3 Regulations of Housing Developers

1.0 Intoduction
1.1 Statute
The statutes were enacted with 3 objectives:
(i) to check abuses in the housing industry
(ii) to regulate the activities of housing developers. Prior to this any RM2/- company
could start a housing project.
(iii) to protect house buyers.
* The HDA does not apply to Sabah & Sarawak.

1.2 Definition
S 3 of Housing Development Act 1966 (HDA)-
“housing development” means to develop or construct or cause to be constructed in any
manner whatsoever 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 lots of land or building lots with the view of constructing more than four units of
housing accommodation;
“housing developer” means any person, body of persons, company, firm or society (by
whatever name described), who or which engages in or carries on or undertakes or causes
to be undertaken a housing development;
“licensed housing developer” means any housing developer licensed in S 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.
“housing lot” means 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.
“housing accommodation” includes any building, tenement or messuage which is wholly
or principally constructed, adapted or intended for human habitation or partly for human
habitation and partly for business premises and such other type of accommodation as may
be prescribed by the Minister from time to time to be a housing accommodation pursuant to
section 3A.
“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.
[not in S 3] “develop” means 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.

1.3 Licensed Developer

* A developer has to obtain an advertisement permit and developer's license (APDL) before
it can develop any land.
S 5 of HDA: All housing developers have to be licensed.
S 7 of HDA: Duties that has to be followed by a licensed housing developer.
S 8 of HDA: Arrangement or agreement affecting the business of a licensed.
S 8A of HDA: Statutory termination of SPA.
S 9 of HDA: Audit
R 8(1A) of Housing Development (Control And Licensing) Regulations 1989 (HDR):
Advertisements shall not contain
(a)offer of free legal fees;
(b)projected monetary return gains and rental income;
(c)claim of panoramic view;
(d)travelling time from housing projects to popular destinations; or
(e)any particulars to which a housing developer cannot genuinely lay proper claim.
R 11(2) of HDR: No person including parties acting as stakeholders shall collect any
payment by whatever name called except payment stated in 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.
R 11 of Housing Developers (Housing Development Account) Regulations 1991:
Housing Developer is only allowed to withdraw all monies remaining in the Housing
Development Account when
(a) the housing development has been completed (CCC had been issued); and
(b) the solicitor for the licensed housing developer has certified that the obligations of
the licensed housing developer in respect of transfer of title under all the sale and
purchase agreements in that housing development have been fulfilled (Defect Liability
Period had over, title had been transfer/ perfection had been done).
2.0 Was there a housing development agreement?
City Investment Sdn Bhd v Koperasi Serbaguna Cuepacs Tanggungan Bhd
 There is a housing development agreement when the vendors had come within the
meaning of “housing developer” under S 3 of HDA whereby the vendor undertake, or
carry on, or engage themselves in the construction of houses and thus render an
agreement a statutory binding “housing development” contract.
Cheong Soo Leong v H’ng Ah Ba
 The court held that the defendants were not regarded as ordinary contractors engaged
to build houses for individuals but housing developers within the meaning of S 3 of
HDA since the defendants had embarked to develop 75 units of houses.

3.0 Protection of buyers

3.1 Booking proforma was a contract between developer &
purchaser and increase of cost shall be bear by developer
Daiman Development S/B v Mathew Lui Chin Teck & Anor
 The purchaser had signed a booking proforma with an agreed purchaser price of
$26,000 but SPA is not yet concluded. Later, the developer increased the price of the
house.
 The court held that the booking pro forma was a firm contract which specified the
property to be bought and its price. Thus, the appellants had no right to change the
price stated in the booking pro forma in such circumstances.
*After signed SPA, as stated in Clause 23 of Schedule G & Clause 24 of Schedule H, the
purchaser is not liable to any increase of cost.

