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CHAPTER 3

Housing Development statutes were enacted with


3 objectives =
(i)
to check abuses in the housing industry
(ii)
to regulate the activities of housing
developers. Prior to this any RM2/company could start a housing project.
(iii)
to protect house buyers.
Strata Titles (Amendment) Act 2016
i.

Seeks to amend the Strata Titles Act 1985 (Act


318) which includes the insertion of a new
Part IVA to enable the implementation of
rent of parcel or provisional block and any
matters connected therewith.

ii. Harmonize the provisions of Act 318 and with the


provisions of the National Land Code as Act
318 is construed as part of the National Land
Code.
iii. Introduce a new Part VIIIA to facilitate the
implementation of acquisition of subdivided
building or land.
The HDA does not apply to Sabah & Sarawak.

Sec 3 housing development- means to develop


or construct or cause to be constructed in any
manner more than 4 units of housing
accommodation and includes the collection of
monies or the carrying on of any building
operations for the purpose of erecting housing
accommodation in, on, over or under any land; or
the sale of more than four units of housing lots by
the landowner or his nominee with the view of
constructing more than four units of housing
accommodation by the said landowner or his
nominee;
= anyone who constructs of a minimum of 4 houses /
sells more than 4 units of housing lots etc could be
considered as a housing developer but does not apply
for the license or housing development

Licensed housing developer = any housing


developer licensed under section 5 to engage in or
carry on or undertake a housing development and
includes the holder of any power of attorney of
such housing developer duly created under the
Powers of Attorney Act 1949 "

= even if a company goes into winding up, the


liquidator will try to complete the contract. Every
housing developer must be registered + licensed

Housing Lot - any piece of land surveyed or


otherwise, to which a lot number has been
assigned to it and which is subject to the category
"building" in accordance with the NLC 1965
Housing accommodation includes houses,
flats, apartments or partly houses and partly shops
or offices. Previously it did not include any
accommodation erected on any land designated
for or approved for commercial development. Eg.
an office and shopping complex with some units
of pent houses. However 2009 amendments now
include such units as housing accommodation. See
Sec 3(c)
Whether these situations come within the HDA?
(a) Shop lots. Flats on the 2nd floor = YES
(b) 2 complexs Shopping comple and offices =
NO
(c) 2 complexs Shopping complex, apartments,
offices (When there is a resident) = YES
Eg: The Shore Melaka
(d) Office penthouse NO unless it is in
residential area
- Office case and is considered as a perk
and privilege of occupation

If a landowner sells a plot of land and


subsequently there is a separate construction
agreement for the construction of houses on the
said land and the same party then executes a Sale
and Purchase Agreement (SPA) with a purchaser
of a housing unit, this will be regulated by the
HDA.
If you sell a land which is going to build
houses = YES
The minute that idea w housing project, the
project comes under the HDA. One cannot
escape.
Regardless if: Make separate contracts
1) SPA sell land
2) SPA private construction

Develop to construct or cause to be constructed


and includes the carrying on of any building
operations for the purpose of constructing housing
accommodation in, on, over, or under any land
with the view of selling the same or the land
which would be appurtenant (attached) to such
housing accommodation.
Purchaser means any person who purchases
housing accommodation or who has any dealing
with a licensed housing developer in respect of the
acquisition of housing accommodation;
4. Sec 5 all housing developers are required to be
licensed and under s.7B a licensed housing
developer for the purposes of ss.8,8A,11 and 12)
includes one whose licence had expired (penalty
will be imposed)
5. Amendments under HDA Amendment
Regulation 2015 shall not =
a) offer free legal services
eg = Bar Council Rulings 14.18 (2) and
(3) and Sec 84 LPA
the Developer solicitor cannot act for
the Purchaser.
SPA is a statutory document provided
by the government
b) Claim any panoramic view
c) travelling

3.2 Was there a housing


development agreement?

City Investment Sdn Bhd v


Koperasi Serbaguna Cuepacs
Tanggungan Bhd [1985]

The Ps executed 2 SPAs with the D


Vendors. SPA1 was to buy 60 sub
divided lots for single storey terrace
houses to be built thereon. The Ds were
to appoint a licenced housing developer
who would then execute SPA with
individual purchasers for the terrace
houses.

Under SPA 2 the Ps would only sell lots


of vacant land for the construction of 11
bungalow lots and 14 semi detached
houses. The full price for the land and
development for the terrace lots were
paid but not the construction of the
terrace houses as the terrace houses
were never built. The Ds subsequently
appointed themselves as developers
under the SPA1.

Ds Counsel argued that SPA 1 was


purely for the sale of land only and
therefore was not within the ambit of
the HDA.

