Recently, there has been plenty of Judicial Review proceedings brought about by property developers in Malaysia at the Courts of Law to challenge decisions made by the Housing Tribunal. To put it simply, a judicial review is a challenge to the way in which a decision has been made. This brings about the question, how does an aggrieved homebuyer afford to pay for the legal fees to challenge the developers’ battalion of lawyers in court?
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What is the Homebuyer’s Tribunal?
Officially known as the Tribunal for Homebuyer Claims (TTPR), the tribunal was established on December 1, 2002 through an amendment to the Housing Development (Control & Licensing) Act 1966 (HDA). This tribunal’s jurisdiction only applies to cases in Peninsular Malaysia. The TTPR is meant to provide an avenue for house purchasers to claim against property developers at minimal cost. It only costs RM10 to file a claim and the award or compensation is usually given within 60 days from the first day of the hearing.
You can only bring a claim to the Housing Tribunal if you have a cause of action that arose from the Sales and Purchase Agreement (SPA) entered into between you and a licensed property developer AND within a specific time frame as laid down in Section 16N(2) of the HDA (explained below).
It should be noted that the sale and purchase of the property must be in accordance with Regulation 11 of the Housing Development (Control & Licensing) Regulations 1989 (HDR).
What claims can you make under the Homebuyer’s Tribunal?
The Homebuyer’s Tribunal commonly deals with claims relating to:
1. Defective workmanship;
2. Defective materials;
3. Property not constructed in accordance with the approved plans stated in the SPA;
4. Late delivery of vacant possession of the property;
5. Late delivery of common facilities;
6. Payment of liquidated and ascertained damages claims (LAD);
7. Refund of deposit; and
8. Refund of late interest charges
Section 16N(2) of the HDA provides that any claims made to the Homebuyers Tribunal must be done within 12 months of either:
(a) the date of issuance of the certificate of completion and compliance (CCC) for the housing accommodation or the common facilities intended for subdivision (whichever is later);
(b) the expiry date of the defects liability period as set out in the SPA; or
(c) the date of termination of the SPA by either party. Such termination must occur before the date of issuance of the CCC for the housing accommodation or common facilities intended for subdivision (whichever is later).
Claimants are to file their claims using the Tribunal Home Claims (Borang 1) to be submitted at the nearest Tribunal office or the Ministry of Housing and Local Government. More details on the claiming process and the documents required can be found here.
It can be seen from the provision above that homebuyers may bring a claim within 12 months of any of the limbs (support of their arguments). The courts have found that the use of the word ‘or’ must be taken disjunctively, thus giving homebuyers a choice between the limbs. It has been established in the High Courts that to read it conjunctively would be doing violence to the word ‘or’.
Section 16N(2) also provides that even if there has been no ‘physical’ SPA entered into between the homebuyer and the licensed property developer at the time the cause of action accrued, this will not affect or defeat the claim as long as the homebuyer can show that there is a ‘previous dealing’ (the purchase of the residential property developed by a developer by the homebuyer). We can see that Parliament has left the Homebuyers Tribunal’s jurisdiction wide enough to protect homebuyers in their dealings with property developers in Malaysia.
FIND OUT: Certificate of Completion and Compliance (CCC) in Malaysia: What you need to know
Award issued by Housing Tribunal
It is important to note that the maximum award that can be given by the Homebuyers Tribunal is RM50,000. An award is the Homebuyers Tribunal’s final decision on claims filed by homebuyers. It explains the Tribunal’s decision and its terms and conditions.
Most of the terms and conditions of the Tribunal can be enforced through a court just like a court order. An example of an award would be payment of money. If the property developer owes a certain sum of money to the claimant (homebuyer) such as in the form of a liquidated ascertained damages (LAD), the award will specify the amount the developer has to pay to the homebuyer. The award may require the developer to pay a specific amount of money by a specific date. If the money is not paid by then, the award may say that interest on the money will also have to be paid, with the rate of interest also specified.
The enforcement of a Homebuyers Tribunal award is still carried out by the courts and not by the Tribunal. If the claimant is unfamiliar with court procedures, he/she may appoint a lawyer to act on his/her behalf.