3.2 Purchaser is entitled to liquidated damages when developer

failed to deliver vacant possession within time stipulated
* Liquidated damages = Liquidated ascertain damages (LAD)
Clause 24 of Schedule G: Developer has to deliver vacant possession (VP) within 24
months from the date of SPA. Failure to do so will render the developer to pay liquidated
damages calculated from day to day at the rate 10% p.a. of the purchase price until deliver
VP to purchaser. [Purchaser price x 10% ÷ 365 x number of days]
Clause 25 of Schedule H: Time to deliver VP is 36 months.
Syarikat Chang Cheng(M) Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd (old case)
 The developer delivered VP to the purchaser within 24 months as stated in the SPA.
However, the law at that time was that the developer has to deliver VP within 18
months,
  The court held that the Clause in SPA stated that the time for deliver VP is 24 months
is void and thus the developer was obliged to indemnify the purchaser for delay in
delivery VP.
Chinaya Ganggaya v Senthul Raya Sdn. Bhd
 The court held that the contract between the developer and the purchaser to sell a
condominium is regarded as a statutory contract (Schedule H of HDA) and not
ordinary contract. Therefore, the parties are bound to adhere to the provisions in HDA
and not Contract Act 1950 (CA) and the argument that the SPA had been oust by CA
cannot be raised.
 Since there was a late in delivering VP, the developer was entitled to pay liquidated
damages to the purchaser.
Lim Mewah Development S/B v Dr Jasbir Singh s/o Harbhajan Singh
 The court held that in claiming liquidated damages for late delivery of VP, damages
for pain, anxiety, distress and humiliation cannot be claimed.

3.2.1 When the date of VP due/ How to calculate 24 or 36 months

Clause 24 of Schedule G & Clause 25 of Schedule H: calculated from the date of SPA
* The date of SPA!!!!!! Not the date the purchaser signs. Sometimes purchaser may sign on
01/01/2022 but the SPA is dated 01/02/2022.
GJH Avenue Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Ors
 The limitation period for delivery VP commences from the date of the S&P.

Exception: Developer collect booking fee prior to the signing of SPA

R 11(2) of HDR: No person including parties acting as stakeholders shall collect any
payment by whatever name called except payment stated in the contract of sale.
PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah
 The court held that since the collection of booking fee is now prohibited, the collection
of booking fee prior the signing of SPA will render the date to calculate VP runs from
the date of payment of deposit/booking fee/initial fee/expression by the purchaser of
his written intention to purchase and not from the date of the SPA literally.
 The reason is that the developer had acted in contrary to the law and thus, the
developer had to accept the resulting consequences.
3.2.2 Where the liquidated damages clause is a penalty clause? Whether
actual loss have to be proved as per S 75 of CA?
S 75 of CA: If there is a breach of contract and there is a compensation sum stated in the
contract, the innocent party may receive reasonable compensation not exceeding the amount
stipulated, disregarding actual damage or loss is proved or not.
3.2.2.1 Innocent party need proves actual damages.
Selva Kumar a/l Murugiah v. Thiagarajah a/l Retnasamy (recovering prepaid
payments)
 The court held that an innocent party who is claiming for actual damages in an action
for breach of contract must still prove the actual damages or the reasonable
compensation. Since the respondent could not prove actual damage, the court order
refund of some forfeited purchase price.
 The court also held that if there is a failure to prove damages, the court will not award
damages. (Against S 75).
Johor Coastal Development Sdn Bhd v. Constrajaya Sdn Bhd
 The court heavily relied on Selva Kumar’s case and held that the innocent party
should not retain the moneys paid as reasonable compensation without proof of loss or
damage.

3.2.2.2 Innocent party no need to prove actual damages. The burden lies on the
defaulting party to prove that the sum sought is unreasonable.
Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd
 The court depart from Selva Kumar’s case and held that in claiming liquidated
damages, the innocent parties only have to prove that the defaulting party had breach
the contract; and the contract had specified a sum to be paid upon breach. Once the
two elements had been proved, the innocent is entitled to the damages disregard
whether actual damage or loss is proven.
 However, if the sum sought is not reasonable, the defaulting party has to prove that the
sum is unreasonable.

