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UCY4612 Conveyancing Practice

LECTURE 3:- REGULATION OF HOUSING DEVELOPERS

3.1 Introduction Relevant legislation

Housing Developers (Control & Licensing) Act 1966 (HDA) with 2015 amendments,
Housing Developers (Control and Licensing) Rules 1970: [r.12(1)(r)]
Housing Development (Control & Licensing) Act 2007
Housing Development (Control and Licensing ) Regulations 1989
with amendments in 2007, 2008 and 2009
Housing Development (Tribunal for Homebuyer Claims) Regulations 2002
Strata Titles Act 1985 incorporating 2013 amendments (w.e.f. 1.6. 2015)
Building and Common Property( Maintenance & Management) Act 2007 ( BCPA)
Strata Titles Management Act 2013 (w.e.f. 1.6. 2015)

Strata Titles (Amendment) Act 2016 (w.e.f. 1.1. 2017)


This Bill seeks to amend the Strata Titles Act 1985 (Act 318) which includes the insertion of a
new Part IVa to enable the implementation of rent of parcel or provisional block and any
matters connected therewith. This Bill also seeks to harmonize the provisions of Act 318 with the
provisions of the National Land Code as Act 318 is construed as part of the National Land Code.
This Bill further seeks to introduce a new Part VIIIa to facilitate the implementation of
acquisition of subdivided building or land.

The statutes were enacted with 3 objectives:-


(i) to check abuses in the housing industry
(ii) to regulate the activities of housing developers. Prior to this any RM2/- company could start
a housing project.
(iii) to protect house buyers.

2. The HDA does not apply to Sabah & Sarawak.

3. Definitions s.3:-
housing development- means to develop or construct or cause to be constructed in any
manner more than 4 units of housing accommodation and includes the collection of monies or
the carrying on of any building operations for the purpose of erecting housing accommodation
in, on, over or under any land; or the sale of more than four units of housing lots by the
landowner or his nominee with the view of constructing more than four units of housing
accommodation by the said landowner or his nominee;

Licensed housing developer means any housing developer licensed under section 5 to
engage in or carry on or undertake a housing development and includes the holder of any
power of attorney of such housing developer duly created under the Powers of Attorney Act
1949 and in a case where the housing developer is under liquidation, includes a person or
body appointed by a court of competent jurisdiction to be the provisional liquidator or
liquidator for the housing developer.".

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Housing Lot - any piece of land surveyed or otherwise, to which a lot number has been
assigned to it and which is subject to the category "building" in accordance with the National
Land Code 1965

Housing accommodation includes houses, flats, apartments or partly houses and partly shops
or offices. Previously it did not include any accommodation erected on any land designated for
or approved for commercial development. Eg. an office and shopping complex with some units
of pent houses. However 2009 amendments now include such units as housing
accommodation. See s. 3(c)

If a landowner sells a plot of land and subsequently there is a separate construction agreement
for the construction of houses on the said land and the same party then executes a Sale and
Purchase Agreement (SPA) with a purchaser of a housing unit, this will be regulated by the
HDA.

Develop to construct or cause to be constructed and includes the carrying on of any building
operations for the purpose of constructing housing accommodation in, on, over, or under any
land with the view of selling the same or the land which would be appurtenant (attached) to
such housing accommodation.

Purchaser means any person who purchases housing accommodation or who has any dealing
with a licensed housing developer in respect of the acquisition of housing accommodation;

4. s.5 all housing developers are required to be licensed and under s.7B a licensed housing
developer for the purposes of ss.8,8A,11 and 12) includes one whose licence had expired.

5. Amendments under Housing Development (Amendment) Regulations 2015


Advertisements shall NOT :r.8 (1A)
(i) offer free legal services see Bar Council Rulings 14.18 (2) and (3). S.84 LPA 1976.
(ii) projected monetary return gains and rental income
(iii) claim any panoramic view
(iv) travelling time from housing projects to popular destinations
(v) any other particulars which developer cannot genuinely prove.

Regulation 11 (2) Collection of payment: No PERSON including parties acting as stakeholders


shall collect any payment by whatever name called except as prescribed by the contract of
sale. With this amendment, no person is allowed to collect booking fee, deposit, stakeholder
sum or any payment from the purchaser prior to SPA signing.

Housing Developer is only allowed to withdraw all monies remaining in the Housing
Development Account after CCC has been issued & the Defect Liability Period has expired.

3.2 . Q. Was there a housing development agreement?


