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Housing Developers
(Control and Licensing)
(Amendment) Act 2002
16/02/2002
NST By *Shamsulbahri bin Ibrahim & Roger Tan Kor Mee
Background
One of the first things Datuk Seri Ong Ka Ting did when he became the Minister of Housing and
Local Government was to spearhead his ministry’s Steering Committee on Legislative Drafting (“the
Committee”) to re-look at the provisions of the Housing Developers (Control and Licensing) Act
1966 (“the principal Act”) and propose the necessary amendments to it. The last time the principal
Act was amended was in 1988. It was also amended in1972, revised in 1973 and further amended in
1977.
The Committee met for the first time on 29 February 2000, and sat through over the next 8 months
in a series of meetings to deal with the many amendments proposed by various parties. Deputy
Minister Datuk Peter Chin also chaired a number of meetings. The Real Estate and Housing
Developers Association (“REHDA”) was strongly represented with its President, Dato’ Eddy Chen Lok
Loi, Deputy President Tan Teng Boon and Executive Secretary Ms Ng Kuai Heng present in almost all
the meetings. Likewise, the consumer groups, Federation of Malaysian Consumers Associations (“FOMCA”),
Consumer Association of Penang (“CAP”) and Consumer Associations of Selangor and Federal Territory
sent their senior office-bearers. Other members of the Committee are representatives from the
Ministry of Domestic Trade and Consumer Affairs, Department of the Director General of Lands and
Mines, Malaysian Institute of Architects, Association of Consulting Engineers Malaysia, Master
Builders Association Malaysia and Construction Industrial Development Board; Controller of Housing
together with Shamsulbahi bin Ibrahim, the legal adviser of the Ministry of Housing and Local
Government and his senior officers, Prof. Salleh Buang, lawyers Teh Sek Hock, Toong Gek Foong, S.Y.
Kok and Roger Tan. Views from the Bank Negara Malaysia, Association of Banks Malaysia, Koperasi
CUEPACS Berhad and the Bar Council were also either sought or received from time to time.
The final draft was submitted to the Attorney General’s Chambers in early 2001 for approval and
the Cabinet approved the final draft in September 2001.
The Housing Developers (Control and Licensing) (Amendment) Bill 2001 went through the Houses of
Parliament in October and received the Royal Assent on 24 January 2002. It was gazetted on 31
January 2002 and will come into operation on a date to be appointed by the minister by
notification in the Gazette (“the Appointed Date”).
This is a major revamp of the principal Act emphasizing on preventive measures, better protection
of purchasers as consumers in addition to enhancing the authorities’ investigation and enforcement
powers.
Title
Ss 3 and 4 of the Housing Developers (Control and Licensing) Amendment Act 2001 (“the Amending
Act”) change the title of the principal Act to Housing Development (Control and Licensing) Act
1966 (“the Act”) so that it does not give an impression that the Act is aimed only at the housing
developers but that the Act will have general application to the purchasers as well as the housing
developers.
The principal Act is now divided into 7 parts, namely:
Part I : Preliminary (ss 1- 4)
Part II : Licensing housing developers (ss 5 – 6B)
Part III : Duties of a licensed housing developer (ss 7 – 9)
Part IV : Investigation and Enforcement (ss 10 – 10J)
Part V : Powers of Minister (ss 11 – 16)
Part VI : Tribunal for Homebuyer Claims (ss 16A – 16AI)
Part VII : Miscellaneous (ss 17 – 24)
Application of the Act
S 6 of the Amending Act deletes s 2(1) of the principal Act. With the deletion, no person or body
in West Malaysia who is a housing developer is now exempted from the application of the Act.
Previously, co-operative societies, statutory bodies and bodies and agencies under the control of
the Federal Government or any State Government were exempted from the principal Act.
S 35 of the Amending Act provides that any society, body or agency undertaking or causing to be
undertaken any housing development where housing accommodation had not been offered for sale
before the Appointed Date is required to apply for a licence under the Act within six months from
the Appointed Date and pending the decision of the Controller of Housing on the application for
such a licence, such applicant shall be deemed to be a licensed housing developer under the Act.
Definitions
S 7 of the Amending Act amends the definitions of “bank”, “finance company”, “housing
accommodation”, “licensed housing developer”, “prescribed” and “purchaser”. It also inserts new
definitions of “certificate of fitness for occupation”, “Deputy Controller”, “local authority”,
“stakeholder” and “Tribunal”.
