HOUSING LAWS Additional notes

CAN THE PURCHASER CLAIM LIQUIDATED

ASCERTAINED DAMAGES (LAD) BY
CALCULATING FROM THE DATE THE
BOOKING DEPOSIT IS PAID?

The collection of booking fees by developers is a common practice in Malaysia

during property transactions, but many might not be aware that it is prohibited
under the Housing Development (Control and Licensing) Regulations 1989
(HDR).
FC decision-PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah &
Another & 6 Other Appeals
In a landmark decision on Jan 19, 2021, the Federal Court has delivered its
grounds of judgement – it finally clarified the legal position as to when time starts
to run, in respect of Vacant possession of the property.

this issue had earlier been decided by two Supreme Court cases in Hoo See Sen
& Anor v Public Bank Bhd & Anor and Faber Union Sdn Bhd v Chew Nyat Shong
& Anor, the legal position had remained unresolved for 32 years before it was
re-visited by the Federal Court in PJD Regency.
 CAN HDR 11(2): “No person including parties acting as stakeholders
shall collect any payment by whatever name called except as
prescribed by the contract of sale”.
DEVELOP PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah &
Another & 6 Other Appeals [2021] 2 CLJ 441 (PJD Case) has
ER clarified the legal position on the calculation time for liquidated
ascertained damages (LAD) claims.

COLLECT In the case, the purchaser paid RM10,000 to his developer on

Jan 16, 2013 to secure a unit in You Vista development but the
BOOKING sale and purchase agreement (SPA) was only signed on March
21, 2013.

FEES/ ANY The purchaser claimed there was a delay in the delivery of VP
and completion of the common facilities but the developer

OTHER denied the claim on the following grounds:

- The date of calculation of the LAD runs from the date of

PAYMENT payment of the SPA, and not the date the booking fee was
paid;

?
CON’T
- The common facilities were completed when the architects
certified its completion and not on the date when the Certificate
of Practical Completion (CPC) was issued to the Purchaser.

However, the Housing Tribunal, on June 5, 2017, made an

award in favour of the purchaser and held that the calculation
of LAD should begin from the date when the booking fee was
paid and the common facilities must be completed and handed
over to the purchaser at the time of VP.
The developer then filed a judicial review application with the
High Court, followed by the Court of Appeal, but both were
dismissed. The developer went on to file an appeal to the
Federal Court.
CON’T
the Federal Court applied the concept of “social legislation” when interpreting the
Housing Development (Control and Licensing) Act 1966 (HDA 1966). The Chief
Justice of Malaysia, Tengku Maimun CJ in her judgement said:

In disputes between home buyers and housing developers, its significance lies in
the approach taken by the Courts to tip the scales of justice in favour of the
homebuyers, given the disparity in bargaining power between them and the
housing developers.

A social legislation is a legal term for a specific set of laws passed by the
Legislature for the purpose of regulating the relationship between a weaker class
of persons and a stronger class of persons. Given that one side always has the
upper hand against the other due to the inequality of bargaining power, the State
is compelled to intervene to balance the scales of justice by providing certain
statutory safeguards for that weaker class.
HDR 1989- law against the collection of booking fees
In 2015, an amendment was made to HDR 1989 (PU(A)
106/2015) (2015 Amendment) because there were too many
cases where developers have devised several “schemes” with
other stakeholders with vested interest to circumvent the
provisions of the law.

It was therefore necessary to introduce the amendment i.e.

HDR 11(2) stated in our synopsis above, to further protect the
interests of house buyers and to prohibit all parties including
stakeholders from collecting booking fees. HDR 13(1) also
increased the penalties for offenders to “a fine not exceeding
RM50,000 or to a term of imprisonment not exceeding five
years or to both”.
 The Federal Court in its wisdom held that the Courts would not tolerate the bypassing
of statutory safeguards meant to protect the house buyers. When it comes to
interpreting social legislation, the courts must give effect to the intention of the
Parliament and not the intention of parties. Otherwise, the attempt by the Legislature to
level the playing field by mitigating the inequality of bargaining powers would be
rendered nugatory and illusory.

The Federal Court disagreed with the developer’s contention that it is a standard
commercial practice to accept booking fees from purchasers. The development of the
law clearly suggests the contrary.

NOTE: The Court must construe the statutory contract in accordance with the statutory
protection afforded by Parliament. Otherwise, the Court would be condoning the
developers’ attempt to bypass the statutory protection afforded to the purchaser put in
place by Parliament.

PJD CASE