3.2.2.1 Latest position- Innocent party need not prove actual loss but when the
defaulting party object to the clause, the innocent party has to prove actual loss
Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui
 The Court of Appeal set out this methodology when assessing compensation under a
liquidated damages clause:
o 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.
o If the defaulting party objects to the clause, the innocent party has an obligation
to prove loss and damages. [a very damaging decision, it is a statutory
 agreement, should have been done according to the statute, as this is not a sub-
sale]
o If the innocent party does not succeed wholly or partly, 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.
 The court held that the three case above has no relevancy to this case as well as the
interpretation of S 75 of CA.

3.3 Purchaser can terminate the wrongly signed SPA

Audrey Gertrude De Souza v Sunway D'mont Kiara Sdn Bhd
 The purchaser had signed Schedule H instead of Schedule G.
 The court held that the solution for the situation of wrongly signed SPA was to either
seek for the termination of Schedule H and demand a refund or to execute an
agreement in the correct form and to backdate its effectiveness.
 Since the purchaser had failed to choose neither options and refused to make further
payment, the court held that the purchaser had breach the contract.
* General rule: Purchaser can terminate the SPA or signed the SPA again
* If failed to choose, there might be breach of contract.

3.4 Purchaser can claim damages when specifications in the SPA

are different from that approved and advertised
Generally, the developer has to build the house according to what is stated in SPA. If there is
any change by the developer itself, consent has to obtain from purchaser. If there is any
change from Appropriate Authority, the developer shall not charge the cost on the purchaser.
* But I don’t know why Azwina notes say can charge
Chan Yew Mun Anor v Faber Union Sdn Bhd
 The plaintiffs are entitled to damages or a corresponding reduction in purchase price,
if the variations involve omissions or the substitution of cheaper materials in the
works.
Tan Tien Seng & Anor v Grobina Resorts Sdn Bhd
 The developer amended the building plan without the consent of the purchaser.
 The court held that the developer’s failure in delivering the unit based on the building
plan approved and advertised was a fundamental breach of the contract.
4.0 Vacant possession
Time to deliver VP can refer above.

4.1 Manner of delivery VP

Clause 26 of Schedule G & Clause 26 of Schedule H
When the developer delivers VP to the purchaser, they must ensure that the following had
been done:
 the issuance of a certificate of completion and compliance;
 water and electricity supply are ready for connection to the said Building;
 the Purchaser having paid all monies payable under subclause 5(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; and
 the completion of any alteration or additional work under subclause 16(2), if any.
 supported by a certificate of completion and compliance and includes the handing over
of the keys
S 7 (h, i, j, k) of HDA

4.2 Can the VP period be extended?

Can, when Extension of Time (EOT) is granted by Controller.
R 11(3) of HDR 1989:
“Where the Controller is satisfied that owing to special circumstances or hardship or
necessity compliance with any of the provisions in the contract of sale is impracticable or
unnecessary, he may, by a certificate in writing, waive or modify such provisions:
Provided that no such waiver or modification shall be approved if such application is
made after the expiry of the time stipulated for the handing over of vacant possession
under the contract of sale or after the validity of any extension of time, if any, granted by the
Controller.”
Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan and Another v
Ang Ming Lee
 The court held that the purchasers must be notified on the EOT to complete the
developer project and they shall be given a reasonable period of time to state their
views before EOT is made. Since the purchasers were not being notified and to
express their view, the court held that the EOT should be set aside.

