Is it a crime?
By Salleh Buang
the Housing Developers (Control & Licensing) Act 1966, as it stood before
its most recent amendment, housing developers can be sent to prison by the
courts (apart from having to pay substantial fines) if they commit any of
the following offences:
(a) contravening section 5(1) and (2) of the Act (to carry out housing
development without a valid license as well as failing to comply with any
of the conditions imposed on the licence);
(b) contravening any of the provisions of section 7 of the Act (which sets
out the full range of statutory duties of a housing developer);
(c) contravening or failing to comply with section 7A of the Act (to open
and maintain a housing development account);
(d) entering into any arrangement or agreement in contravention of section
8 of the Act (which requires the developer to make notification to, and
obtain the consent of the Controller of Housing);
(e) contravening section 10(3) of the Act (which requires the developer to
furnish information or explanation to the Controller of Housing);
(f) contravening section 11(1) of the Act (which requires the developer to
comply with various specific directions of the Minister);
(g) contravening section 11(3) of the Act (which requires the developer,
upon receiving directions from the Minister, to submit the control of his
business to another party);
(h) contravening section 12 of the Act (which requires the developer to
comply with general directions of the Minister).
In addition to the above, there is a general penalty provision in section
21 which states that any housing developer found guilty of an offence
under the Act “for which no penalty is expressly provided” is liable to a
prison term not exceeding three years.
A prison term of not exceeding three years can also be imposed also on any
individual (director, manager or secretary) who continues to be involved
or concerned in the management of the housing developer in contravention
of section 15(1) and (2) of the Act. This section prohibits a person who
has been adjudicated a bankrupt or been convicted of a crime involving
dishonesty or fraud from holding office as a director, manager or
secretary of a licensed housing developer.
It also prohibits any person who previously had been working as a director
or been directly concerned in the management of a housing developer which
has been wound up by a court from acting as a director or an officer of
another housing developer, without the Minister’s prior approval in
Finally, under section 22 of the Act, a director, manager or secretary of
a housing developer can be made vicariously liable for an offence
committed by a housing developer unless he can prove to the court that the
offence was committed without his consent or connivance, and that he has
exercised all such diligence to prevent the commission of the offence. The
penalty for this offence can be a prison term not exceeding three years.
Apart from a prison term for contravening specific provisions of the Act,
a housing developer can also be imposed a prison term of not exceeding
three years for contravening certain provisions of the Housing Developers
(Control and Licensing) Regulations 1989, such as -
(a) for making any misrepresentation when providing information under
Regulation 4(2), which concerns the renewal of a housing developer’
(b) for making any misrepresentation when providing information under
Regulation 5(2), which concerns the application for an advertisement and
(c) for breaching any condition in a license or in any advertisement and
Under the recent amendments to the Act, which saw it being renamed the
Housing Development (Control & Licensing) Act 1966, the Tribunal for
Homebuyer Claims was established. Claims by house purchasers against
developers can now be filed with the Tribunal, provided these claims do
not exceed RM25,000 in value. Claims exceeding that amount can still be
filed with the Tribunal provided both parties agree in writing to do so.
Under a new section 16T of the Act, the Tribunal is expected to encourage
the parties to work out a settlement amicably, if they can. Where the
Tribunal has heard the case (which must be open to the public) and has
made its decision, it should deliver its “award without delay” and, where
practicable, within 60 days of the first day of hearing. The decision of
the Tribunal is final and all parties are obliged to comply with it.
A new section 16AD states that “Any person who fails to comply with an
award made by the Tribunal” within the prescribed time commits an offence
and shall upon conviction be liable to a fine of not more than RM5,000 or
to imprisonment for a term not exceeding two years or both”.
It is in regard to this custodial penalty for failing to comply with the
decision of the Tribunal (viewed by many as being obviously targeted at
the defaulting developers) that I have recently been asked by certain
quarters whether the latest amendments have gone overboard in trying to
protect house purchasers’ interest?
These parties told me that essentially the disputes laid at the door of
the Tribunal are “civil” in nature and to impose “criminal sanctions” as a
remedy for a civil default is carrying things a bit too far.
Do you agree? Do you feel that the criminal sanctions provided for under
the pre-amendment law are more than adequate to punish the black sheep in
the housing industry, without any need to empower the Tribunal to impose
custodial sentence on the developers for their default in paying out
monies to the purchasers?
In any case, many believe that the custodial sentence only works as a
threat. But if the developer actually chooses to accept the jail sentence,
the house purchasers might as well kiss their monetary claims (and the