Held in HC & FC =
The subsequent building contract should not
attempt to evade the HDA & Regulations. Even
otherwise the SPA1 as it stands comes within the
ambit of s.3 HDA as a housing developer includes
one who is desirous of undertaking a housing
development and develop includes .land
which would be appurtenant to such housing
accommodation

Cheong Soo Leong & Ors. v


Hng Ah Ba [2004]
The Ps entered into a SPA1 with the Ds, for the
purchase of land and an SPA for the construction
of a semi-detached house thereon. The P made
some payments pursuant to the 2 agreements but
neither the land nor the house was completed and
transferred to him within the agreed time. The P
then sued for specific performance in respect of
the two agreements, liquidated damages for nondelivery of the house within the agreed time,
interests and costs. The Ds averred that the P had
defaulted in his progress payments towards the
house and therefore building works had come to a
halt for lack of funds.
3 years later the Ds firm applied for a declaration
that the two agreements were null and void. The
two suits were heard together and the P's claim
was allowed whilst the Ds firms claim was
dismissed. The Ds appealed.
Held =
i. The firm with the defendants as partners
embarked on a project to develop 75 units of
houses in which the plaintiff's house was one
of them. As such they were housing
developers within s. 3 HDA.
ii. Ps were entitled to damages for late delivery and
were entitled to set off the payments of the
balance of the purchase price against the
liquidated damages due. Specific performance
of the 2 agreements granted.
iii. The claim by the Ds firm instituted 3 years later
was nothing more than an attempted escape
route against the Ps legitimate claims.
The land owner sold the land. 2 agreements
1. sell the land
2. construction
yes it is regulated by the HDA
LO Exercise 1
V subdivides his land into 5 lots, obtains
individual title and sells it to the public. The SPA
states that only residential buildings may be
constructed on the land. Would the SPA be
governed by the HDA and Regulations?
= YES

3.3 Protection of Buyers


1)
2)
3)
4)

To get title
Decent quality
Compensation in case of defects
Enforceable Contracts

When does the contract is enforced?

Daiman Development Sdn Bhd


v Mathew Lui Chin Teck &
Anor. [1981]
Privy Council: A booking pro forma (1% or 2%
booking fee that is paid) constituted a binding
contract as there is an offer, acceptance and
intention to create legal relation.

SEA Housing Corpn Sdn Bhd v


Lee Poh Choo [1982]
Respondent had sued the appellant developer for
breach of contract to complete and deliver a
housing accommodation with issue document of
title within the stipulated 18 months (Old law.
Current law = 24 months) The house was only
completed after 23 months later. So they have to
fight for the damages for late delivery. The
developer sought to rely on a clause 32 in the SPA
which purported to exempt the developer for nonfulfilment of any terms caused by circumstances
beyond their control.
FC held:
1. The HDA and the Rules were for the
protection of the interests of the public and
the developer could not contract out of these.
2. Clause 32 of the SPA was inconsistent with
Rule 12(1)(r) of the Housing Developers
(Control and Licensing) Rules 1970 and
therefore void.
3. The Respondent was entitled to liquidated
damages as per Rule 12(1)(r) and was entitled
to set off the withholding of the final
installment payment against the liquidated
damages for delay in completion.

Principle = agreement is a statutory agreement

thus the parties have existing statutory duties


towards each other, and could not contract out
of the Schedule G.

Chinaya Ganggaya v Senthul


Raya Sdn. Bhd. [2008]
The Pl claimed for late delivery of a condominium
unit in KL. By a SPA dated 23 September 1995 by
clauses. 7, 22, and 24 thereof, the Df contracted to
deliver vacant possession of a condominium unit
to the P and to complete the common facilities of
the property within 36 months (3 years), failing
which it was liable to pay liquidated damages
('LAD') to the Pl. Vacant possession with
completed common facilities was only delivered 7
years later in 2002.
Consequently, the P claimed for payment of LAD
in the sums of RM165,962.89 for the delay. The D
argued that the plaintiff was not entitled to LAD by
virtue of Sec 56(3) of the Contracts Act
1950 and the doctrine of frustration.

Held =
(i) Since the agreement is not an ordinary
contract but governed by Rule 11 and

Schedule H of the Housing Developers


Regulations, it follows that clause 7, 22, and
24 of the agreement are not mere terms of a
contract: they are also statutory provisions
since they are actually provisions of

Schedule H of the Housing Developers


Regulations that had been imposed by law
upon the parties.

(ii) The defendant's argument on Sec 56(3) CA


and doctrine of frustration is unacceptable.
The right of the plaintiff to LAD is solely
governed by clause 22(2) and 24(2) of the
agreement and the HDA regulations, and Sec

56(3) clearly has no relevance.

Araprop Development S/B v


Leong Chee Kong & Anor.
[2008]
[property without individual tittle = no charge to the
bank but contract to the bank as security.]
(deed of assignment one of the terms is to give up all
title, rights and interest in the property to the bank)

The delay, was said to be due to the failure of


the electrical and telephone contractors to
complete their cabling work in time.

Held = The delay was by the appellant's subcontractors who were under the control of the
appellant. The SPA clearly provided for a
completion date and that was also true in the
sub-contracts.

On Appeal : The issues were:

(1) Whether the Resp were entitled to terminate the SPA


since they had assigned their rights thereunder to the
Malaysia Building Society Berhad ('MBSB') by
virtue of a loan agreement taken with MBSB;

Held = Yes the rights and interest has been assigned to


the bank as there is a contract between the
PB and the Bank but the PB still has a
contract with the developer to complete the
construction.

Right to sue when he got an assignment


If he sues during the course of the assignment =
1. Get permission of the bank
2. Make the bank as party of the proceeding

However, in this case, the purchaser only sued after


completed his payment. Assignment is no longer
enforced. Purchaser is the legal owner. Thus there is
no issue.