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City Investment Sdn Bhd v. Koperasi Serbaguna Cuepacs Tanggungan Bhd [1985] 1 CLJ
131; 1

The Ps executed 2 SPAs with the D Vendors. SPA 1 was to buy 60 sub divided lots for single
storey terrace houses to be built thereon. The Ds were to appoint a licenced housing developer
who would then execute SPA with individual purchasers for the terrace houses. Under SPA 2 the
Ps would only sell lots of vacant land for the construction of 11 bungalow lots and 14 semi
detached houses. The full price for the land and development for the terrace lots were paid but
not the construction of the terrace houses as the terrace houses were never built. The Ds
subsequently appointed themselves as developers under the SPA1. Ds Counsel argued that SPA 1
was purely for the sale of land only and therefore was not within the ambit of the HDA.

Held HC &FC:- The subsequent building contract should not attempt to evade the HDA &
Regulations. Even otherwise the SPA1 as it stands comes within the ambit of s.3 HDA as a
housing developer includes one who is desirous of undertaking a housing development and
develop includes .land which would be appurtenant to such housing accommodation

Cheong Soo Leong & Ors. v Hng Ah Ba [2004]2


The Ps entered into a SPA1 with the Ds, for the purchase of land and an SPA for the construction
of a semi detached house thereon. The P made some payments pursuant to the 2 agreements but
neither the land nor the house was completed and transferred to him within the agreed time. The
P then sued for specific performance in respect of the two agreements, liquidated damages for
non-delivery of the house within the agreed time, interests and costs. The Ds averred that the P
had defaulted in his progress payments towards the house and therefore building works had come
to a halt for lack of funds. 3 years later the Ds firm applied for a declaration that the two
agreements were null and void. The two suits were heard together and the P's claim was allowed
whilst the Ds firms claim was dismissed. The Ds appealed.
Held:- (i).The firm with the defendants as partners embarked on a project to develop 75 units of
houses in which the plaintiff's house was one of them. As such they were housing developers
within s. 3 HDA.
(ii). Ps were entitled to damages for late delivery and were entitled to set off the payments of the
balance of the purchase price against the liquidated damages due. Specific performance of
the 2 agreements granted.
(iii). The claim by the Ds firm instituted 3 years later was nothing more than an attempted
escape route against the Ps legitimate claims.

LO Exercise 1
V subdivides his land into 5 lots, obtains individual title and sells it to the public. The SPA states
that only residential buildings may be constructed on the land. Would the SPA be goverened by
the HDA and Regulations?

3.3 Protection of Buyers

Daiman Development S/B v Mathew Lui Chin Teck & Anor. [1981]3
1
[1985] 1 CLJ 131
2
[2004] 2CLJ 19
3
[1981] 1 MLJ 56
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PC: - a booking pro forma constituted a binding contract.

SEA Housing Corpn. S/B v Lee Poh Choo[1982]4

Respondent had sued the appellant developer for breach of contract to complete and deliver a
housing accommodation with issue document of title within the stipulated 18 months. The house
was only completed after 23 months. The developer sought to rely on a clause 32 in the SPA
which purported to exempt the developer for non fulfilment of any terms caused by
circumstances beyond their control.

FC Held:- 1. The HDA and the Rules were for the protection of the interests of the public and
the developer could not contract out of these.
2. Clause 32 of the SPA was inconsistent with r. 12(1)(r) of the Housing Developers (Control
and Licensing) Rules 1970 and therefore void.
3. The Respondent was entitled to liquidated damages as per r. 12(1)(r) and was entitled to set off
the withholding of the final installment payment against the liquidated damages for delay in
completion.

Chinaya Ganggaya v Senthul Raya Sdn. Bhd. [2008] 5

The P claimed for late delivery of a condominium unit in Kuala Lumpur known as Sang Suria
Condominium. By a SPA dated 23 September 1995 by clauses. 7, 22, and 24 thereof, the D
contracted to deliver vacant possession of a condominium unit to the P and to complete the
common facilities of the property within 36 months, failing which it was liable to pay liquidated
damages ('LAD') to the P. Vacant possession with completed common facilities was only
delivered 7 years later in 2002. Consequently, the P claimed for payment of LAD in the sums of
RM165,962.89 for the delay. The D argued that the plaintiff was not entitled to LAD by virtue of s.
56(3) of the Contracts Act 1950 and the doctrine of frustration.
Held:-
(i). Since the agreement is not an ordinary contract but governed by r. 11 and Schedule H of the
Housing Developers Regulations, it follows that cls. 7, 22, and 24 of the agreement are not
mere terms of a contract: they are also statutory provisions since they are actually provisions of
Schedule H of the Housing Developers Regulations that had been imposed by law upon the
parties.

