If there was late delivery of a property to the buyer, should damages for late delivery be calculated from the date of the sale and purchase agreement or the date the booking fee was paid?

SRI DAMANSARA SDN BHD v. VOON KUAN CHIEN & ANOR [2020] 5 CLJ 619

• Sri Damansara Sdn Bhd was the developer of a condominium (“Developer”) and had collected booking fees in contravention of the Housing Development (Control and Licensing) Act 1966 (“HDA”) and the Housing Development (Control and Licensing) Regulations 1989 (“Regulations”).

• On 6 January 2012 it collected a booking fee of RM10,000 as part of the 10% deposit of the purchase price of a condominium unit and the sale and purchase agreement (“SPA”) following the mandatory Schedule H agreement dated 28 June 2012 (statutory form of the SPA).

• When vacant possession was delivered to Voon Kuan Chien and others (“Purchasers”), the Purchasers filed a claim against the Developer with the Tribunal for Homebuyer Claims (“Tribunal”) for late delivery of their property.

• The Purchasers argued that the delivery was beyond the 42 month period stipulated in the SPA and the Purchasers had calculated the 42 month period from the date the booking fee was paid.

• The Developer however argued that 42 month period should be calculated from the date of the SPA (i.e. 28 June 2012) to the date of handing over of vacant possession.

• The Developer contended that it was not liable to pay any late delivery claim as the vacant possession date in the SPA was 22 December 2016 which was within 42 calendar months from the date of the SPA on 28 June 2012.

• They further contended that the Purchasers had consented to the payment of the booking fee in deviation of HDA and the Regulations and therefore it is not illegal.

• The Tribunal agreed with the Purchasers on the proper commencement date of the SPA which was to be taken as the date the booking fee was paid.

• Under the award of the Tribunal, the Developer was required to pay the Purchasers a sum of RM40,860-46.

• Dissatisfied, the Developer applied for judicial review to the High Court to quash the Tribunal’s decision.

• The High Court found in favour of the Purchasers and the Developer appealed to the Court of Appeal.

• The Court of Appeal dismissed the appeal and held that it was irrelevant that the Purchasers consented to the payment of the booking fee because the HDA and the Regulations are there to protect the purchasers and the prohibition would have no bite if a booking fee or a deposit less than 10% of the purchase price is collected without the signing of the SPA.

• The Court essentially held that the Developer cannot circumvent the scope of the HDA and collect a booking fee which was prohibited by law.

• Therefore, the Court had no problem calculating the late delivery claim from the date the booking fee was paid and not from the date of the SPA.

• To calculate the late delivery claim from the SPA date would be to allow the perpetuation of a practice that the Regulations prohibit.