High Court Quashes Homebuyers Tribunal’s Decision to Award Liquidated and Ascertained Damages from Booking Fee Payment Date
17 June 2019
In Hedgeford Sdn Bhd v Lynda Quah May Lu & Anor  3 AMR 525, the applicant, a property developer, successfully obtained an order from the High Court to quash an award issued by the second respondent, the Homebuyers Tribunal (“tribunal”), awarding damages to the first respondent, the purchaser (“homebuyer”), for late delivery of an apartment purchased from the applicant pursuant to a prescribed form sale and purchase agreement (“SPA”) under the Housing Development (Control and Licensing) Regulations 1989 and for late completion of the related common facilities.
Among the issues considered by the High Court were the following –
- Whether a homebuyer can be represented by a third party at a hearing before the tribunal;
- Whether the tribunal should have dismissed the homebuyer’s claim for non-appearance at the hearings; and
- Whether the tribunal had erred in law in allowing liquidated and ascertained damages (“LAD”) from the date of the payment of the booking fee instead of the date of the sale and purchase agreement (“SPA”).
The first and second issues
In relation to the first issue, the High Court was satisfied, based on a reading of section 16U of the Housing Development (Control and Licensing) Act 1966 (“HDA”), that an individual must appear in person at a hearing before the tribunal except in the following circumstances –
- the individual may be represented by an advocate and solicitor if the tribunal is of the opinion that the matter involves complex issues of law and the party will suffer severe financial hardship if he is not represented by an advocate and solicitor;
- a minor or a person with disability may be represented by his next friend or guardian ad litem.
On the second issue, the learned judge, Faizah Jamaludin J, referred to Regulation 22(1) of the Housing Development (Tribunal for Homebuyer Claims) Regulations 2002 (“2002 Regulations”) which, among others, provides that if a claimant does not appear at the hearing, the tribunal may either dismiss the claimant’s claim or award the developer’s counterclaim (if any). The Court was of the view that, notwithstanding the use of the word “may”, the provisions in Regulation 22(1) of the 2002 Regulations are not permissive but mandatory. The legislative intent of Parliament is that if the claimant does not appear at the hearing, the tribunal must either dismiss the claimant’s claim or award the developer’s counterclaim, if any.
In light of the foregoing, Her Ladyship ruled that –
- the tribunal’s decision in allowing two individuals, neither of whom is an advocate and solicitor, to represent the homebuyer at the hearings before the tribunal was procedurally improper and a breach of natural justice; and
- the president of the tribunal did not have the option of adjourning the hearing and should have dismissed the homebuyer’s claim when she did not attend the hearings.
The third issue
As to the issue whether LAD should be calculated from the date of payment of the booking fee by the homebuyer or from the date of the SPA, the Court pointed out that clauses 25 and 27 of the SPA respectively provide that vacant possession of the relevant parcel is to be delivered to the homebuyer and that the common facilities are to be completed, in each case, within 36 calendar months from the date of the SPA.
According to the learned Judge, if the date of payment of the booking fee is to be construed as the date of the SPA, it means that a binding contract exists between the purchaser and the developer at the date of the payment of the booking fee. The judge added that in such event, the purchaser would be bound to complete the purchase of the property and if the purchaser decides not to proceed with the purchase and to execute the sale and purchase agreement, he would be in breach of the sale and purchase agreement since it has already come into being when he paid the booking fee. In such a situation the purchaser would be liable to the developer for any loss, damage or costs suffered for breach of contract, instead of just forfeiting the booking fee which he paid. In the Court’s view, such an outcome cannot be the legislative intent of the HDA which is enacted for “the protection of the interest of purchasers.”
For the reasons stated above, the Court declined to follow Lim Eh Fah & 4 Ors v Seri Maju Padu (dituntuti sebagai sebuah firma)  CLJ 37 and Lembaman Development Sdn Bhd v Ooi Lai Yin & Anor and other cases  7 MLJ 261, where the High Court had in each case held that the relevant date for calculating LAD is the date of payment of the booking fee. The High Court in Lim Eh Fah had relied on the Supreme Court decision in Hoo See Sen & Anor v Public Bank Berhad  2 MLJ 170 whilst the High Court in Lembaman Development followed the decision in Lim Eh Fah.
Her Ladyship was of the view that the statement made by Tun Salleh Abbas LP in Hoo See Sen that “the payment of the booking fee was the date of the agreement was obiter dicta. It was not the ratio decidendi of the case”. Accordingly, the learned Judge was of the view that “the decision by the Kota Baru High Court in Lim Ee Fah and later followed by the Pulau Pinang High Court in Lembaman Development, that the relevant date for the calculation of liquidated damages for late delivery of vacant possession in the date of payment of the booking fee was made per incuriam.”
The High Court found that the tribunal had erred in law by calculating LAD from the date of payment of the booking fee and that such damages for late delivery of vacant possession of the apartment and the late completion of the common facilities should have been calculated from the date of the SPA.
Homebuyers should take heed of the High Court decision that they can only be represented by a third party before the tribunal in two circumstances – the first being where the third party is an advocate and solicitor and the tribunal is of the opinion that the matter involves complex issues of law and the homebuyer will suffer severe financial hardship if he is not represented by an advocate and solicitor; and second, where the homebuyer is a minor or person with disability, he may be represented by his next friend or guardian ad litem.
Homebuyers should also note that based on this decision, a hearing before the tribunal cannot be adjourned and absence on the hearing date will result in the claim being dismissed and the developer’s counterclaim, if any, being awarded.
The learned Judge’s decision that the commencement date for calculating LAD under the SPA is the date of the SPA and not the date of the payment of the booking fee by the homebuyer means that there are now two lines of conflicting decisions of the High Court on the issue. It remains to be seen which line of authority will prevail. As there are no provisions in the SPA that provide that the expression “the date of this Agreement” in clauses 27 and 29 of the SPA refers to the date of payment of the booking fee, the decision of the learned Judge appears to be correct and accords with the rules of statutory interpretation.