(2) Whether the delay to deliver vacant possession was


due to circumstances beyond the appellant's control?

(3) Whether there was waiver and/or estoppel on the part


of the respondents when they were silent upon the
expiry of the due date for delivery of vacant
possession on 15 March 1999.
-

Appellant alleged that the Resp had paid quitrent on the property and only issued the notice
to terminate some two years and three months
after the due date.

Held = The delay was by the appellant's subcontractors who were under the control of the
appellant. The SPA clearly provided for a
completion date and that was also true in the
sub-contracts. Thus the silent does not have
any effect as long as the claimant raises the
issue within the limitation period.

3.4 Consequences
Delivery

of

Late

What is the right of the buyer if there is a late


delivery?

1. Under the HD Regulations Sch. G


completion period for a house is 24 months while
under

Schedule H for an apartment is 36 months.

Title
Schedule G
Sell
Ground (lot no)
24 months
Payment, progress
payment
Retention sum (5% +
5%)
Defect liability 24
months

W/o Title
Schedule H
Build
Apartment (parcel)
36 months
Progress payment

MK Retnam Holdings v Bhagat Singh


[1985]
- cannot contract out. 2nd contract is null & void

Due to unavoidable matters, the construction


could not be completed. Therefore, the developer
contacted all the buyers and told them that if they
want their construction to be completed, they have
to enter into a 2nd agreement (supplementary
agreement) for an extension of 6 months to
complete and an additional payment. The buyers
agreed. However the house was again not
completed by that date and delivery and vacant
possession never made. The R obtained judgment
for liquidated damages.

Appellants ground of appeal:

Retention sum (5% + 5%)


Defect liability 24
months

SEA Housing Corpn. S/B v Lee


Poh Choo [1982]
On a failure to complete within the stipulated
period of delivery the Purchaser is entitled to
liquidated damages

The learned Judge was wrong in =


a) Holding that the 2nd agreement was void and
of no effect;
b) Awarding indemnity at 12% per annum on the
full agreed purchase price and not merely on
the actual amount already paid by the
respondent; and
c) Awarding interest on the purchase price on a
day to day basis as damages.

SC Held =
1) A developer cannot subsequently increase the
purchase price. The 2nd. Agreement is null and
void when tested against the HD Rules 1970
and the case of Lee Poh Choo.

2) Rule 12(1)(r) is a statutory remedy


providing indemnity for late delivery based
on a clear formula of fixed interest on the
total purchase price from the due date of
delivery of vacant possession to the actual
date on a daily basis.
3) But that does not mean that interest should be
calculated on a daily rest basis. If interest on
daily rest basis is intended by the Rule a
clearer provision would have been made as
such provision would impose a heavier
burden on the developer.

Faber Union S/B v Chew Nyat


Shong & Anor. [1995]
In a claim for damages for late delivery the
question was, when did time start running
(a) from the date the Purchaser paid the booking
fee
(b) the date the Purchaser signed the SPA

Held = From the date of payment of the booking


fee. Because booking fee is a binding contract.

Reality = The time starts running on the date


stipulated on the SPA which is the date when the
vendor signed.

Lim Mewah Development S/B v


Dr. Jasbir Singh s/o Harbhajan
Singh[1993]

In a claim for late delivery there can be no claim


for damages for pain, anxiety, distress and
humiliation.

3.4.3. Vacant Possession


= Certificate of Completion and Compliance, free
from encumbrances, title of the land and electric
and water connection.

South East Asia Brickworks


Sdn Bhd v Maria Antoinette
[1979]

In a claim for late delivery the question was


whether vacant possession meant practical
completion as per architects certificate or with
issue of the Certificate of Fitness for Occupation
(CFO)

Held = It would be unreasonable to impose a


further condition on the developer to hand over
vacant possession with CFO. Delivery of vacant
possession would be effective with the architects
certificate of practical completion.

Later the law was amended under Schedule G


to require that vacant possession shall be with :

the architects certificate of practical


completion,

connection of water and electricity supply


and

that the vendor has applied for CFO.

Further amendments to the HDA Sec 7 (h,i,j,k)


now requires that the Developer has to: inform the Controller of the progress
achieved by him in relation to the issuance
of the CF
exercise all such due diligence as may be
required to ensure that vacant possession
of the house is made simultaneously with
the issuance of CF
as well as title to the house.

* under the latest amendments the CF is issued by


the Developers architect and engineer to avoid
delay = CCC. However, liability is also placed on
the architect and engineer.

New Schedule H Contract of sale new clause

27(1)(b) developer shall let purchaser into


possession of the parcel (strata) upon, inter alia,
the issue of a separate strata title to the parcel by
the appropriate authority = strata tittle cannot be
late

New clause 28(1) if strata title cannot not have


issued for any reason not attributable to the

developer, he may apply to Controller for a


certificate.

Application for certificate must be submitted


before expiry of 36 months

Required prove:
1. Notified PTG and JUPEM of superstructure
stage (building has been structured) within 2
weeks
2. Timely application to PTG for subdivision

Defect Liability

Rule 25(1) - 24 months

Fong Wan Reality v PJ


Condominium S/B [2010]
Right to sue on latent defects not outwardly
discoverable = Even if it is not visible and would
pose a danger after the defect liability period, but
could be detected by professionals, such as
engineers

Rule 27(1) of Schedule G = any defect,


shrinkage or other faults in the said Building
which shall become apparent within a period of
24 months after the date the Purchaser takes
vacant possession of the said Building and which
are due to defective workmanship or materials
shall be repaired and made good by the Vendor at
its own cost and expense within 30 days of the
Vendor having received written notice thereof
from the Purchaser.

