“Whether a claim for damages, for the purpose provided in Clause 12 of the statutory sale and purchase contract with a Developer [under Schedule H of the Housing Development (Control and Licensing) Regulations 1989] requires proof of actual loss to be shown before damages could be awarded?”

CHONG NGE WEI & ORS v KEMAJUAN MASTERON SDN BHD [2022] 4 CLJ 833

• The Appellants, Chong Nge Wei & Ors in this case are the purchasers (“the Purchasers”) and parcel owners of 6 apartment units of a housing project.

• The Respondent, Kemajuan Masteron Sdn Bhd, is the developer of the said project (“the Developer”).

• Without the written consent of the Purchasers, the Developer changed the building material for the outer brick walls of the properties from autoclaved aerated concrete building block to flexcore.

• The Purchasers therefore claimed for breach of contract pursuant to Clause 12 of Schedule H of the Housing Development (Control and Licensing) Regulations 1989, which entitles the purchaser of a housing unit to seek a corresponding reduction in the purchase price or claim damages against a Developer who uses different materials in constructing the property without the Purchasers’ written consent.

• At the High Court, the Purchasers claim was allowed and an order for assessment of damages was made pertaining to the breach of Clause 12.

• The Purchasers produced a quotation drawn up by a building contractor and the Senior Assistant Registrar assessed damages to be in the sum of RM380,500.00

• At the Court of Appeal, a finding was made in favour of the Developer, reversing the High Court’s findings on the basis that:

         i)  The Purchasers failed in proving loss.

        ii)  The quotation did not portray the losses suffered by the purchasers.

• There was no further evidence to show that the repair works were done to the units.

• The Court of Appeal took the view that the change in construction material of the outer walls did not adversely affect the value or purchase price of the property.

• The Appellants appealed to the Federal Court.

• The Federal Court iterated that the basis of assessment is to place the Purchasers “in the same situation as if the contract had been performed.”

• It was further held that pursuant to Clause12, the Purchasers are at liberty to ask for a reduced price for the properties orto claim for damages in the event of the respondent’s wrongful act of using different building materials from the contracted materials without the appellants’ written approval.

• There is nothing in Clause 12 to say that damages could only be claimed in the event the Developers used material that is cheaper than the contracted material.

• The Federal Court held that Clause 12 entitles a purchaser to either ask for a corresponding reduction in the purchase price for the properties, or exercise their alternative right to claim for damages for the use of different materials from that stipulated in the Fourth Schedule of the statutory Sale and Purchase Agreement without the purchaser’s written consent. 

• The Federal Court also noted that nothing in Clause 12 states that damages could only be claimed if the material used is cheaper than the contracted material.

• The Federal Court noted that the Purchasers had adduced a quotation prepared by a building contractor in support of their claim for the cost of replacing materials used for the outer brick walls, and disagreed with the Court of Appeal’s view that actual remedial works must first be carried out and actual expenses must first be incurred before damages could be awarded.

• The Federal Court found that the quotation provided a detailed breakdown of the works to be carried out as well as the rate and amount for each item of work which included the cost of the replacement of materials and there was, therefore, prima facieproof of the cost of the remedial works.