Perhaps the amendment to the definition “housing accommodation” requires a word or two. The
definition of “housing accommodation” now reads as (with the inserted words in italics): ““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 but does not include an accommodation erected on any land designated for or
approved for commercial development;”. This is to clarify that buildings erected on commercial
land such as service apartments will not be subject to the Act.
Appointment of Controller, Deputy Controller, Inspectors and other officers and servant
S 8 of the Amending Act rewords s 4 of the principal Act to the effect that a new office of the
Deputy Controller of Housing is now created in order to assist the Controller in the discharge of
the latter’s duties under the Act as currently the Controller is also the Secretary General of the
Ministry. The Minister may appoint such number of Deputy Controllers as he deems fit. The
Controller and the Deputy Controllers shall also have the same powers conferred on an Inspector of
Housing under the Act. The newly worded section also allows the Controller to delegate any of his
powers and functions under the Act to any Deputy Controller, Inspector, officer or servant
appointed by the Minister including his powers and functions in respect of investigation of
offences under the Act to any public officer or officer of a local authority. It is hoped that
with the powers of investigation capable of being delegated to government agencies and local
authorities throughout West Malaysia, enforcement of the provisions of the Act will be more
effective and better monitored.
Licence Fees
S 10 of the Amending Act inserts new subsections (4A) and (4B) into s 5 of the principal Act which
empower the Controller to collect fees payable on the grant of a licence and at such intervals
during its validity period and that no application for a licence shall be considered unless such
fees which will be prescribed shall have been paid to the Controller.
Conditions or restrictions for the grant of a licence.
S 11 of the Amending Act has made some significant changes to s 6 of the principal Act as follows:
Subject to the Minister waiving it, no licence shall be granted if:
(a) a corporate applicant for a licence does not now make a deposit with the Controller a sum of
not less than RM200,000 in cash or in such other form as the Minister may determine.
(b) a person or body of persons applying for the licence fails to make a deposit with the
Controller an increased sum of RM200,000 from previously RM100,000.
(c) the applicant is a company, at the time of application:
i. any one who is convicted of an offence involving fraud or dishonesty or who is an undischarged bankrupt is holding office as director, manager or
secretary of the applicant or other similar office or position;
ii. any director, manager or secretary of the applicant has due to a conviction of an offence under the Act been fined for a sum exceeding RM10,000 or
has been imprisoned (other than imprisonment in default of a fine not exceeding RM10,000); or
iii. any person who had been a director of or had been directly concerned in the management of the business of a licensed housing developer which has
been wound up by a court is a director or is directly concerned in the management of the business
of the applicant;
(d) the applicant is a society, any one who is convicted of an offence involving fraud or
dishonesty or who is an undischarged bankrupt is holding office as president, secretary or
treasurer of the applicant or other similar office or position at the time of application.
(e) the applicant is a body of persons or firm, at the time of application the applicant or any
member or partner of the applicant has due to a conviction of an offence under the Act been fined
for a sum exceeding RM10,000 or has been imprisoned (other than imprisonment in default of a fine
not exceeding RM10,000).
(f) the registration of the applicant's architect or engineer has been cancelled and has not been
reinstated at the time the application is made.
For the purposes of sub-paragraph (c) above, the expression of “applicant” shall include the
holding company of the applicant or a subsidiary of the applicant or a subsidiary of the holding
company of the applicant.
New ss 6A and 6B have also been inserted to the effect that subject to the direction of the
Minister, the deposits referred to sub-paragraphs (a) and (b) above shall be kept by the
Controller until the expiry of the defects liability period of the housing development. The
Controller may after having given the licensed housing developer an opportunity to be heard,
forfeit the whole or a part of the deposits if the licensed housing developer:
(a) is carrying on his business in the opinion of the Controller in a manner detrimental to the
interest of the purchasers or public;
(b) has insufficient assets to cover his liabilities;
(c) is contravening any provision of the Act; or
(d) has ceased to carry on housing development in West Malaysia.
Duties of a licensed housing developer
S 7 of the principal Act has been amended to require a licensed housing developer to exhibit at
all times in a conspicuous position in any office and branch office of the licensed housing
developer a copy of his licence, advertisement and sale permit.
A licensed housing developer is also required to report to the Controller not later than the 21st
day of January and the 21st day of July of each year on the progress of the housing development in
such form as the Controller may determine from time to time and to inform the Controller if the
licensed housing developer considers that he is likely to become unable to meet his obligations to
the purchasers at any stage of development before the issuance of the certificate of fitness for
occupation (“CFO”). This provision will help the Ministry monitor the progress of every housing
development and to take necessary action to ensure that such housing development is eventually
completed.