(ii). The defendant's argument on s. 56(3) CA is unacceptable. The right of the plaintiff to LAD
is solely governed by cls. 22(2) and 24(2) of the agreement and the HDA regulations, and s.
56(3) clearly has no relevance.

Araprop Development S/B v Leong Chee Kong & Anor. [2008] 6

The respondents commenced an action against the appellant in the High Court for, inter alia, :

4
[1982] 2MLJ 31
5
[2008] 3 CLJ 23
6
[2008] 1 CLJ 135
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a declaration that they were entitled to terminate a sales and purchase agreement ("SPA")
executed with the appellant for failing to deliver vacant possession of a piece of property
purchased by the respondents from the appellant;(2) recovery of sums paid by them under the
SPA; and (3) damages for late delivery of vacant possession.
The HC found in favour of the respondents. The appellant's appealed. The issues were before the
CA were inter alia:
(1) whether the respondents were entitled to terminate the SPA since they had assigned their
rights thereunder to the Malaysia Building Society Berhad ('MBSB') by virtue of a loan
agreement taken with MBSB; (see below under assignment)
(2) whether the delay to deliver vacant possession was due to circumstances beyond the
appellant's control; and
(3) whether there was waiver and/or estoppel on the part of the respondents when they were
silent upon the expiry of the due date for delivery of vacant possession on 15 March 1999.

CA Held:- Appeal dismissed.


(i). the absolute assignment did not affect their right to terminate.
(ii). the respondents had the choice of terminating the SPA, alternatively, claiming damages for
late delivery.
(iii). The delay to deliver vacant possession was not a delay as stipulated by the exclusion clause,
ie, cl. 22 of the SPA. The delay was by the appellant's sub-contractors who were under the
control of the appellant. The SPA clearly provided for a completion date and that was also
true in the sub-contracts.
(iv). Silence by itself was not a waiver unless there was an additional factor with the silence that
could be interpreted as a waiver and/or an estoppel. There was no act on the part of the
respondents that could be constituted as a waiver or an estoppel.

3.4 Consequences of Late Delivery

1. Under the HD Regulations Sch. G completion period for a house is 24 months while under
Sch. H for an apartment is 36 months.

2. On a failure to complete within the stipulated period the Purchaser is entitled to liquidated
damages.- SEA Housing Corpn. S/B v Lee Poh Choo[1982]

MK Retnam Holdings v Bhagat Singh [1985]7


The R had by a SPA dated 3 Nov. 1978 bought a house from the Appellant. to be completed with
delivery of vacant possession within 18 months i.e. 2 May 1980. A 2nd. agreement called the
supplementary agreement was entered into by the parties on 11 July 1981 for an extension of
time of 6 months and a further payment of RM3,585/-. However the house was again not
completed by that date and delivery and vacant possession never made. The R obtained judgment
for liquidated damages. The App. appealed inter alia on the following grounds:-
(a).that the learned Judge was wrong in holding that the second agreement was void and of no
effect;
(b).that the learned Judge was wrong in awarding indemnity at 12% per annum on the full agreed
purchase price and not merely on the actual amount already paid by the respondent; and
(c). the learned Judge was wrong in, awarding interest on the purchase price on a day to day
basis as damages.
7
[1985] 2MLJ 212
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SC Held (i). a developer cannot subsequently increase the purchase price. The 2 nd. Agreement is
void when tested against the HD Rules 1970 and the case of Lee Poh Choo
(ii). r 12(1)(r) is a statutory remedy providing indemnity for late delivery based on a clear
formula of fixed interest on the total purchase price from the due date of delivery of vacant
possession to the actual date on a daily basis.
(iii). But that does not mean that interest should be calculated on a daily rest basis. If interest on
daily rest basis is intended by the Rule a clearer provision would have been made as such
provision would impose a heavier burden on the developer.

Faber Union S/B v Chew Nyat Shong & Anor. [1995]8


In a claim for damages for late delivery the question was when did time start running was it
from the date the Purchaser paid the booking fee or the date the Purchaser signed the SPA
Held:- From the date of payment of the booking fee.
( however in practice it is generally taken from the date stated on the SPA)

Lim Mewah Development S/B v Dr. Jasbir Singh s/o Harbhajan Singh[1993]9
In a claim for late delivery there can be no claim for damages for pain, anxiety, distress and
humiliation.