Rule 27(2) stated that if the Developer did not


make the defects good within 30 days, the
Purchaser is entitled to carry out the works to
repair and to recover the fees from the Developer
or deduct such costs from any sum which is held
by the Developers solicitors as stakeholders
under item 5 of the 3rd Schedule.

Sec 8A.
(1) A purchaser shall at any time be entitled to
terminate the SPA if-

(a) the licensed housing developer refuses to carry


out or delays or suspends or ceases work for a
continuous period of 6 months or more after
the execution of the sale and purchase
agreement
= refers abandoned projects

(b) the purchaser has obtained the written consent


from the end financier
-

Give evidence of the abandon work and


give instruction to the bank to not entertain
any claim / release any more money for
payment to the developer

(c) the Controller of Housing has certified that


the licensed housing developer has refused to
carry out or delayed or suspended or ceased
work for a continuous period of 6 months or
more after the execution of the sale and
purchase agreement.
= purchaser has to apply to the controller to
come and inspect the project and certify the
project to be classified as abandon

(2) For the purpose of paragraph (1)(b), no end


financier shall unreasonably withhold its
written consent to the termination of the
SPA.
= because banks will lose the security of the
loan

(3) In the event that the purchaser exercises his


right to terminate the sale and purchase
agreement under subsection (1), the licensed
housing developer shall within 30 days of such
termination refund or cause to be refunded to
such purchaser all monies received by the
licensed housing developer from the purchaser
free of any interest.

**Not practical = developer can go into hiding


within the 6 months period

Sec 18A. Offences relating to abandonment of


housing development by a licensed housing
developer
(1) Any licensed housing developer who abandons
or causes to be abandoned a housing
development or any phase of a housing
development which it is engaged in, shall
be guilty of an offence and shall, on
conviction, be liable to a fine not less than RM
250,000/- and not more than RM500,000/- or

to imprisonment for a term not exceeding


three years or to both.
(2) "abandons" means refuses to carry out or
delays or suspends or ceases work continuously
for a period of six months or more or beyond
the stipulated period of completion as agreed
under the sale and purchase agreement.".

3.4.4. Effect of an Assignment


of the purchasers interest as
a security.

Assignment = In regards to property without title,


where a bank loan in needed. The purchaser had to
go on basis of contract to take up a loan with the
bank.
Loan Agreement Cum Assignment (LACA) is not
a registrable interest under the NLC = to protect
the right, one has to caveat the master title
indicating ones particular interest in the master
title.

Nouvau Mont Dor (M) Sdn Bhd


v Faber Development Sdn Bhd
[1985]

Developer didnt give out the strata tittle and does not
maintain the common property although the
maintenance fee was paid. One of the clause in the
Loan Agreement mentions that assign the rights,
tittle, interest to the property to the bank absolutely,
not amounting to be by way of a charge

Held = Assignment works as an equitable


mortgage where the rights title and interest will
legal title goes to the bank (mortgagee / financier).
As far as the bank is concerned, the LACA is
stronger than a charge because in a charge, the
legal title is with the purchaser. In a claim for
certain declaratory relief by the appellant a
preliminary issue was raised objecting to the locus
standi of the Appellant to bring the action.

The issue was whether the assignment of the


purchasers interest was an absolute assignment.
The Appellant entered into a SPA with the
Respondent for the purchase of a shop lot (the said

property) and as individual title was still pending


assigned the said property to Public Bank for a
loan to enable the Appellant to pay the
Respondent the balance of purchase price. This
was carried out by means of 2 documents, a loan
agreement and a Deed of Assignment. This was
expressly consented to by the Respondent. At the
time of the commencement of the action the
Appellant had not fully settled the loan amount.

FC Held = The appellant was not competent to


maintain the action at the time when the
originating summons was filed. The fact that the
assignment had the effect of passing to the
assignee the rights, title and interest of the
assignor in the sale agreement and the beneficial
interest of the assignor in the property by way of
security only did not derogate from the absolute
character of that assignment.

Sakinas S/B v Siew Yik Hua &


Anor.[2002]

In a Purchasers claim for damages for late


delivery the appellant raised the issue of :(i)

whether the right of purchaser to sue was


prejudiced by the assignment of the
purchaser's rights under sale and purchase
agreement to the financier.