5.0 Defect liability period

Clause 27 of Schedule G & Clause 30 of Schedule H: 24 months
 1) Purchaser will have a defect liability period for 24 months starting from the date the
purchaser obtains VP.
2) If discovered defect, have to inform developer in writing and developer shall made
good the defect within 30 days (1st 30 days).
3) After the 1st 30 days the developer did not make good, purchaser can find a certified
contractor to open a quotation of making good the defect. Later, the purchaser shall
give the developer the quotation and give the developer a change to rectify the defect
within 30 days (2nd 30 days).
4) After the 2nd 30 days the developer no take action, the purchaser can carry out the
work himself ASAP and claim the money from developer. (Total 60 days for the
developer to rectify the defect)
5) The developer shall pay the purchaser within 30 days after the purchaser demand for
payment.
Fong Wan Reality v PJ Condominium S/B
 The purchaser had discovered defects of piping system in his unit but the purchaser
did not provide a written notice of defects to the developer. It was found that such
defect was due to poor workmanship of the developer.
 The court relied on the principle of breach of contract instead of defect liability clause
to order the developer to rectify the defect and state that failure to give written notice
as required by defect liability clause does not prevent the purchaser to claim based on
the principle of breach of contract.
Question: Can there be rescission after delivery of vacant possession has been accepted
and transfer registered in the name of buyer?
 Yes. When the contract is broken, and there's no termination/non-completion clause
that allows it, the party suffering from the breach would be entitled to exercise his/her
rights under the SPA.
Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M
Concept Sdn Bhd
 Zulkefi FCJ held that the right to rescind a contract by way of termination only arose
when there had been a total failure of consideration.
 Since there is no total failure of consideration whereby the developer had completed
the construction of the project and the purchaser’s lot was in a state of delivery, the
purchaser is only entitled to received compensation by virtue of liquidated damages.
TTDI Jaya Sdn Bhd v Yew Hong Teng and Another CA
 The purchaser upon had during the defect liability period found 160 defects. Remedial
works were carried out but the purchaser was not satisfied and refused to accept
satisfactory repairs. However, the purchaser continued to pay the housing loan,
accepted transfer of title under his name and paid the outgoings, quit rent.
 The court held that the purchaser had no right to rescind the SPA because his act had
showed that he had accepted the property. Furthermore, his claim was unsupported by
 evidence and a reasonable purchaser would not wait for several years to elapse before
deciding to rescind the SPA.

6.0 Abandoned project and termination

S 8A of HDA: Statutory termination of SPA
S 18A of HDA: Offences relating to abandonment of housing development by a licensed
housing developer

*My Teduh online database to allow house buyers to check the status of their proposed
housing project. *can actually make complaints on developers who did not perform
according to the progress of delivering vacant possession. stated in the SPA.

7.0 Tribunal for Homebuyer Claims (Part VI of HDA)

This is being provided so we don’t have to go to court every time, when we have any issue
with the developer, that is something that is arising specifically arising out of the SPA then
we can actually take the issue to the Homebuyers Tribunal. It saves time and money for the
purchaser. We don’t need a lawyer to do that as we can represent ourselves in these types of
tribunals.

S 16A of HDA: “homebuyer” means a purchaser and includes a person who has
subsequently purchased a housing accommodation from the first purchaser of the housing
accommodation.

* It also applies to sub sale cases.

S 16L of HDA: A homebuyer may lodge a claim to the Tribunal in the prescribed form
together with the prescribed fee claiming for any loss suffered or any matter concerning his
interests as a homebuyer under this Act.

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

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

S 16N of HDA: Limitation of jurisdiction

Tribunal Tuntutan Pembeli Rumah v Westcourt Corpn. S/B & Ors

  HDA has retrospective effect and, therefore, the Tribunal has the jurisdiction to decide
upon claims based on Sale and Purchase Agreements entered into before the
enactment of the Act.
S 16O of HDA: 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. If the parties have entered
into an agreement with writing then they shall submit the claim to the jurisdiction of the
tribunal and the tribunal can proceed.
S 16Y of HDA: The Tribunal shall make its award within 60 days of the 1st. day of hearing
before it. It is very useful and efficient to apply for a tribunal as it is faster than court
proceedings.
S 16Z of HDA: Reference to a Judge of the High Court on a question of law.
House Buyer Tribunal and Another v Unique Creations Sdn Bhd
 The Tribunal had awarded the maximum of RM50,000 to the plaintiff. Disastified
with the decision, the defendant referred the case to the High Court on a point of law
and the High Court quashed the decision of the Tribunal.
 The Court or Appeal reversed the HC decision and reinstated the award of the
Tribunal.
 It was also held that the Limitation Act 1953 does not apply to homebuyer claims
before the Tribunal. Instead, the 12-month period under Section 16N of the Act would
apply.