Clear path for the Housing
NST-PROP By Salleh Buang
It was good news indeed for house buyers when the
nation's highest judicial body, the Federal Court, declared that the
newly established Tribunal for Homebuyer Claims is empowered to hear
all disputes related to the Sale and Purchase Agreements (SPAs)
between house buyers and developers that are brought before it.
Some developers had earlier challenged the Tribunal's jurisdiction,
insisting that it did not have the right to hear disputes arising
from SPAs signed before Dec 1, 2002, which is the date that the law
establishing the Tribunal and the amended Housing Development
Licensing) Act came into force.
Until the Federal Court decision on June 14 this year, it was
anybody's guess as to whether the Tribunal had this jurisdiction.
This state of bewildering uncertainty (and anxiety for purchasers)
arose from a decision of the High Court, handed down on Sept 4 last
In that decision which shocked house buyers, the learned High Court
judge held that the Tribunal had no jurisdiction to hear claims from
purchasers against two housing developers, Westcourt Corp Sdn Bhd
and Puncakdana Sdn Bhd - essentially because the law that created
the Tribunal did not have retrospective effect.
Westcourt and Puncakdana went to the High Court to challenge the
awards that were handed down by the Tribunal in favour of six
purchasers, who had signed their SPAs before Dec 1, 2002.
Now that the Federal Court has upheld the jurisdiction of the
Tribunal, the road ahead is clear for the statutory body to hear all
other cases that have been pending (we are told that these number
6,000 now) and certainly many others that have yet to be filed.
Naturally, the National Housebuyers' Association welcomed the
ruling, with its secretary-general Chang Kim Loong saying that with
the issue of jurisdiction finally resolved, the Housing and Local
Government Ministry should not waste any more time prosecuting
developers who continue to defy the Tribunal.
As at February this year, at least 33 developers had yet to settle
some RM1.2 million in compensation awarded by the Tribunal in
respect of 104 cases filed by disgruntled house buyers.
That same month, the ministry also said it would soon "issue
notices" to the developers concerned to pay up, failing which
criminal proceedings would be taken against them. Housing and Local
Government Minister Datuk Seri Ong Ka Ting warned that under the
law, "developers face a fine of up to RM5,000 or two years" jail or
both upon conviction, and an additional fine of RM1,000 a day until
At that time, the Tribunal had handed down 809 awards (including the
104 cases concerned), and ordered 58 developers to pay a total of
RM4,333,349 as compensation.
Replying to questions from newsmen on the performance of the
Tribunal since its establishment, Ong said that it had resolved more
than a quarter of the cases, that is, 1,138 out of 4,060 filed as of
February this year.
Clearly vindicated and encouraged by the favourable decision of the
Federal Court, the Tribunal now plans to spread its wings. It will
soon start hearing cases filed by disgruntled purchasers outside the
Klang Valley. As of August, such hearings will be held in Penang and
Kedah as well.
Developers should own up and pay as per the awards handed down by
the Tribunal, said Ong, who has now gone a step further on this
matter. He recently warned that those who consistently refuse to
comply with the Tribunal's awards risk being blacklisted and face
criminal prosecution. The effect of the former is that they'll not
get approval for future projects, while the effect of the latter is
the risk of a jail term and not just a paltry fine.
Ong also announced that his ministry is "in the process of drawing
up papers to bring errant developers to court". It would be helpful,
he said, if buyers who have been successful in their cases before
the Tribunal could keep the ministry informed, so that it could
update its records and thereby speed up criminal prosecutions
against errant developers.
The litmus test (to gauge effectiveness and public acceptance) of
any new legislation lies in the manner and extent of its
enforcement. The effectiveness of the new law that established the
Tribunal has gone through its first test, past the highest level of
the judicial hierarchy, and has triumphed, much to the delight of
Now comes the second and final test: If errant developers continue
to ignore the Tribunal's awards, will they be sent to prison, or
will the courts say that fines should be sufficient and that
imprisonment should be the last resort?
Section 16AD(1) of the revamped Housing Development Act states that
"any person who fails to comply with an award made by the Tribunal
within the period specified therein commits an offence and shall,
upon conviction, be liable to a fine not exceeding RM5,000 or to
imprisonment for a term not exceeding two years or to both".
Subsection (2) goes on to state that in the case of a "continuing
offence", he shall be liable to a further fine not exceeding RM1,000
for each day or part of a day during which the offence continues
There is one other matter that purchasers must also be reminded of.
Under section 23 of the Act, no prosecution can be instituted 'save
by or under the direction of or with the consent of the Public
In simple language, based on what I understand from this standard
provision found in several other statutes as well, it means that the
relevant files and documents must first be sent to the Attorney-General's
Chambers for vetting and clearance, since the A-G is the Public
This administrative loop could be - though not necessarily so -
another delaying factor. Thus, while the road ahead may, in theory,
be clear, the journey to full resolution of their grouses with
developers may not be as swift as purchasers have hoped for.
Salleh Buang is senior advisor of a company specialising in
competitive intelligence. He is also active in training and public
speaking and can be reached at email@example.com