Chinaya Ganggaya v Senthul Raya Sdn. Bhd. [2008]

3.4.3. Vacant Possession

South East Asia Brickworks S/B v Maria Antoinette [1979]10


In a claim for late delivery the question was whether vacant possession meant practical
completion as per architects certificate or with issue of the Certificate of Fitness for
Occupation(CFO)
Held:- It would be unreasonable to impose a further condition on the developer to hand over
vacant possession with CFO. Delivery of vacant possession would be effective with the
architects certificate of practical completion.

Later the law was amended under Sch.G of the 1989 Regulations to require that vacant
possession shall be with :-
the architects certificate of practical completion and compliance (CCC),
connection of water and electricity supply and
that the vendor has applied for CFO.

Further amendments to the HDA s.7 (h,i,j,k) now requires that the Developer has to:-
inform the Controller of the progress achieved by him in relation to the issuance of the CF
exercise all such diligence as may be required to ensure that vacant possession of the house is
made simultaneously with the issuance of CF
as well as title to the house.

8
[1995] 3AMR 2094
9
[1993] 2AMR 1263
10
[1979]2MLJ 46
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* under the latest amendments the CF is issued by the Developers architect and engineer to
avoid delay. However liability is also placed on the architect and engineer.

Housing Development (Control & Licensing) (Amendment) Regulations 2015, came into
force on 01/07/2015 -
A new Schedule H contract of sale - new clause 27(1)(b), developer shall let purchaser
into possession of the parcel upon, inter alia, the issue of a separate strata title to the
parcel by the appropriate authority.

New clause 28(1) If strata title not issued for any reason not attributable to the developer,
he may apply to Controller for a certificate
Application for certificate must be submitted before expiry of 36 months.
Required to prove:
(i) Notified PTG and JUPEM of superstructure stage within 2 weeks
(ii) Timely application to PTG for subdivision.

LO Exercise 2
What amounts to vacant possession?

Defect Liability
r.25(1) 24 months

Fong Wan Reality v PJ Condominium S/B [2010]10 CLJ 112


Right to sue on latent defects not outwardly discoverable.

s. 8A. (1) A purchaser shall at any time be entitled to terminate the sale and purchase agreement
if-

(a) the licensed housing developer refuses to carry out or delays or suspends or ceases work for a
continuous period of six months or more after the execution of the sale and purchase
agreement;
(b) the purchaser has obtained the written consent from the end financier; and
(c) the Controller has certified that the licensed housing developer has refused to carry out or
delayed or suspended or ceased work for a continuous period of six months or more after the
execution of the sale and purchase agreement.
(2) For the purpose of paragraph (1)(b), no end financier shall unreasonably withhold its
written consent to the termination of the sale and purchase agreement.
(3) In the event that the purchaser exercises his right to terminate the sale and purchase
agreement under subsection (1), the licensed housing developer shall within thirty days of
such termination refund or cause to be refunded to such purchaser all monies received by the
licensed housing developer from the purchaser free of any interest.

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TTDI Jaya Sdn Bhd v Yew Hong Teng and Another CA [2017] 1 CLJ 436
Q. can there be rescission after delivery of vacant possession has been accepted and transfer
registered in the name of buyer.
The plaintiffs accepted vacant possession of the property and after inspection, submitted a
complaint form detailing 160 defects to the defendant. Remedial works were carried out but the
plaintiffs were not satisfied and refused to accept satisfactory repairs. The property was
registered in the names of the plaintiffs. After five years, the plaintiffs sued seeking, inter alia, (i)
a declaration that the defendant failed to complete and deliver vacant possession to the plaintiffs
before the stipulated date under the SPA and, therefore, the SPA was rescinded;
(ii) a refund of the purchase price; and
(iii) damages for breach of contract.
HC held: that the plaintiffs had the right to rescind the contract as there was a total failure of
consideration.
CA: Allowed defendants appeal:-
(i) a reasonable purchaser would not wait for several years to elapse before deciding to rescind
the SPA.
(ii) The plaintiffs' claim for rescission of the SPA was unsupported by contemporaneous
documents and/or evidence.
(iii) Plaintiffs continued to service their housing loan, accepted transfer of title to their name and
paid the outgoings, quit rent etc.
(iv) the plaintiffs sat on their rights to pursue a claim for rescission. Therefore, they were
estopped from denying that they had taken vacant possession of the property.
(v) the plaintiffs ought not to have abandoned the said property but should have mitigatde their
losses by engaging their own contractor to rectify the defects and charging the same to the
defendant. The plaintiffs had only themselves to blame for not having occupied the property
and/or having maintained it at all for ten years now.