(ii)

Whether the deed of assignment was an


absolute one or by way of charge only
pursuant to s. 4(3) Civil Law Act 1956, -

(iii)

Whether notice to claim compensation


should be given

(iv)

Whether actual loss or damage must be


proved

HC Held =

(i) To fall under s. 4(3) CLA 1956, the


assignment must be an absolute assignment
and must not purport to be by way of charge
only. All the terms of the deed of assignment
must be considered, and if, it is clear that the
intention was to give a charge only, then the
action must be in the name of the assignor
(Nouvanu Mont) The actual phraseology
does not matter. Therefore, this could be taken
to mean that even if the assignment were to
use the word "absolutely", it would not fall
within s. 4(3) of CLA if the intention was to
give a charge only. Therefore the right of the
purchaser to sue was not prejudiced.
(ii) The assignment herein was an alternative form
of security necessitated by the fact that the
apartment had no title to enable it to be
charged under the National Land Code as
security. If the apartment had a title, the title
would have been charged under the National
Land Code as security for the loan and there
would have been no need for an assignment.
(iii) As the intention of the appellant and the
respondents was that time should be of the
essence of the contract, the agreement
became voidable at the option of the
respondents when the appellant failed to
deliver vacant possession on 13 December
1997.
(v)

The sale and purchase agreement in this case


was a mandatory one prescribed by statute.
As such, the liquidated damages prescribed in
the agreement constituted reasonable
compensation and the respondents ought to
be paid in full.

Philleoalied Bank(M) Bhd. v


Bhupinder Singh Avtar Singh
& Anor.[2002]

In order to finance their purchase of a piece of


property to which no strata title had been issued,
the Resp entered into a LACA with the Appellant
bank pursuant to which all their rights, title and
interest under the SPA were assigned absolutely to
the bank. The borrowers also executed a joint
Power of Attorney(PA) in favour of the bank.
Subsequently, the borrowers defaulted in their
repayment and the bank took steps to auction off
the property, relying on the LACA and the PA
without obtaining an order for sale from the court.

A day before the auction, the HC granted the


borrowers an injunction restraining the bank from
proceeding with the sale on the ground that:-

FC allowed the appeal Held:-

(i) The LACA in the present case amounted to an


equitable mortgage and not an equitable
charge. At common law, a legal or an
equitable mortgagee has, upon the
mortgagor's default in repayment, the power
to sell and convey the legal estate to a 3rd
party pursuant to the express terms of the
mortgage deed without an order of the court.

(ii)

for recourse. It cannot be relied upon to


compel the bank, an equitable mortgagee, to
make an application to the court for an order
for sale in the absence of any substantive
provision or rule, express or implied, in the
NLC or at common law imposing such an
obligation. The court should, therefore,
recognise and give effect to the contractual
rights and obligations as had been determined
between the borrowers and the bank.

(i) the assignment being absolute, thus the bank is the


legal owner. If the borrower defaults the
payment, the bank can auction off the
property without obtaining an order for sale
from the court under O. 31 r. 1 RHC

1980.
(ii)

O.83 RHC provides the procedural means

if the assignment was not absolute, thereby


creating an equitable charge, then the
appellant would have to proceed under O. 83

RHC.
(iii)

the PA was invalid.

(iii)

Although for most practical purposes a


charge should be regarded as a species of
mortgage, there is one essential difference. A
mortgage is a conveyance of property, legal
or equitable, subject to a right of
redemption. A charge conveys nothing; it
merely gives the chargee certain rights over
the property as security for the loan. At
common law, only mortgages can be created;
in equity both mortgages and charges are
possible. The remedies of an equitable
chargee are inferior to those of a
mortgagee.

(iv)

Since the assignment under the LACA was


absolute and not one 'purporting to be by way

On appeal the CA dismissed the appeal. On


further appeal to the FC:-

of charge only' within the meaning of s. 4(3)

CLA1956, the borrowers, as assignors,


were not even competent to maintain the
originating summons.
(Nouvau Mont Dor followed)

Absolute assignment = Purchaser Borrower


cannot bring an action as there is no basis because
there is no contractual right for the PB to sue.

Q. Whether a financier having an absolute


assignment could realize his security after the
issuance of an individual title, without
registering a NLC charge and applying to the
court for an order for sale?

= Bank can sell. There is no law requiring the


bank to convert the LACA into a charge. The only
way is that the PB can negotiate with the bank
when you are applying for the loan and inserts a
clause in the loan agreement stating that when title
is issued, the assignment will be converted into a
legal charge registered under the NLC.

Hong Leong Bank Bhd. v Goh


Sin Khai [2005]
The plaintiff applied for the following relief:

(i) a declaration that the defendant had absolutely


assigned to the plaintiff all rights and interests
in a piece or parcel of property ('the said
property') pursuant to a deed of assignment
dated 12 September 2002 ('the DOA');

(ii)

a declaration that the issuance of an


individual title for the said property did not
affect the validity and continuance of the
aforesaid absolute assignment, and that the
rights and privileges of the plaintiff as the
assignee under the DOA were intact and
preserved regardless of the issuance of the
said individual title; and

(iii)

a declaration that the absolute assignment


constituted an equitable mortgage of the said

property to the plaintiff and by reason


thereof, the plaintiff was at liberty to dispose
off the said property in accordance with the
agreed terms and conditions in the facilities
agreement dated 12 September 2002 and
DOA, regardless of the issuance of the said
individual title.

HC Held:-

I.

The DOA in this case stated that the


defendant assigned 'the full and entire benefit
of the SPA together with all rights, title and
interests of the assignor(s) therein'. It was
evident in these transactions that the assignor
had paid the full purchase price for the
property to the developer utilizing the funds
made available to him by the assignee. It was
clear that the developer was no more than a
constructive trustee in this case but he still
held the legal title to the property until it was
transferred, and until then, the assignor only
had a right in personem, i.e. the contractual
right or benefit accruing to him under the
SPA. That is a right enforceable by action if
unlawfully withheld by the developer and is a
chose in action. Following from this, an
absolute assignment in such a case amounted
to a transfer of the legal right of the chose in
action from the purchaser to the financier.