In the meantime, the time for the licensed housing developer to submit its audited report to the
Controller has now been extended to 6 months from 3 months previously after the close of its
financial year.
4 new sub-sections have also been inserted into s 7 of the principal Act, namely requiring the
licensed housing developer to:
* inform the Controller of the handing over of vacant possession of the housing accommodation to
the purchasers and submit a certified true copy of his architect’s certificate certifying that the
construction of the housing accommodation has been duly completed and that water and electricity
supplies are ready for connection to the housing accommodation.
This provision will allow the Ministry to monitor the progress of handing over of vacant
possession in accordance with the Uniform Building By-Laws.
* inform the Controller if the appropriate authority has refused to accept the submission of any
document relating to the issuance of certificate of fitness for occupation and submit the refusal
letter from the appropriate authority to the Controller.
This provision will enable the Controller to undertake the necessary investigation to ascertain
the reason why the particular local authority has refused to issue or withheld the issuance of the
CFO so that the Controller can take the matter up administratively with the relevant local
authority.
* ensure that the development of the housing accommodation has been carried out in accordance with
any requirements prescribed under any law regulating buildings and has exercised all such
diligence as may be required for the issuance of the CFO and for the issuance and transfer of the
titles to the housing accommodation to the purchasers.
This is to impose on the licensed housing developer a statutory duty to ensure that he shall
fulfil all his duties and responsibilities as set out in the law.
* inform the Controller of the progress in the issuance of a separate or strata title for the
housing accommodation and the transfer of the said titles to the purchasers.
This provision will help the Controller monitor the progress in this area which remains a problem
particularly with sub-divided buildings.
Moneys held by stakeholder
This is the final 5% of the purchase price held by a solicitor as a stakeholder to be released to
the licensed housing developer pursuant to the sale and purchase agreements (“SPAs”) which
currently state that 2.5% thereof is to be released 6 months after handing over of vacant
possession and the balance 18 months after the handing over of vacant possession unless there are
defects in the subject property within these periods.
S7A of the principal Act is now amended to give to the stakeholder’s moneys similar protection as
the moneys held in a housing development account so that in the event the licensed housing
developer should be declared a bankrupt or if it is a company, liquidated, the stakeholder’s
moneys shall not be deemed to be part of the property of the licensed housing developer and
therefore beyond the reach of his creditors. The stakeholder’s moneys then vest in the official
receiver or trustee in bankruptcy, as the case may be, to be applied in accordance with the
provisions of the SPAs. Further, the stakeholder’s moneys shall not be garnished until all the
liabilities and obligations of the licensed housing developer under the SPAs have been discharged
and fulfilled.
Sub-section (9) of S 7A has been amended to make it clear that the obligation of a licensed
housing developer to open and maintain a housing development account will subsist so long as any
sale and purchase of the property shall take place before the issuance of CFO.
New s 7B – “Licensed housing developer”
Under the new s 7B, the expression “licensed housing developer” as referred to ss 8, 8A, 11 and 12
shall mean to include any housing developer whose licence has expired.
S 8 of the principal Act as amended provides that where a licensed housing developer proposes to
enter into an arrangement or agreement to sell, transfer, assign, dispose of or reconstruct his
business relating to housing development either by amalgamation or otherwise, the licensed housing
developer is required to seek the prior approval of the Controller.
S 8A is a new section on statutory termination of SPAs. S 11 confers powers on the Minister to
give directions for the purpose of safe-guarding the interests of purchasers. S 12 confers on the
Minister to give general directions as he deems fit and proper for the purpose of ensuring
compliance with the Act.
Hence, under the new s 7B, a licensed housing developer whose licence has expired will still be
caught by the provisions of ss 8, 8A, 11 and 12 and are required to comply with the same. As what
the Minister told the Dewan Rakyat when tabling the amending Bill, the housing developers could
not now deliberately not renew their licences in order to “escape” from their obligations under
the Act. They are still required to seek the approval of the Controller for any sale or merger of
projects even though their licences may have expired.
New s 8A - Statutory Termination of SPAs
This new section proposed by REHDA is intended to permit termination of all the SPAs when it is
clear that the licensed housing developer is unable to proceed with the housing development or any
phase thereof especially during an economic downturn. If both the licensed housing developers and
most of the purchasers agree to terminate their SPAs and therefore cease the construction of the
housing development or any phase thereof, it is in the mutual interest of the parties to ensure
this intention is carried out expeditiously without the fear of being sued by the remaining
purchasers.