s.18A. Offences relating to abandonment of housing development by a licensed housing


developer

(1) Any licensed housing developer who abandons or causes to be abandoned a housing
development or any phase of a housing development which it is engaged in, ..shall be
guilty of an offence and shall, on conviction, be liable to a fine not less than RM 250,000/-
and not more than RM500,000/- or to imprisonment for a term not exceeding three years or
to both.

(2), "abandons" means refuses to carry out or delays or suspends or ceases work continuously
for a period of six months or more or beyond the stipulated period of completion as agreed
under the sale and purchase agreement.".
Nation Thursday, 26 May 2016: 182 abandoned housing projects revived

TWO hundred and twenty-six private housing development projects in Peninsular Malaysia
have been abandoned since 2009.
Deputy Urban Wellbeing, Housing and Local Government Minister Datuk Halimah Mohd
Sadique said the abandoned projects affected 40,866 house buyers.
Of this total, the ministry has helped revive 182 abandoned projects involving 32,641 house
buyers, she said in reply to a question by Datuk Hasbullah Osman (BN-Gerik).
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Halimah said 20 abandoned projects were in various stages of construction work involving
4,610 buyers, with initial plans to revive 24 other projects involving 3,615 buyers.
She cited several reasons why the housing projects were abandoned, and these included poor
management, lack of finances, low buyer response, legal disputes and the rising cost of
materials.
To address this issue, Halimah said amendments were made to the Housing Development Act to
impose stricter regulations on developers while giving house buyers greater protection.
For example, developers will have to place a deposit of 3% of their projects total cost with the
housing fund, compared with RM250,000 previously.
Buyers can also now terminate their agreement with the developers if there is no sign of work
at the project site for six months, she added.
Halimah said the ministry would also step in to assist affected house buyers to negotiate loan
terms.
She said the ministry was upgrading its My Teduh online database to allow house buyers to
check the status of their proposed housing project.

3.4.4. Effect of an Assignment of the purchasers interest as a security.


Nouvau Mont Dor (M) Sdn Bhd v. Faber Development Sdn Bhd [1985]11
In a claim for certain declaratory relief by the appellant a preliminary issue was raised objecting
to the locus standi of the Appellant to bring the action. The issue was whether the assignment of
the purchasers interest was an absolute assignment. The Appellant entered into a SPA with the
Respondent for the purchase of a shop lot (the said property) and as individual title was still
pending assigned the said property to Public Bank for a loan to enable the Appellant to pay the
Respondent the balance of purchase price. This was carried out by means of 2 documents, a loan
agreement and a Deed of Assignment. This was expressly consented to by the Respondent. At the
time of the commencement of the action the Appellant had not fully settled the loan amount.
FC Held:- The appellant was not competent to maintain the action at the time when the
originating summons was filed. The fact that the assignment had the effect of passing to the
assignee the rights, title and interest of the assignor in the sale agreement and the beneficial
interest of the assignor in the property by way of security only did not derogate from the absolute
character of that assignment.

Sakinas S/B v Siew Yik Hua & Anor.[2002]12


In a Purchasers claim for damages for late delivery the appellant raised the issue of :-
(i) whether the right of purchaser to sue was prejudiced by the assignment of the purchaser's
rights under sale and purchase agreement to the financier.
(ii) Whether the deed of assignment was an absolute one or by way of charge only pursuant
to s. 4(3) Civil Law Act 1956, -
(iii) Whether notice to claim compensation should be given
(iv) Whether actual loss or damage must be proved
HC Held:- (i) To fall under s. 4(3) CLA 1956 , the assignment must be an absolute assignment
and must not purport to be by way of charge only. All the terms of the deed of assignment
must be considered, and if, it is clear that the intention was to give a charge only, then the
action must be in the name of the assignor (Nouvanu Mont Dor (M) Sdn Bhd v. Faber
Development Sdn Bhd). The actual phraseology does not matter. Therefore, this could be
11
[1985] 1 CLJ 65
12
[2002] 5 MLJ 497
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taken to mean that even if the assignment were to use the word "absolutely", it would not fall
within s. 4(3) of CLA if the intention was to give a charge only. Therefore the right of the
purchaser to sue was not prejudiced.
(ii) The assignment herein was an alternative form of security necessitated by the fact that the
apartment had no title to enable it to be charged under the National Land Code as security. If
the apartment had a title, the title would have been charged under the National Land Code as
security for the loan and there would have been no need for an assignment.