II.

The law in relation to absolute assignments is


clear. An absolute assignment is an equitable
mortgage and the essence of a mortgage is
that there is a transfer of the ownership to
the mortgagee. There is no statute or rule in
common law that once an individual title or
strata title is issued, the absolute assignment
is extinguished. Likewise, there is nothing to
say that the assignee must extinguish the
assignment by ensuring that the assignor takes
a transfer of the property and creates a charge
in favour of the lender. In the absence of any
statutory provision or rule of common law,
the court must give effect to the intention of
the parties that is reflected in the contractual
provisions of the assignment. Unless the
contractual provisions in the assignment
provide that it is extinguished upon the
issuance of an individual or strata title, the
assignment is not extinguished. Unless the
assignment imposes an obligation on the

assignee to ensure that the title is


transferred to the assignor and a charge is
registered, the court cannot impose such an
obligation on the assignee in the absence of
statutory power or common law enabling the
court to do so.

The property was auctioned off by defendant


pursuant to the deed of assignment.

Q. Whether an auction could be held before an


order for sale is obtained.
III.

So a lender having an assignment may,


without obtaining an order of sale from the
court, realize his security consisting of
immovable property in respect of which there
is an issue document of title but no registered
charge.

RHB Bank Bhd V. Zalifah Juan & Anor


[2005]
Whether holder of equitable Mortgage must apply
to court to exercise its contractual rights to sell
Property - Whether O.31 r.1RHC1980 provides
court with jurisdiction to order judicial sale
Held = court has an inherent power to order sale
where it appears necessary or expedient". In the
case of an absolute assignment the assignee does
not require an order of court to sell.

Ruzain bin Zainudin & Anor v RHB


Bank Berhad [2012]
Defendant granted loan facility to plaintiffs for
purchase of property by way of an absolute
assignment. plaintiff defaulted in repayments. On
12,December 2008, judgment in default was
entered against the plaintiffs in the Sessions Court
for a sum of RM210,369.59 as at June 30, 2008,
interests and costs. Individual title for the said
property was issued but transfer and charge not
done. The Deed of Assignment provided that:

5.1.3 the right and power to sell and assign


the PROPERTY as the absolute unencumbered
owner thereof by way of public auction or private
treaty with or without advertisement or valuation
at such price or prices and in such other manner
and upon such terms and conditions as the BANK
shall in its absolute discretion think fit free from
any interest of the ASSIGNOR.

HC Held: There was no provision in the deed of


assignment for the defendant to issue a notice to the
plaintiffs to execute the memorandum of transfer and
charge. Prior to the execution of the charge, the
interests of the defendant were protected by the deed
of assignment and power of attorney that had been
executed by the plaintiffs in the defendants favour.
The issuance of the individual title for the property did
not mean that the defendant could no longer rely on the
deed of assignment.
The absolute assignment was not extinguished and the
plaintiffs contention that the defendant could no
longer rely on it to dispose of the said property by
public auction was totally without basis. Under the
deed of assignment, the defendant was entitled to
proceed to auction off the property in the event of a
default.

Lee Ming Chong Sdn Bhd v


Prudential Properties Sdn Bhd
[2012]

The plaintiff had, vide a sale and purchase


agreement ('principal SPA') dated 17 October
1992, purchased from the defendant, the
developer, an office lot ('the property') in Imbi
Plaza, in 1992 and the full purchase, a sum of
RM434,720, had been paid to the defendant. In
February 2001, the plaintiff had entered into a sale
and purchase agreement ('SPA') to sell the office
lot to one Abdul Haiyum ('sub-purchaser') for
RM700,000 and a deposit of RM70,000 had been
paid to the plaintiff. As the strata title had not been
issued, the plaintiff had sought the defendant's
consent to the sub sale of the property. However,
the defendant imposed seven conditions on the

plaintiff in the sub sale instead of the original


three conditions stipulated in section 4.09 of the
principal SPA. In June 2001, the sub-purchaser
terminated the SPA between him and the plaintiff.

Held, allowing the plaintiff's claim in part with


costs:

(1) all conditions should have been spelt out it


out in section 4.09 of the principal SPA.
The plaintiff sued the defendant for:

unreasonably withholding its consent to the


sub sale

loss of profit of RM265,280 being the


difference between the original purchase
price and the sub sale price.

declaration that the defendant had


unreasonably withheld its consent to the
deed of assignment ('DOA') and that

the imposition of the conditions as


conditions precedent to the granting of the
consent to the DOA and the endorsement of
the DOA was null and void and
unenforceable

The issues for the determination of the court were


as follows:
(i)

whether the defendant/developer


right to impose the condition
payment of arrears of service
before consenting to the sub-sale
plaintiff/purchaser;

(ii)

whether the imposition of condition (i)


above was reasonable in the circumstances
of the case; and

(iii)

has a
of the
charge
by the

whether the loss suffered was the


difference between the current purchase
price in the sub sale and the original
purchase price.