However, strict conditions apply before this new section can be invoked by the parties which are
as follows:
* the approval of the Minister is required;
* the development has not commenced 6 months after the execution of the SPAs; and
* at least 75% of all the purchasers who have entered into the SPAs have agreed with the housing
developer in writing to terminate the SPAs and each of their written consent shall have been duly
executed and witnessed by their solicitors or a Commissioner for Oaths. For this purpose, joint
purchasers irrespective of any number shall be considered as one purchaser.
In determining any such application for approval, the Minister may require such other documents or
evidence as the Minister may determine including such evidence which may satisfy him that the
licensed housing developer is financially capable of refunding to the purchasers and their
financiers all the moneys paid by them to the licensed housing developer if the Minister approves
such application. When giving his approval, the Minister may impose such conditions as he may deem
fit and proper.
If the Minister approves the application, the following shall apply:
* the decision of the Minister shall be final and shall not be questioned in any court and it
shall be binding on the licensed housing developer and all the purchasers and no injunction shall
be granted to restrain any person from carrying out the decision of the Minister.
* all the SPAs including that of the remaining purchasers who have not agreed to the termination
shall be deemed to have been duly terminated.
* the licensed housing developer shall within 14 days from the date of receipt of the Minister’s
approval inform all the purchasers in writing of the Minister’s decision.
* the licensed housing developer shall refund fully all moneys received by the licensed housing
developer from the respective purchasers free of any interest within the period stated in the
Minister’s approval.
* upon full receipt of the aforesaid refund, the purchasers shall forthwith cause all encumbrances
on the land to be removed and the cost and expense for such removal shall be borne by and may be
claimed as a civil debt from the housing developer.
The penalty for non-compliance with this section is a fine not exceeding RM50,000 and to a further
fine not exceeding RM5,000 for every day during which the offence continues after conviction.
Powers of Investigation and Enforcement
Under the principal Act, the powers of investigation of the Controller or an Inspector are wholly
inadequate. S 10(1) empowers the Controller or an Inspector to investigate from time to time under
conditions of secrecy into the affairs of or into the accounting or other records of any housing
developer and S 10(3) of the principal Act gives the Controller or an Inspector the right of
access at all times to the accounting and other records of the housing developer or to require any
person to provide such explanation or information as he may desire. As the Controller and the
Inspectors do not have the powers to enter, search, seize and arrest, the Controller and the
Inspectors are powerless as many a time evidence is destroyed before the Ministry could even act
on an errant housing developer.
The Amending Act deletes s 10(3) of the principal Act and inserts 10 new sections (ss 10A – 10J)
to enhance the investigation and enforcement powers of the Controller and the Inspectors. The new
sections are grouped together with s 10 under Part IV. However, in order to prevent any abuse of
power by any Inspector, the new ss 10I and 10J provide that no Inspector shall be entitled to
exercise any of the powers under Part IV without the prior authorisation of the Controller and if
asked, the Inspector is required to produce such written authorization from the Controller.
The new s 10A provides that an Inspector may with a warrant of search issued by a magistrate at
any time day or night with or without police assistance enter into any premises and search the
premises and any person therein and seize or detain any property or document. If it is necessary,
an Inspector may break open any outer or inner door of such premises and enter thereinto. The
magistrate may issue the warrant if there is reasonable cause to believe that any premises have
been used for or there is on any premises evidence necessary to establish the commission of an
offence under the Act. However, if an Inspector has reasonable cause to suspect that by reason of
delay in obtaining a search warrant, the investigation would be adversely affected or evidence of
the commission of an offence is likely to be tampered with, removed, damaged or destroyed, the
Inspector may enter the premises and exercise all those powers as if he were authorized to do so
by a warrant of search. Having said that, the Inspector must still have obtained the prior
authorisation of the Controller as required under the new s 10J. The other sub-sections of s 10A
provide for the preparation of a search list and set down the procedure to be followed for the
release of properties seized.
The new s 10B entitled “Search of Person” deals with a body search and a person may be detained
for such period as may be necessary to have the search carried out which shall not exceed 24 hours
without the authorisation of the magistrate. No female person shall be searched except by a female
Inspector. The new s10C prohibits anyone from obstructing an Inspector in various specified ways
from exercising his powers of entry, search, seizure and detention. The new s 10D empowers an
Inspector to require the translation to be done by the person possessing any book or document
which is not in Bahasa Malaysia or English into Bahasa Malaysia.
