Housebuyers end up losers in claims
23/06/2003
NST K.T. Chelvi and Aniza Damis
June 22: Is the Housing Tribunal a godsend to aggrieved housebuyers as
many are led to believe? Speedy and simple as the procedure may be, the
pitfalls are still aplenty, write K.T. CHELVI and ANIZA DAMIS.
A HANDFUL of housebuyers sat in the High Court listening intently to the
barely audible exchange between the lawyers and the judge.
The only words they were able to catch was the judge declaring that the
judicial review scheduled for hearing that day was to be postponed to
August.
They came out looking frustrated and perplexed, wondering whether they
missed hearing something really important.
"Well, it's just after 10 in the morning, what is stopping the judge
from hearing the case? He has got a whole day ahead of him," says one of
them, not quite aware of how the courts work.
Delays and postponements are part and parcel of the justice system which
is already bursting at its seams.
For them, a further one-and-a-half month delay for a claim as low as
RM17,000, arising out of a straightforward dispute is preposterous.
Who is to say that there will not be any further delays? This is
basically a case where the developer failed to deliver the apartment
units within the stipulated period. And by virtue of the sale and
purchase agreement, he is liable to pay interest for late delivery.
When the developer failed to abide by the contract, 50 aggrieved buyers
decided to file a claim at the Housing Tribunal.
The first few received awards in their favour. However, the joy of
victory was shortlived when the developer threw a spanner in the works
by seeking a judicial review on the decision of the tribunal.
The developer claims that the Housing Tribunal has no jurisdiction to
hear disputes stemming from sale and purchase agreements signed before
December 2002 — the date the tribunal came into effect.
"There is no need to go to court and even the tribunal. Everything is so
straightforward.
"It's just a matter of whether the developer wants to pay us or not. If
he had scruples, he would abide by the contract," says Susan, an
aggrieved buyer who is convinced that all this is a ploy by the
tightfisted developer who wants to further frustrate the claimants by
delaying.
Mary, another buyer, says that the application for review by the
developer is an insult to the tribunal.
"If this goes on, we will lose faith in the tribunal," she says.
The buyers filed their claim at the Housing Tribunal, after rejecting
the developer's offer of part payment.
The developer proposed that the rest of the money be offset from the
maintenance fee.
"The developer became hostile when we rejected the offer and filed our
claims. He threatened to fight us all the way," says Susan.
The buyers started filing their claims since January this year. While
seven had received their awards which are now being reviewed, the rest
are still in the midst of their claims-hearing stage.
However, since the application for review, the tribunal has on its own
volition stopped hearing the rest of the claims.
This was even before the case was brought to court, says Susan who had
her case hearing postponed by the tribunal due to this.
"I was told by the tribunal chairman that hearing the claims would be a
wasted effort if the decision of the review were not in our favour,"
says Susan.
On the day the case was brought up, the developer's solicitor made an
application for an order to prohibit the tribunal from hearing the rest
of the claims, but the High Court refused.
The aggrieved buyers claim that they not only have to suffer the delay
in payment but also defective workmanship which is yet to be rectified
by the developer.
Earlier, Deputy Housing and Local Government Minister Datuk M. Kayveas
had urged developers to comply with the tribunal award despite seeking
judicial review.
He had asked them to start the compensation process immediately.
Would the developer pay compensation when he is seeking to nullify the
decision of the tribunal? Bets are he would seek a stay of execution.
National House Buyers Association (HBA) secretary-general Chang Kim
Loong says the award of the tribunal should be final as stated in the
Act.
The Act has no provision for appeal and it only allows the tribunal to
refer to the judge of the High Court a question of law, says Chang.
"If the current situation were to go on, we will be faced with a
situation where the financially able developer will appeal on all
rulings against them — just to buy time or to exhaust the complainants.
"Most buyers would have limited resources, having spent most of it
acquiring the property. They would not have the stamina the developers
have, for litigation." There have been cases where litigious developers
had counter-sued a group of housebuyers claiming for compensation, for a
much larger amount, and also instances where the developers had
deliberately insulted the buyers and challenged them to take their
claims to court.
