In Country Garden Danga Bay Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor [2022] 5 CLJ 173, the Federal Court clarified the limits of the jurisdiction of the Tribunal for Homebuyer Claims (‘Tribunal’) under the Housing Development (Control and Licensing) Act 1966 (‘Act’) and ruled that a homebuyer who has accepted vacant possession and renovated the premises is estopped from claiming that he has been allotted the wrong unit by the developer.
 
Brief facts
 
The appellant, the housing developer of Country Garden Danga Bay project (‘Appellant’) and the second respondent, the purchaser of a unit of apartment of the project (‘Second Respondent’), entered into a Sale and Purchase Agreement (‘SPA’) in respect of the unit (‘Property’). The Second Respondent accepted delivery of vacant possession of the Property and proceeded with renovations.
 
The Second Respondent wrote to the Appellant subsequently that the Property had an open balcony instead of a covered balcony as shown in the display model at the Appellant’s showroom (‘Display Model’). The Second Respondent then brought a claim at the Tribunal alleging that the Appellant gave him a wrong unit which contradicted the SPA.
 
The President of the Tribunal directed a technical team to inspect the Property. The technical report (‘Technical Report’) found that the Property delivered by the Appellant to the Second Respondent complied with the SPA.
 
The decision of the Tribunal
 
Despite the findings in the Technical Report, the Tribunal ruled that the feature of the Display Model which carried a covered balcony was binding on the Appellant, and directed that the specifications of the SPA be amended under section 16Y(2)(e) of the Act. The Tribunal also awarded compensation of RM50,000 to the Second Respondent.
 
Dissatisfied with the Tribunal’s decision, the Appellant sought an order of certiorari at the High Court to quash the decision, contending among others that the Tribunal was wrong to find that the Second Respondent was entitled to a unit with covered balcony when that was not a term provided in the SPA, and that the Tribunal has no jurisdiction to enforce terms which were not found in the SPA.
 
The decision of the High Court and the Court of Appeal
 
The Tribunal’s decision was upheld by the High Court, and, upon appeal, by the Court of Appeal.
 
The issues before the Federal Court
 
The Appellant obtained leave to appeal to the Federal Court. The main questions of law before the Federal Court were essentially:

The decision of the Federal Court 

1. Whether section 16N(2) of the Act precludes the Tribunal from exercising jurisdiction over a claim which is not based upon the sale and purchase agreement or its specifications, but on the homebuyer’s expectation of the unit purchased corresponding with a display model at the developer’s showroom  

Section 16N(2) of the Act limits the Tribunal’s jurisdiction to “a claim that is based on a cause of action arising from the sale and purchase agreement entered into between the homebuyer and the housing developer which is brought by a homebuyer not later than twelve months” from the specific events stated therein. The Second Respondent submitted that section 16N(2) merely applied to the limitation period for filing claim, and does not limit the claim to the express terms of the SPA.
 
The Federal Court observed that the Tribunal’s award was against the provisions of the SPA and contradicted with the findings in the Technical Report. Therefore, the critical issue was whether the Tribunal had jurisdiction to enforce terms which were undisputedly not found in the SPA.
 
The Federal Court held that the Tribunal, being a creature of statute, can only act within the four walls of the statute, and agreed with the observation by the High Court in Southville City Sdn Bhd v Chua Teck Kee & Anor (No 2) [2019] 1 LNS 1318 that “[t]he jurisdiction of the Tribunal is only confined to the four corners of the SPA and does not include any purported agreement nor conduct outside the SPA”.
 
The Federal Court concluded that the Tribunal was wrong to take into consideration the Display Model instead of the SPA, and had no jurisdiction over matters following outside the SPA in the form of collateral contracts, representations or warranties. Therefore, the Tribunal did not have jurisdiction to entertain the Second Respondent’s complaint on the covered balcony issue, which was not based on the SPA. 

2. Whether the Tribunal’s power to vary or set aside a contract under section 16Y(2)(e) of the Act confers on it the jurisdiction to add specifications of its own to the unit purchased by the homebuyer to include a covered balcony which is not provided for in the SPA  

Section 16Y(2)(e) of the Act provides that an award of the Tribunal may require “that the contract be varied or set aside, wholly or in part”. The Second Respondent submitted that Parliament had given ample power to the Tribunal to vary the schedule H agreement under the Act. Hence, although the covered balcony was not provided for in the SPA, the Tribunal was empowered to include the missing terms to give effect to the parties’ intention. As the Act is to protect the interest of the purchasers, the Second Respondent further argued that a statutory agreement can be contracted out if it is favourable to the purchaser.
 
The Federal Court found that the Tribunal was wrong when it varied the content of the specifications under the SPA using section 16Y(2)(e). The power under section 16Y(2)(e) is a power of rectification to comply with the statutory terms of the schedule G or H agreement of the Housing Development (Control And Licensing) Regulations 1989, and the Tribunal has no power to rectify the SPA by adding or excluding terms inconsistent with the statutory terms of the schedule agreement. Hence, the Tribunal’s power to vary or set aside a contract is only exercisable when a clause in the agreement is inconsistent with the statutory terms of the schedule agreement. 

3. Whether a homebuyer after having inspected, taken possession and renovated the premises can claim to have been allotted the wrong unit by the developer.  

The Second Respondent submitted that estoppel does not operate against a statutory form of contract, and contended that there was no acquiescence on his part as he had given notice that he would take legal action. Notwithstanding the foregoing, the Federal Court was of the view that the Second Respondent would obviously have noticed during his inspection at the time of delivery of vacant possession, that the Property did not carry a covered balcony but he still accepted it and carried on with renovation. Hence, there was an estoppel by conduct on the part of the Second Respondent when he accepted vacant possession and renovated the Property.
 
For the reasons set out above, the Federal Court answered the first question in the affirmative, and the second and third questions in the negative and unanimously allowed the appeal by the Appellant.
 
Comments
 
Notwithstanding the recent decisions in Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and Other Appeals [2020] 1 CLJ 162 and PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor and Other Appeals [2021] 2 CLJ 441 where the Federal Court has firmly upheld the Act to be a social legislation protecting homebuyers and that the courts are to tip the scales of justice in favour of homebuyers in their disputes with housing developers, the Federal Court in this decision has confined the Tribunal’s powers of rectification under section 16(2)(e) of the Act only to comply with the relevant schedule agreement.
 
This decision also highlights that a homebuyer’s rights are confined to matters stated in the schedule G or H agreement and the homebuyer may not succeed in a claim against a developer on specifications seen on a display model or in a promotional brochure on the project or the housing accommodation that are not expressly included in the sale and purchase agreement. Further, a homebuyer may not, on one hand, dispute to have been allotted the wrong unit, and on the other hand, accept vacant possession after his inspection and renovate the premises.
 
Case summary by Jesy Ooi (Partner) and Engy Tan (Senior Associate) of the Real Estate Practice of Skrine.