Under the new s 10E entitled “Power to examine persons”, if an Inspector suspects any person to
have committed an offence under the Act, he may order a person to be examined orally in relation
to any matter or order the person to produce any book, document or thing which may assist in the
investigation into the offence or by written notice require the person to furnish a statement in
writing made on oath or affirmation providing information which may assist in the investigation.
The section also sets out the procedure of carrying out the examination in addition to empowering
the Inspector to seize any property produced before him or use any record of an examination for
the purposes of prosecuting the accused person or another person whether under the Act or any
other written law.
The new s 10F authorises an Inspector to carry out investigation on any past or present business
associate or any person who is or who was concerned in the control or management of the affairs of
the suspected offender. The new s 10G provides for another method of investigation to be conducted
by a police or public officer in which case the Controller and the Inspector shall render the
necessary assistance to the police or public officer. The new s 10H protects any informer in any
civil or criminal proceedings unless in a trial for any offence under the Act, the court believes
that the informer willfully made a false statement or in any other proceeding the court feels that
justice requires the disclosure of the informer.
Powers of the Minister
S 11 of the principal Act empowers the Minister to give various directions to safeguard the
interests of the purchasers if the Controller is informed or is of the opinion that a licensed
housing developer is unable to meet his obligations to his purchasers or is about to suspend his
building operations or is carrying on his business in a manner detrimental to the interests of his
purchasers. A new sub-section (ca) has been incorporated into sub-section 11(1) to empower the
Minister to certify that the licensed housing developer has abandoned the housing development.
This may be necessary so that such housing developer may then avail himself to the various schemes
introduced by the Government for the revival or restoration of abandoned projects.
S 11 currently empowers the Minister to:
* direct the licensed housing developer to take such steps as he may consider necessary to rectify
any matter or circumstance;
* direct that a person be appointed or himself appoint a person to advise the licensed housing
developer in the conduct of his business;
* with the concurrence of the Minister of Finance direct a company to assume control and carry on
the business of the housing developer upon such terms and conditions as the Minister may
determine;
* direct that the licensed housing developer present a petition to the High Court for the winding
up of his business; or
* take such action as the Minister may consider necessary in the circumstances of the case for
carrying into effect the provisions of the Act.
However, the Ministry has advised that these provisions are difficult to implement because in
order to do so, the Ministry may have to meet all the costs and expenses arising therefrom
including that of professional advisers and the parties coming in to rescue the projects which may
sometimes run into thousands of ringgit. A new sub-section (1A) is therefore inserted into s 11 to
allow the Minister to specify that any cost and expense reasonably incurred by such persons in
carrying out such direction or decision of the Minister to be paid from the housing development
account or from moneys due to the account. An amendment has also been made to S11(2) that every
such direction of the Minister shall be binding also on the purchasers.
Controller to report the conduct of an architect or engineer
Under the new s 13A, the Controller may report the conduct of an architect or engineer to his
respective professional body if the Controller is satisfied that the professional’s conduct has
prejudiced the interest of the purchasers. This new provision serves as a warning to any errant
architect or engineer who acts unprofessionally in certifying the completion of the various stages
of the housing development.
Transfer or assignment of a licence
A new s 13B has also been inserted into the principal Act to prohibit any transfer or assignment
of any licence or any right attached thereto and such transfer and assignment shall be void.
Public Servants and Application of Public Authorities Protection Act 1948
A new s 22A now deems the Controller, every Deputy Controller, every Inspector and all members and
officers of the Tribunal to be a public servant for the purposes of the Penal Code and a public
officer for the purposes of the Criminal Procedure Code.
The new s 22B is interesting as it provides that the Public Authorities Protection Act 1948 shall
apply to any action, suit, prosecution or proceedings against the Minister, Controller, any Deputy
Controller, or any Inspector, the Tribunal or any member or officer of the Tribunal in respect of
any act, neglect or default done or committed by him in such capacity. This means that any such
suit, action, prosecution or proceeding has to be instituted within 36 months after the act,
neglect and default complained of. If the plaintiff later loses his case, he will have to pay
costs taxed on a solicitor and client basis.
Right to initiate and maintain actions.
The new s 22C is a very important provision. It provides as follows:
“Notwithstanding anything contained in any written law or any rule of law, a homebuyer as defined
in section 16A shall be entitled on his own volition and in his own name to initiate, commence,
institute and maintain at any court or tribunal any action, suit or proceeding against a housing
developer or any other person in respect of any matter arising out of the sale and purchase
agreement entered into between the purchaser and that housing developer unless a contrary
intention is expressed in any agreement, assignment or charge between the homebuyer and his
financier in which case the prior written consent of his financier must first be obtained before
he exercises any of his rights under this section.”
