months of the delivery of vacant possession, the
Tribunal has the jurisdiction to hear the claim of the appellant and to make and award.
 It is also our view that the Limitation Act does not apply to a homebuyer who makes his claim
pursuant to section 16N(2) of the Act.
 In our opinion, a person making a claim under section 16N(2) of the Act is subject to a
different limitation period, that limitation period being that the claim must be made within 12
months of the delivery of vacant possession; meaning that for the purpose of this 12-month
period, time begins to run only from the date of the actual delivery of vacant possession –
whenever that might be.
 This means that if he were to make a claim after the prescribed 12-month period, then his claim
is barred by limitation. In other words, the 12-month period stipulation by section 16N(2) of the
Act serves a dual purpose: the conferring of a right to an aggrieved homebuyer to make a claim
before the Tribunal as well as a special limitation period for such a claim
 Now, section 16N(2) of the Act is a special or specific provision of law on limitation applicable
to homebuyers making a claim before the 13 Tribunal pursuant to the Housing Development
(Control and Licensing) Act 1966; whereas section 6 of the Limitation Act is a general
provision of law on limitation pertaining to claims under tort and contracts. It is a principle of
construction of statutes expressed in the maxim generalibus specialia derogant that where there
are two provisions of written law, one general and the other specific, then the special or
specific provisions excludes the operation of the general provision