Court: Payment for late delivery of houses must be calculated from date booking fee is paid

Court: Payment for late delivery of houses must be calculated from date booking fee is paid
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PUTRAJAYA (Jan 19): The Federal Court has ruled that the payment due from housing developers to purchasers for late delivery of houses should be calculated from the date the booking fee is paid, and not the date the sales and purchase agreement (SPA) is signed.

Delivering the landmark decision today, Chief Justice Tengku Maimun Tuan Mat said: “Where a developer fails to deliver vacant possession according to the time stipulated in the statutory SPA, the calculation of the Liquidated Ascertained Damages (LAD) begins from the date of payment of the booking fee and not from the date of that statutory agreement.”

She said the Housing Development (Control & Licensing) Act 1966 and its subsidiary laws are social legislation and that is now a settled law.

The judgment was for a case which House Buyers Association volunteer lawyers Datuk Andy Wong, Viola DeCruz and Koh Kean Kang had taken up on a pro bono basis for the purchaser against the developer.

The purchaser, Wong Kien Choon, had paid a booking fee of RM10,000 as requested by the developer, PJD Regency Sdn Bhd, on Jan 16, 2013 but only signed the SPA on March 21, 2013.

The SPA stated that the vacant possession of the house must be delivered to the purchaser within 42 months or by September 2016.

However, Wong was only informed of the handover on Jan 23, 2017, and he subsequently sought LAD of RM33,000 but the developer disputed the amount.

Tengku Maimun noted that the lawyers for the developer had submitted that scheduled contracts must be read literally and in accordance with the intention of parties.

“And applying the principles of statutory interpretation, we ought to prioritise the literal rule, which means the date of the agreement should follow the printed date in the first page of the agreement,” she said.

However, she added: “It is our view that the submission is untenable. When it comes to interpreting social legislation, the courts must give effect to the intention of Parliament and not the intention of parties.

“Otherwise, the attempt by the legislature to level the playing field by mitigating the inequality of bargaining power would be rendered nugatory and illusory,”

The chief justice also highlighted that a 2015 amendment to the Housing Developers (Control and Licensing) Regulations 1989 cements the notion that the legislative framework has been further tightened to abrogate this practice of booking fees.

“Regulation 11(2) was amended to even stricter terms: everyone, not just developers, is prohibited from collecting booking fees,” she said.

“The courts will not countenance the bypassing of statutory safeguards meant to protect the purchasers.

“While the developers might think that it is a standard commercial practice to accept booking fees, the development of the law clearly suggests to the contrary.

“The courts will not condone such a practice until and unless the law says otherwise,” added Tengku Maimun.

S Kanagaraju