Since the 1984 decision of the Federal Court in Nouvau Mont Dor (M) Sdn Bhd v Faber Development
Sdn Bhd (1984 2 MLJ 268), a person who has bought a property without title from a housing
developer and thereafter assigned his contractual rights in a SPA to his financiers usually by way
of a loan agreement cum assignment as security for a loan granted to him finds himself incompetent
to found and maintain an action in his own name against any person particularly the housing
developer where there is a dispute over the property. The Federal Court in the 1984 case which was
later followed by the Supreme Court in Hipparion (M) Sdn Bhd v Chung Khiaw Bank Ltd (1989 2
MLJ 149) held that where the assignment is an absolute assignment not purporting to be a charge
only within the meaning of section 4(3) of the Civil Law Act 1956, then the assignor purchaser is
not entitled to sue the vendor in his own name but the action should be brought by the assignee
bank in its own name or by the assignee bank in the name of the assignor. Of course, if the
separate title to the property is issued and transferred to the assignor, this problem will not
arise at all.
In the recent decision of the Kuala Lumpur High Court in Chan Min Swee v Melawangi Sdn Bhd
(2000 7 MLJ 111), the court held that even if the assignment is not absolute, the assignor
purchaser is still unable to sue the developer without joining the assignee bank as a co-plaintiff
or as a defendant (if the assignee bank refuses) in the action. The court in that case also held
that the letter of consent drafted in qualified terms would not give the assignor purchaser the
locus standi to sue the developer.
The legal position is further complicated when various High Court judges
attempted to circumvent the superior courts’ decisions Nouvau Mont Dor and Hipparion [see
Loh Hoon Loi & Ors v Viewpoint Properties (Sabah) Sdn Bhd (1995 4 MLJ 804); Max-Benefit
Sdn Bhd v Phuah Thean An & Anor (2001 1 MLJ 553) and Lim Hock Lai v Hwa Kwong Development
Sdn Bhd (2001 5 CLJ 515)]. However, our judicial system is founded on the principle of stare
decisis and the decision of Nouvau Mont Dor by the Federal Court which stands at the apex
of our judicial system is still the law.
Therefore, this legal position is against the interest of the assignor purchaser who now finds
himself incompetent to file any action against the housing developer without getting the assignee
bank involved. The assignee bank also finds itself inconvenienced by the persistent pleas of its
borrower to file an action against the housing developer over a dispute which is essentially
between the borrower and the housing developer and if the assignee bank should refuse, the
assignor purchaser may also hold the assignee bank to be in breach of a duty to him to preserve
the property.
The new s 22C is therefore timely as it seeks to protect those purchasers who have entered into a
SPA with a housing developer as the phrase “homebuyer” as defined in the new s 16A includes a
purchaser who has a dealing with a licensed housing developer. This new s22C will not protect the
other purchasers such as purchasers of commercial properties or purchasers who have bought a
property from someone who is not a housing developer.
S32(2) of the Amending Act gives retrospective effect to the new s 22C in that it applies to every
agreement, assignment or charge lawfully entered into between a purchaser and his financier before
the Appointed Date.
The new s 22C which is a “legislative intervention” to protect the interest of the purchasers
applies “notwithstanding anything contained in any written law or any rule of law.” It follows the
provisions of section 4(3) of he Civil Law Act 1956 and Nouvau Mont Dor and Hipparion decisions
will now have no application to such purchasers. However, the new s 22C also takes into account
the interest of the financiers who will have a say in the manner in which any action is being
brought against a housing developer so that the security over the loan is not in any wise
prejudiced.
It is expected that all loan and security documents between the assignor purchaser and the
assignee bank will now include a clause requiring the purchaser to obtain the written consent of
his financier before he commences any action against a housing developer or any person. If the
loan documents (including an assignment by way of a charge) do not express the contrary intention
or have such a provision requiring the financier’s prior consent, then the purchaser can proceed
directly against the housing developer without the prior written consent of his financier. If
consent is required, all the purchaser need to do when he commences any action against any person
is to state or produce the written consent of his financier in the writ or originating summons, as
the case may be. If the financier has given its consent, then the courts should not still require
the financier to be added as a party to the proceedings. Of course, the financier can always
withhold its consent if it desires to be added as party to the action commenced by its borrower
against the housing developer.
