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The property industry may possibly be on the verge of breaking new ground in terms of consumer protection. The Minister of Housing and Local Government Datuk Seri Ong Ka Ting is considering exercising his powers under section 11 of the Housing Developers (Control and Licensing) Act, 1966 (HDA) in respect of the Majestic Heights project. Section 11 of the HDA empowers the Minister to give directions for the purpose of safeguarding the interests of purchasers.

The Majestic Heights project in Paya Terubong, Penang was first launched in 1994 offering 2955 residential units, 55 shops and 22 light industrial lots. The project which was being developed over four phases ground to a halt in 1997 leaving the properties in various stages of completion but a large number of which were fully paid for.

The purchasers then organized themselves in four committees for each of the four phases to resolve the matter. Since then the committees have merged and the plight of the purchasers is being taken up by what is known as the Ad Hoc Committee for Taman Terubong Indah (Majestic Heights) Purchasers.

Crucial to the Ad Hoc Committee's success in getting the Minister to consider invoking section 11 of the HDA was the involvement of the Penang Chief Minister Tan Sri Dr Koh Tsu Koon. The Ad Hoc Committee's advisor S.L. Chang said the Chief Minister had attended a purchasers' forum on May 27 and had since then been meeting regularly with the purchasers.

"We had a series of meetings in July with the Chief Minister and have informed him that the purchasers were determined to go all the way," said Chang. On Aug 15, Koh had appealed to Ong to help resolve the matter. According to Koh the petition to wind up the developer filed by the purchasers would be time-consuming with a long wait for the project to be revived. Because of this stalemate, Koh felt the minister should use his power under section 11 to intervene as requested by the purchasers. Koh also said he had proposed to the ministry that a suitable property developer be selected to complete the project which the Housing Minister can then pursuant to his powers under section 11 direct to take over the project.

The efforts of the Ad Hoc Committee culminated in a meeting with Ong attended by its representatives and Koh himself on Aug 29. During the meeting, the Ad Hoc Committee's representatives made a case for the invoking of section 11(1)(d) of the HAD supported by a letter from Koh to the same effect. Section 11(1)(d) empowers Ong to direct the developer to present a petition to the High Court to wind up its business. 

Chang said section 11(1)(d) was the most appropriate directive given the circumstances and because it provides the purchasers a clean break from a many problems that be set the project allowing them to rehabilitate it on their own through the appointed provisional liquidator. Aside from this, Chang pointed out that failure to obey such directives is an offence under the HDA whereby the developer on conviction is liable to be fined or imprisoned.

"By having the company wound up, the purchasers will not have to be concerned with the debts of the company ad so there will be no hindrance to completing the project. All the purchasers want is to complete the work and they will be coughing up their own money to rehabilitate the project," he explained.

According to Chang, Ong had requested the Ad Hoc Committee to take some time to consider the possibility of invoking section 11(1)(c) instead and revert to the ministry through another meeting with its legal department as to whether they are agreeable to this. Section 11(1)(c) empowers the Housing Minister to direct a company to assume control and carry on the business of a developer.

Chang is however optimistic that the section 11 will be invoked notwithstanding the fact that matter will be studied by the ministry's legal department and forwarded to the Attorney-General's chambers before any decision is made.

"I'm confident that he will invoke it. The only question is whether he will invoke section 11(1)(c) or (d)," said Chang who added that the committee has yet to receive notification on the meeting the ministry's legal department. He also said the committee will be informing the ministry that it is maintaining its stand on the applicability of section 11(1)(d).

Undoubtedly consumer rights' bodies such as the House Buyer Association (HBA) will be closely observing the developments of the Majestic Heights project. And if the matter is resolved in favour of its purchasers, it will be the first time since the enactment of the HDA that a Housing Minister invokes his power under it for the protection of house buyers.