When a developer delays in handing over vacant possession of a property, when does the calculation of liquidated damages begin from? Is it the date of the payment of the booking fee or the date of the sale and purchase agreement?

PJD REGENCY SDN BHD v. TRIBUNAL TUNTUTAN PEMBELI RUMAH & ANOR [2021] 1 LNS 9

• Several developers of different housing projects have delayed in the delivery of vacant possession of homes to its purchasers.

• The question before the Federal Court was when there was such delay in respect of Schedule G and/or H types contracts, when should the date of calculation of liquidated agreed damages “LAD”) begin from:

a) the date of payment of deposit/booking fee/initial fee/expression by purchase of his written intention to purchase; or

b) the date of the sale and purchase agreement.

• The developers and purchasers have different interpretations as to the meaning of the words, “from the date of this agreement” contained respectively in clause 24(1) of Schedule G of the Housing Development (Control and Licensing) Act 1966 (“Act”) and clause 25 of Schedule H of the Act (both are statutory contracts, i.e. contracts which form and substance are provided by law, collectively referred to as “Statutory Contracts”).

• The High Court and the Court of Appeal have found in favour of the purchasers and the developers have appealed to the Federal Court.

The Federal Court upheld the decision of the lower courts and found in favour of the purchasers:

a) The law remains very much decided that where a developer fails to deliver vacant possession according to the time stipulated in the Statutory Contract, the calculation of the LAD begins from the date of payment of the booking fee and not from the date of that Statutory Contract.

b) The Housing Development (Control and Licensing) Regulations 1989 and the Act are “social legislation” which is not merely a fanciful label. In disputes between home buyers and housing developers, its significance lies in the approach taken by the courts to tip the scales of justice in favour of the home buyers given the disparity in bargaining power between them and the developers.

c) Housing developers have continued to devise ingenious and devious schemes to overcome the protections afforded to purchasers by the Act and the collection of booking fees are one such invention.