(2) Had the developer applied for strata titles


timeously to the whole Imbi Plaza, purchasers
would not have this problem. The principal
SPA was signed as long ago as 17 October
1992. The purchaser having paid the full
purchase price to the developer, owes the
developer no further obligation consistent
with the purchaser's right as the absolute
beneficial owner of the property with the
developer being a bare trustee.

(3) Any imposition of any conditions should be


viewed with much circumspection as the only
reason for coming back to the developer was
more for administrative expediency than
having to fulfill any continuing obligations on
the part of the purchaser. The developer will
have the continuing obligation to ensure that
the strata title once issued is duly registered in
the name of the purchaser and for so long as
the developer delays in applying for the strata
title it will be saddled with this continuing
obligation (see para 24).

(4) As Plaza Management Services Sdn Bhd


('PMS') was not duly licensed to collect
service charges, and other rates and charges
including arrears under the Act, the defendant
cannot impose as a condition before it grants
consent to the sub-sale. To insist on that
would be to act unreasonably in withholding
consent to the sub sale

(5) There was also no justification in requiring


the payment of three months advance service
charge from April to June 2001 to the
defendant pending completion of transfer
documents when the same was not due.

(6) The purchaser had been wrongfully deprived


of its right to sell to anyone consistent with
his right of ownership of its property.

When one does a sub-sale under an assignment,


one only has to send a notice to the developer.
One is not required to get the consent of the
developer.

Old law = consent developer would charge for


the consent

Amended = consent is not required.

Summary Note

1. What this means is that the assignor must join


the assignee in suing or pay off the loan and
obtain a reassignment before he can
commence an action in his own name.

2. Unlike Novau Mont Dor where the


assignor was suing the developer, in Philieo
it was the bank that was seeking recovery
under the loan.

3. Philieo has now settled the law on


assignments and explained the distinction
between an equitable assignment and
equitable charge.

4. A bank need not extinguish an assignment


and convert it to a charge unless this is
specified in the DoA or LACA

3.4.5 Apart from the above


cases on the effect of an
absolute assignment

5. Bank can sell the property by way of private

HDA s. 22D

treaty without order of court. Roc Order

31 rule 1 not required either. Assignee can

Assignment states that :-

proceed to sell property under absolute


assignment by way of auction.

(1)

an absolute assignment in writing, under


the hand of the assignor of the housing
accommodation, not purporting to be by way
of charge only, of the proprietary right or
interest in the housing accommodation and
the legal chose in action in the sale and
purchase agreement in respect of a housing
accommodation, of which express notice in
writing has been given to the housing
developer by the assignor in the manner set
out in subsection (2) shall be deemed to have
been effectual in law to pass and transfer
the proprietary right, interest, chose in
action and all legal and other remedies for the
same to the assignee, from the date of the
receipt of such notice by the housing
developer, and the concurrence of the
housing developer shall not be required.

i.e. Developer is now deemed to have consented


and cannot charge an administrative fee. Vendor/
Purchasers Solicitors have a duty to send a notice
of the sub-sale to the developer.

Damai Freight (M) Sdn Bhd v


Affin Bank Berhad [2015]
Whether a lender having an absolute assignment
of rights to land may realize his security under the
terms of the assignment, where document of title
to the land was issued subsequently, without the
need to resort to the remedies provided under the
National Land Code, 1965.

3. 5 Tribunal for Homebuyer


Claims Part VI HDA

s.16A homebuyer - a purchaser and includes a


person who has subsequently purchased a housing
accommodation from the first purchaser of the
housing accommodation

Held = Appeal is dismissed with costs. Followed

Hong Leong Bank Bhd. v Goh Sin Khai


(i)

(ii)

(iii)

(iv)

(v)

(vi)

The LACA, has created an absolute


assignment not one by way of charge only.
This means that the Bank should have all the
rights, title and interest of the
assignor/appellant under the Principal
Agreement;
When title was issued to the Land, the Bank
did not lose its security or its power of sale
under the LACA. The absolute assignment
under the LACA survives;
The Bank is thus empowered to realize its
security for the loans by way of a private
sale of the Land;
The Purchaser merely takes a legal right of
the chose in action that was assigned to the
Bank. The sale of a chose in action is
permissible under section 4(3) of the Civil
Law Act 1956;
There is no necessity to first create a charge
or for the Bank to resort to the statutory
remedy of a foreclosure action under section
256 of the NLC, to realize its security. The
Banks
recovery
action
stands
independently;

Section 206 (3) of the NLC allows such


a transaction relating to any alienated land to
give effect to the contractual obligations and
rights of the parties as they had determined
under the LACA.

s. 16 M (1) Subject to ss 16N and 16O, the


Tribunal shall have jurisdiction to determine a
claim lodged under section 16L where the total
amount in respect of which an award of the
Tribunal is sought does not exceed RM 50,000/-

s. 16 N Limitation of jurisdiction
(1) the Tribunal shall have no jurisdiction in
respect of any claim(a) for the recovery of land, or any estate or
interest in land; and
(b) in which there is a dispute concerning(i)

the entitlement of any person under


a will or settlement, or on intestacy
(including partial intestacy);
(ii)

goodwill;

(iii)

any chose in action; or

(iv)

any trade secret or other


intellectual property right.