Many feel that developers should not be allowed to question the
tribunal's jurisdiction, especially since the ministry had assured
buyers countless times that the tribunal will hear disputes arising from
sale and purchase agreements signed before December 2002.
Real Estate and Housing Developers' Association (Rehda) president Datuk
Jeffrey Ng contends otherwise.
The amended Act, he says, introduced not only a tribunal which deprives
developers of their right to appeal but also a prison sentence.
All these were not present in the earlier law.
"In this regard, it would be unfair if the tribunal has retrospective
power." In urging members to go for judicial review, Rehda is fighting
the developers' loss of right and not fighting for developers who
deliberately breach sale and purchase agreements, says Ng.
The Housing Tribunal or the Tribunal for Homebuyer Claims is the
creature of the newly amended Housing Development (Control and
Licensing) Act 1966 (the Act), formerly known as Housing Developers
(Control and Licensing) Act 1966.
To housebuyers, it is almost heaven-sent, as it was a speedy and
affordable alternative to seek legal redress against developers instead
of embarking on a costly and arduous court process.
Under the new law, the tribunal shall take no more than 60 days to make
its award and the developers would have to comply with the award within
a specified period or be liable to a fine not exceeding RM5,000 and
imprisonment for a term not exceeding two years.
All that's needed is a valid claim and RM10 — no lawyers and no
mind-boggling procedures.
It is fashioned after the Consumer Tribunal set up under the Consumer
Protection Act 1999.
The tribunal's jurisdiction is limited to claims where the compensation
does not exceed RM25,000 per cause of action, arising from the sale and
purchase agreement or previous dealings between the developer and the
purchaser.
Compensation can be for late delivery, deviation of plans and adjustment
in land area.
Claims can only be initiated by the purchaser and not later than 12
months from the date of issuance of the certificate of fitness or 12
months from the expiry of the defect liability period (18 months).
To date, the tribunal has received 1,725 claims and has settled 276 of
them. According to the latest government statistics, the tribunal has so
far awarded a total of RM2.2 million to aggrieved housebuyers.
Up to late last year, the industry was facing losses of up to RM1.2
billion in penalty payments for late delivery.
Despite all of these, the tribunal has its drawbacks. The buyer who gets
fast justice is now faced with a huge hurdle of enforcing it.
Never mind sending the developer to jail or getting the company to pay a
fine of a mere RM5,000 for noncompliance; more importantly, how do we
get our money from the developer after getting the judgment? Marhalisa
Matari, who received an award for RM20,375.08 in March, was taken aback
when she received a letter from the secretary of the tribunal asking her
to enforce the judgment using the available enforcement procedure such
as the judgment debtor's summon, the writ of seizure and sales,
garnishment proceedings and winding-up procedure.
She feels that the cost of enforcing the judgment would not justify the
amount of the award.
"What will be left of my award at the end of the whole exercise?" she
asks.
The tribunal would be ineffective as an alternative redress avenue if
the buyers have to rely on the normal court system they have been trying
so hard to avoid, to enforce their judgment.
"We are looking at legal fees of RM3,000 to RM5,000 for procedures like
the judgment debtor's summons and garnishment proceedings and a fee of
up to RM8,000 for winding-up procedures," says Chang.
There is also the filing fees, court deposits as well as commissions for
the court and auctioneer, he says, adding that the buyers should also
expect a counter-suit from the developer.
The Tribunal for Homebuyer Claims is barely five months old and Ng
believes that we need to give it more time before we can critically
evaluate it.
After all, the core of the problem lies with errant developers who
breach the sale and purchase agreement and then try to avoid being
penalised.
The amended Housing Development Act 1966 has been fortified with more
stringent provisions which includes the revocation and suspension of
licence to combat the recalcitrant ones.
Now all that is left is for the Housing and Local Government Ministry to
crack the whip and ensure the developers comply with the Act and honour
their contracts. |
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