Property developers are challenging Section 16N(2) of the HDA
This issue was argued at the Court of Appeal recently. A property developer had appealed against the dismissal of a judicial review by the High Court which maintained the Homebuyers Tribunal awards to seven buyers of a high-rise residential development in Johor. The claims were for LAD due to late delivery of vacant possession of their units and completion of the common facilities (the developer was under contract to complete the properties within 48 months). The developer was seeking to quash the Tribunal’s award, arguing that vacant possessions begin from the SPA date and not from the date the deposits for the property were paid.
The Court of Appeal on July 6, 2021 unanimously dismissed the developer’s appeal and upheld the decision of the High Court and the award by the Homebuyers Tribunal.
The Court of Appeal followed the decision of the Federal Court in the Westcourt case which held that “The Court would further agree that, under Sec. 16N(2), so long as the claim before the Tribunal concerned a SPA between a homebuyer and a licensed property developer, and was brought by the homebuyer not later than 12 months from the date of issuance of the certificate of fitness for occupation or the expiry date of the defects liability period (DLP), the Tribunal would have jurisdiction to hear the claim irrespective of the date of the SPA.”
Therefore, as the law stands today, homebuyers can bring their claims not later than 12 months from the CCC being issued or the expiry of the DLP (which would be 3 years from them taking vacant possession of their units) or the date of termination of the SPA by either party (which will have to have occurred before the date of issuance of the CCC), as long as their claims arise from the SPA.
CHECK OUT: Freehold vs Leasehold title in Malaysia: What property buyers should know
Gaps in HDA allow property developers to challenge homebuyer rights
The HDA is designed to protect purchasers and is a social legislation. This is reflected in the Federal Court’s decision in cases such as Ang Ming Lee & Ors v. Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and Other Appeals [2020] 1 MLJ 281 which held that the protection of homebuyers must be the “paramount consideration” in matters concerning property developers and purchasers.
The social significance of the statute is further articulated by former Lord President Mohamed Suffian Hashim in the SEA Housing case:
“It is common knowledge that in recent years, especially when the government started giving housing loans making it impossible for public servants to borrow money at 4% interest per annum to buy homes, there was an upsurge in demand for housing. And to protect home buyers, most of whom are people of modest means, from rich and powerful property developers, Parliament had found it necessary to regulate the sale of houses and protect buyers by enacting the HDA.
“It appears that even since 1982, housing developers have continued to devise ingenious, and if we may say so, devious schemes to overcome the protections afforded to purchasers by the scheme of the HDA 1966… How is the concept of social legislation relevant to the weeding out of such practices?”
This social legislation has indeed been put to the test through many crafty ways that have compromised the protection afforded to homebuyers in Malaysia. There are uncertainty and gaps in the legislation which we believe was intended to make the legislation flexible enough to allow for more protection for homebuyers. Yet these gaps in the HDA leaves plenty of wiggle room for property developers too, a point which has not gone unnoticed by the courts as indicated in the Federal Court case of Westcourt Corporation Sdn Bhd v. Tribunal Tuntutan Pembeli Rumah [2004] 4 CLJ 203.
Judicial Reviews only in the ‘rarest of cases’
In the case of Hazlinda Hamzah v. Kumon Method of Learning Centre, Justice Court of Appeal Gopal Sri Ram remarked that the Tribunal for Consumer Claims has several provisions to protect consumers from the provision of defective goods and services and to give claimants speedy relief. The Parliament in establishing the Tribunal conferred it with extraordinary powers to do speedy justice for consumers. “As such, its Awards should not be struck down save in the rarest of cases, where it has misinterpreted some provision of the Act in such as to produce an injustice,” he said.
Despite this strong statement, too many Tribunal awards have been put on judicial reviews, resulting in some getting quashed or varied. It makes one wonder if the above and other relevant cases and statutory provisions related to housing laws and the Parliament’s intention to protect house buyers are ever brought to the judge’s attention at judicial review proceedings.
If you enjoyed this guide, read this next: Can I cancel a house purchase after signing the SPA?
This article is jointly written by Datuk Chang Kim Loong, Hon Sec-Gen of the National House Buyers Association (HBA) and Claudia Silva, LL.B (Hons) Essex, LL.M., Cardiff a practising lawyer.
*This article is intended to offer an insight into the case authorities and is not intended to be nor should it be relied upon as a substitute for legal or any professional advice.