(2) The jurisdiction of the Tribunal shall be


limited to a claim that is based on a cause of
action arising from the SPA entered into
between the homebuyer and the licensed
housing developer which is brought by a
homebuyer not later than 12 months from-

a) the date of issuance of the certificate of


completion and compliance for the housing
accommodation or the common facilities of
the housing accommodation intended for
subdivision, whichever is later;
b) the expiry date of the defects liability period
as set out in the sale and purchase
agreement; or
c) the date of termination of the sale and
purchase agreement by either party and such
termination occurred before the date of
issuance of the certificate of completion and
compliance for the housing accommodation
or the common facilities of the housing
accommodation intended for subdivision,
whichever is later.

(3) Notwithstanding subsection (2) no claim shall


be affected or defeated on the ground that no
sale and purchase agreement has been entered
into between the homebuyer and the licensed
housing developer at the time when the cause
of action accrues if there exists a previous
dealing between the homebuyer and the
licensed housing developer in respect of the
acquisition of the housing accommodation.

(4) Nothing in this section shall be deemed to


authorize the Tribunal to deal with a claim
arising from personal injury or death.

(5) For the purposes of subsection (1), "land" does


not include fixtures.

Tribunal Tuntutan Pembeli


Rumah v Westcourt Corpn. S/B
& Ors. [2004]

Tribunal has jurisdiction to hear and determine


homebuyers' claims arising from sale and
purchase agreements entered into before
appointed date i.e. 1 Dec. 2002.( retrospective
effect).

s. 16 O - Notwithstanding that the amount or


value of the subject-matter claimed or in issue
exceeds fifty thousand ringgit, the Tribunal shall
have jurisdiction to hear and determine the claim
if the parties have entered into an agreement in

writing that the Tribunal shall have jurisdiction to


hear and determine the claim.

s. 16Z Reference to a Judge of the High Court


on a question of law.
(1) Before the Tribunal makes an award under
section 16Y, it may, in its discretion, refer to a
Judge of the High Court a question of law-

s. 16Y the Tribunal shall make its award within


60 days of the 1st. day of hearing before it.
(a) which arose in the course of the
proceedings;

(b) which, in the opinion of the Tribunal, is


of sufficient importance to merit such
reference; and

(c) the determination of which by the


Tribunal raises, in the opinion of the
Tribunal, sufficient doubt to merit such
reference.

(2) If the Tribunal refers any question of law


under subsection (1) for the decision of a
Judge of the High Court, it shall make its
award in conformity with such decision.

s.16AC Decisions / awards of the tribunal are


to be final and binding and shall be deemed to be
an order of the Magistrates court or Sessions court
as the case maybe ( according to its quantum of
jurisdiction) and enforced as such.

Court Orders Developer To


Return RM1.8 Million In
Maintenance Charges
[NST 17 June 2013]

Pengkalen Holiday Resort Sdn Bhd (PHR) a


developer ordered to return about RM1.8 million
paid for the maintenance and management of
common facilities at nine apartment blocks in Port
Dickson to two management corporations set up
under the Strata Title Act 1985. This was inclusive
of five per cent interest from the time the suit was
filed and the management corporations be paid a
further RM50,000 in costs.
Perbadanan
Pengurusan
Paradise
Lagoon
Apartment North and South sued PHR last year
after the developer did not want to sign a
statement of accounts and hand over the sinking
fund money amounting to RM1.8 million.
Perbadanan
Pengurusan
Paradise
Lagoon
Apartment North and South, referred as
management corporations, currently maintained
and managed the property. The developer had
been collecting money, which included a
management fee, from property owners since
1994. In 2000, the management corporations were
formed but the developer had since then refused to
return money of about RM1.8 million on grounds:
The plaintiffs (management corporations) had no
locus standi to file the suit because the money was
collected from the individual owners before the
management corporations were established.
Developers
in
main
cities
maintained
condominium units of property owners through
associations before the introduction of the Strata
Title Act in 1985. Under the Building and
Common
Property
(Maintenance
and
Management) Act 2007, management corporations
are now accountable to the Commissioner of
Buildings and the local authorities.
Held =
It would be grossly inequitable and unjust to
permit the developer to transfer assets which
belonged to proprietors into his personal account.
The developer had in fact kept the "surplus fund"
in trust after collecting the money from property
owners. The common practice in the industry to

retain all money collected for maintenance and


management during the pre-formation of the
management corporation was a "mere creation of
an expectation" and this was insufficient legal
right.

House Buyer Tribunal and


Another v Unique Creations
Sdn Bhd
Delivery of vacant possession was only effected
on 30 March 2007. It was agreed that there was a
delay of 2391 days. The appellant claimed for
liquidated ascertained damages (LAD) in the sum
of RM57,875.30 pursuant to clause 22 of the SPA.
The Defendant refused to pay. The appellant,
therefore, on 9 May 2007, filed his claim for the
LAD before the Tribunal pursuant to sections 16L,

16M(1) and 16N(2) of the Act. The Defendant


claimed that the action was time barred under the
Limitation Act s.6(1)(a). The Tribunal adopted the
criteria in Sec 16N and awarded the maximum of
RM50,000/- LAD under its jurisdiction. The
Defendant referred to the HC on a point of law
which quashed the decision of the Tribunal.
CoA: reversed the HC decision and reinstated the
award of the Tribunal.
= Time began to run as per criteria in Sec 16N