Increase in Penalties and Power to Compound
The Amending Act has also increased the penalties for the following offences:
* the fine on conviction under s 7A with regard to the housing development account is now
increased from a sum of not less than RM10,000 to a sum of not less than RM50,000 but which will
not exceed RM500,000. The previous maximum fine was RM100,000.
* any unlicensed housing developer or any unlicensed housing developer who assumes or uses in
relation to his business the words “housing developer” or any licensed housing developer who fails
to comply with any of the conditions imposed on the licence will on conviction face a fine of not
less than RM50,000 and not more than RM500,000. The previous minimum and maximum sums were
RM10,000 and RM100,000 respectively.
* any housing developer who fails to perform his duties under s 7 or sells or merges his business
without the approval of the Controller under s 8 or fails to comply with the Minister’s directions
given under ss 11 and 12 including failing to provide that Company directed by the Minister to
take over the housing developer with such facilities as the Controller may consider necessary will
on conviction be liable to a fine not exceeding RM50,000 and a further daily fine of not exceeding
RM5,000 if the offence is continued after conviction. Previously, the amount was RM10,000 and the
offender was liable to a fixed daily fine of RM5,000.
* any one who continues to act as or hold office of a director, manager or a secretary of a
licensed housing developer after he has become a bankrupt or suspended or compounded with his
creditors or been convicted of an offence involving dishonesty or fraud or any one who acts as or
continues to act as or hold office as a director or is directly concerned in the management of the
business of the licensed housing developer without the approval of the Minister after that
business of that licensed housing developer has been wound up by the court will on conviction be
liable to an increased fine of not exceeding RM50,00 from the previous maximum sum of RM10,000.
* the maximum fine for offences where no penalty is expressly provided in the Act will face an
increased fine of not exceeding RM50,000 from the previous maximum sum of RM10,000.
* any person who is a director, manager, secretary, agent, clerk or a servant of a housing
developer deemed to be guilty of an offence committed by a housing developer will now on
conviction face a fine of not exceeding RM50,000 from the previous maximum sum of RM10,000.
The new s23A now empowers the Controller to compound any offence under the Act or any regulation
made thereunder. If the offence is compounded, no prosecution shall thereafter be instituted as
respects the compounded offence. S 24 of the principal Act has also been amended to include more
powers for the Minister to make regulations, inter alia, to prescribe the fees payable under the
Act and prescribe offences which may be compounded and the method and procedure for compounding
such offences.
The Tribunal for Homebuyer Claims
The setting up of a tribunal to hear simple disputes between purchasers and housing developers has
been long awaited. S 25 of the Amending Act introduces new Part VI comprising 35 sections dealing
with the establishment of the tribunal for homebuyer claims (“Tribunal”) and matters connected
therewith. The new Part VI is modelled upon the provisions of the Consumer Protection Act 1999 in
relation to the Tribunal for Consumer Claims under that Act subject to some modifications.
The main provisions about the Tribunal are as follows:
Jurisdiction of the Tribunal
The Tribunal is meant for homebuyers who have been defined to mean a purchaser who has bought a
property or has a dealing with a licensed housing developer including the second purchaser who has
bought the property from the first purchaser. In other words, the Tribunal will not hear any third
or subsequent purchaser of the property.
The jurisdiction of the Tribunal is limited to hearing a claim not exceeding RM25,000 unless the
parties agree otherwise in writing. The claim must be brought by a homebuyer no later than 12
months from the date of issuance of the CFO for the property or the expiry date of the defects
liability period as set out in the SPA, whichever is the later. Any claim must arise out of a sale
and purchase agreement executed or a previous dealing between the purchaser and the licensed
housing developer occurring after the Appointed Date and the writers understand this will be made
clearer in the Tribunal regulations that will follow.
The Tribunal will have no jurisdiction to hear any claim in respect of recovery of land, or any
estate or interest in land; the entitlement of any person under a will or settlement, or on any
intestacy; goodwill; any chose in action; any trade secret or other intellectual property or any
claim arising out from personal injury or death. Neither will the Tribunal hear any claim if it
arises from a SPA or a dealing entered into between the homebuyer and an unlicensed housing
developer in which case the homebuyer may use the normal courts to pursue the matter.
However, the Tribunal can still hear a claim even though there is no SPA entered into between the
parties if at the time when the cause of action accrues there exists a previous dealing between
the homebuyer and the licensed housing developer in respect of an acquisition of the property. So,
for example, if the purchaser has signed any letter of offer or intent with a licensed housing
developer, he may bring the matter to the Tribunal.
