KUALA LUMPUR – The Federal Court has awarded extra protection to house buyers, after further solidifying the Housing Development Act 1966 as social legislation.
The court heard six cases between housing developers and buyers simultaneously. Two of the cases also involved the Housing Tribunal as a party.
The matters presented to the court centred around the penalties to be paid by developers to buyers in the event of late delivery.
The disputed issue concerned the question of “how late is late?”.
Following the Housing Development Act, a developer must deliver the unit to the buyer within a specific time.
If he fails to do so, a penalty must be paid. But, are the courts supposed to calculate the penalties from the date of the sale and purchase contract, or the payment of the booking fee?
In its judgment, the apex court referred to Hoo See Sen & Anor v Public Bank Bhd & Anor (1988) and Faber Union Sdn Bhd v Chew Nyat Shong & Anor (1995), deciding that penalty payments are to be calculated from the time that booking fees are paid.
Additionally, the judges based their decision on the fact that the Housing Development Act is a piece of social legislation meant to protect buyers from developers.
Reference was made to a 1966 Hansard document that cited then local government and housing minister Khaw Kai Boh when tabling the legislation: “Legislative measures should be taken to protect the people from bogus and/or unscrupulous housing developers. Hence this bill.”
The court also mentioned that the practice of collecting booking fees is, in fact, not permitted by law.
“Booking fees are prohibited, yet the developers have continued to brazenly flout the law by calling it standard practice,” said Chief Justice Tun Tengku Maimun Tuan Mat in her judgment summary.
This ruling bears similarities to a Court of Appeal case last year.
In the appellate court’s judgment in a case between a buyer and developer, it was decided that late penalties are to be paid from the date that booking fees are paid, and not the agreement.
The judgment was based on the grounds that house buyers could not be protected if they collected booking fees without contractual repercussions. – The Vibes, January 21, 2021
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