Loh Tina & Ors v Kemuning Setia Sdn Bhd & Ors and another appeal [2020] 6 MLJ 191

Loh Tina & Ors v Kemuning Setia Sdn Bhd & Ors and another appeal [2020] 6 MLJ 191 Court of Appeal

Deviation from HDA

Facts

1.         The Appellants are the Purchasers of residential units of a housing development.

 

2.         The First Respondent is a housing developer holding a valid developer’s license issued under the Housing Development (Control and Licensing) Regulations 1989 (“HDA”).

 

3.         There were amendments made to the SPA as prescribed in Schedule G of that Regulations under HDA.

 

4.         The modifications from the prescribed Schedule G are as follows

 

(a) the title ‘Sale and Purchase Agreement’ (‘SPA’) was substituted with the title ‘Build and Lease Agreement’ (‘Agreement’);

(b) the preamble was modified into “Proprietor agreeing with the Vendor that it shall grant to the Purchaser a lease over the said land”;

 

(c)  the reference to a developer duly licensed under the HDA was deleted;

 

(d) the reference to “the proprietor agreeing to the sale of the said land for the purpose of the agreement” was replaced with the reference to “the proprietor agreeing with the vendor that it shall grant to the purchaser a lease over the said land for a term of 99 years with an irrevocable option to extend”;

 

(e)  all references to a memorandum of transfer were replaced with a memorandum of lease in Form 15A of the National Land Code; and

 

(f)   additional declaration that the purchaser acknowledged that he had been properly explained and knew full well the nature of the interest created by the proprietor was inserted.

 

5.       The Developer had applied to the Controller of Housing for its consent for such modifications to be in effect but the application had been rejected.

 

6.       The Developer nevertheless proceeded with signing of the Agreement with the purchasers.

 

7.       The Purchasers later contended that the Agreement is prohibited under the HDA and they prayed for, inter alia, a transfer of the freehold titles to their names, instead of a lease.

 

8.       The High Court dismissed Purchasers’ claims on the basis of mutual agreement.

Issues

1.       Whether a developer under the HDA can transfer a lease of a freehold subdivided title of a house on the ground that the purchasers have agreed to that.

 

2.       Whether a developer and a proprietor have the right to build housing units and sell them other than by way of the relevant SPA standard form in Schedule G of the Regulation under the HDA.

Ratios

1.         There is no waiver or modification of any of the provisions of the contract of sale unless there is a certificate in writing granted by the Controller of Housing for the waiver or modification as provided for in Reg 11(3) of the Housing Development (Control and Licensing) Regulations 1989 (“HDA Regulations”).

 

2.         Before granting such a certificate, the Controller of Housing under reg 11(3) of the HDA Regulations must be satisfied that owing to special circumstances or hardship or necessity, compliance with any of the provisions in the contract of sale under the HDA Regulations is impractical or unnecessary.

 

3.         In the event that the application is rejected and the developer is aggrieved by the decision of the Controller, the remedy is already provided for in reg 12 of HDA Regulations on appeal to the Minister.

 

4.         A developer that deviates from the HDA and the Regulations by modifying the standard statutory form of SPA in Schedule G without a certificate of the Controller approving the modification would be in breach of the HDA and the HDA Regulations. Certificate must be in writing expressly waiving or modifying specific provisions of Schedule G and nothing short of that would be a valid waiver or modification.

 

5.         A developer undertaking a housing development as defined under the HDA must have a license under s. 5 of the HDA and must comply with the HDA as well as the HDA Regulations.

 

6.         To allow the developer to say that it is not bound by the HDA would be to provide a convenient exit and escape from the mandatory provision stipulated under the HDA and that under the prescribed Form G.

 

7.         No provision in the HDA or the HDA Regulations declared the SPA not in compliance with Schedule G is null and void. It is the relevant clauses in the unauthorised modification to the Schedule G SPA that would be null and void.

 

8.         Where a developer makes changes to Schedule G that are not approved by the Controller, the purchaser would have the right to enforce the SPA in Schedule G as prescribed as if unamended and unmodified.

9.  This is not a case of the court rewriting the contract of sale for the parties but rather one in which the developer had not followed the statutory form standard contract for the SPA and what the court would do is to allow the purchasers to enforce their rights as if Schedule G

had been followed to the letter.

Decision

1.         The fact that the purchasers had obtained a registration of the lease with no objection prior to the filing of their suit in the High Court does not bar or stop them from making a claim for specific performance based on what they should have obtained.

 

2.         The fact that the purchasers had seemingly agreed to take a lease instead of a transfer of the whole of the freehold title, does not affect their rights protected under the HDA and the HDA Regulations.

 

3.         Appeal was allowed and the order of the High Court was set aside.

 

4.         The Court of Appeal ordered that the houses and the land on which the houses were built must be transferred to and registered under the Purchasers’ names, as what was intended by the prescribed Schedule G SPA under the HDA

 

Key take away

1.         The rights of Purchaser in the sale of housing development are provided and protected under the HDA and the HDA Regulations.

 

2.         The HDA and the HDA Regulations were enacted as legislation designed to protect the innocent purchasers who have little or no bargaining power and who are often not aware of their legal rights under the law.

 

3.         In normal cases of contract, parties have freedom to make provisions between themselves. However, a housing developer does not enjoy such freedom and shall follow the statutory schedule provided under HDA Regulations unless certified by the Controller.

 

4.         Even in instances where a modified SPA had been signed by a purchaser, the Agreement may be enforced as if no modification was made.

 

5.         The compliance is clearly and manifestly mandatory. It cannot be optional to the developer or proprietor and the question of consent of the purchasers does not arise.

 

6.         Purchasers under Schedule G of the HDA shall have freehold ownership.

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