In any event, the Tribunal should always attempt to assist the disputing parties to negotiate for
a settlement before the Tribunal proceeds to determine the dispute unless it is not appropriate
for the Tribunal to do so or the parties are unable to reach an agreed settlement.
Membership of Tribunal.
The Tribunal shall comprise a Chairman and a Deputy Chairman appointed from among members of the
Judicial and Legal Service and not less than 5 members who must be either serving in the Judicial
and Legal Service or advocates and solicitors of the High Court in Malaya who have practised for 7
years or more. This allows the Minister to set up as many branches as possible throughout West
Malaysia to hear the disputes. The Chairman or Deputy Chairman or a member of the Tribunal can sit
alone to preside over any matter. All proceedings of the Tribunal shall be open to the public.
Legal representation
Unlike the Tribunal for Consumer Claims where legal representation is absolutely disallowed,
lawyers are allowed in the Tribunal if 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 a lawyer provided that if one party is allowed to be subsequently represented by a
lawyer then the other party shall also be so entitled.
If application for legal representation is denied, it is still anticipated that corporate housing
developers who have their own legal officers will get these professionally trained employees to
appear to defend their companies. Likewise, an individual who is also a lawyer can also appear to
pursue his claim against an unrepresented small time housing developer. If so, the Tribunal may
impose conditions as it considers necessary to ensure that the other party is not substantially
disadvantaged.
In fact, at the Committee stage, in the rare show of solidarity, both REHDA and the consumer
groups have argued for legal representation. It is hoped that this provision will not be abused
and that legal representation should only be allowed in very, very exceptional circumstances such
as where it involves complex issues of law or where one party will suffer severe financial
hardship if he is not represented by a lawyer. The writers can foresee that the first thing every
corporate housing developer will do at the commencement of the Tribunal proceedings is to apply
for legal representation and it is hoped that this application will be swiftly rejected so that
this provision will not defeat the spirit of setting up the Tribunal as an inexpensive, quick and
effective avenue for resolving disputes between the parties. Reasons for its award must be given
by the Tribunal.
Awards of the Tribunal.
The Tribunal shall make its award without delay and, where practicable, within 60 days from the
date of first hearing of the dispute.
However, before the Tribunal makes an award, it may, in its discretion, refer to a Judge of the
High Court a question of law which is of sufficient importance to merit such reference. Reasons
for the award must be given by the Tribunal.
An award may require that a party pay money to any other party; the refund of moneys paid; a party
comply with the SPA; moneys be awarded to compensate for any loss or damage suffered by the
claimant; the contract be varied or set aside, wholly or in part; costs to or against any party be
paid; interest be paid on any sum or monetary award at a rate not exceeding 8% per annum, unless
it has been otherwise agreed between the parties; or the claim be dismissed.
Every agreed settlement recorded by the Tribunal and every award made by the Tribunal shall be
final and binding on all parties to the proceedings and deemed to be an order of a Magistrate’s
Court and be enforced accordingly by any party to the proceedings. The Secretary to the Tribunal
shall send a copy of the award made by the Tribunal to the Magistrate’s court having jurisdiction
in the place to which the award relates or in the place where the award was made and the Court
shall cause the copy to be recorded.
Criminal penalty for failure to comply with the award.
Any person who fails to comply with an award made by the Tribunal within the period specified
therein commits an offence and shall on conviction be liable to a fine not exceeding RM5,000
ringgit or to imprisonment for a term not exceeding 2 years or to both. In the case of a
continuing offence, the offender shall, in addition to these penalties be liable to a fine not
exceeding RM1,000 for each day or part of a day during which the offence continues after
conviction.
Regulations in respect of the Tribunal.
The Minister may make such regulations as may be necessary or expedient in respect of the Tribunal
to prescribe the responsibilities and control of members of the Tribunal; the procedure of the
Tribunal; forms to be used; fees and the manner for collecting and disbursing such fees. These
regulations are required to be made before the Tribunal comes into operation and the writers
believe that the Housing Development (Tribunal for Homebuyer Claims) Regulations 2002 will be
gazetted before or on the Appointed Date.
+However, when finalising the Housing Development (The
Tribunal For Homebuyer Claims) Regulations 2002, the earlier proposed provisions stating that the
Homebuyer’s Tribunal should only hear sale and purchase agreements executed or a previous dealing
which took place after the Appointed Date were removed.
*Shamsulbahri bin Ibrahim is the Legal Adviser to the Ministry of Housing and
Local Government and Roger Tan Kor Mee is an Advocate & Solicitor. |