(iii) As the intention of the appellant and the respondents was that time should be of the essence
of the contract, the agreement became voidable at the option of the respondents when the
appellant failed to deliver vacant possession on 13 December 1997.
(v) The sale and purchase agreement in this case was a mandatory one prescribed by statute. As
such, the liquidated damages prescribed in the agreement constituted reasonable
compensation and the respondents ought to be paid in full.

* Philleoalied Bank(M) Bhd. v Bhupinder Singh Avtar Singh & Anor.[2002] 13


In order to finance their purchase of a piece of property to which no strata title had been issued,
the Respondents (R) entered into a 'loan agreement cum assignment' ('LACA') with the Appellant
bank (the bank) pursuant to which all their rights, title and interest under the SPA were assigned
absolutely to the bank. The borrowers also executed a joint Power of Attorney(PA) in favour of
the bank. Subsequently, the borrowers defaulted in their repayment and the bank took steps to
auction off the property, relying on the LACA and the PA without obtaining an order for sale
from the court.
A day before the auction, the HC granted the borrowers an injunction restraining the bank from
proceeding with the sale on the ground that:-
(i) the assignment being absolute, the proper procedure was for the bank to commence
proceedings for an order for sale under O. 31 r. 1 RHC 1980.
(ii) if the assignment was not absolute, thereby creating an equitable charge, then the appellant
would have to proceed under O. 83 RHC.
(iii) the PA was invalid.
On appeal the CA dismissed the appeal. On further appeal to the FC:-
FC Held:-
(i) The LACA in the present case amounted to an equitable mortgage and not an equitable
charge. At common law, a legal or an equitable mortgagee has, upon the mortgagor's default
in repayment, the power to sell and convey the legal estate to a third party pursuant to the
express terms of the mortgage deed without an order of the court.
(ii) O.83 RHC provides the procedural means for recourse. It cannot be relied upon to compel
the bank, an equitable mortgagee, to make an application to the court for an order for sale in
the absence of any substantive provision or rule, express or implied, in the NLC or at
common law imposing such an obligation. The court should, therefore, recognise and give
effect to the contractual rights and obligations as had been determined between the
borrowers and the bank.
(iii) Although for most practical purposes a charge should be regarded as a species of mortgage,
there is one essential difference. A mortgage is a conveyance of property, legal or
equitable, subject to a right of redemption. A charge conveys nothing; it merely gives
the chargee certain rights over the property as security for the loan. At common law, only

13
[2002]2CLJ 621
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mortgages can be created; in equity both mortgages and charges are possible. The remedies
of an equitable chargee are inferior to those of a mortgagee.
(iv) Since the assignment under the LACA was absolute and not one 'purporting to be by way of
charge only' within the meaning of s. 4(3) CLA1956, the borrowers, as assignors, were not
even competent to maintain the originating summons. (Nouvau Mont Dor (M) Sdn Bhd v.
Faber Development Sdn Bhd followed).
Appeal allowed.

Araprop Development S/B v Leong Chee Kong & Anor. [2008]CA 14

On the issue whether the respondents were entitled to terminate the SPA since they had assigned
their rights thereunder to the Malaysia Building Society Berhad ('MBSB') by virtue of a loan
agreement taken with MBSB;

CA Held:- Appeal dismissed.


(i). the deed of assignment under s. 13 of the loan agreement between MBSB and the
respondents was an absolute assignment and not by way of charge.15
(ii). The absolute assignment did not apply to a notice to terminate. It only prohibited the
institution of an action. The crucial date was the date of filing of the action on 16 October
2001, some two months after the deed of assignment was served on the appellant. Therefore,
when the respondents instituted the present action the absolute assignment had been lifted.
(iii). the respondents had the choice of terminating the SPA, alternatively, claiming damages for
late delivery.

Q. Can a financier having an absolute assignment realize his security after the issuance of
an individual title, without registering a NLC charge and applying to the court for an order
for sale?

Hong Leong Bank Bhd. v Goh Sin Khai[2005]16


The plaintiff applied for the following relief:
(i) a declaration that the defendant had absolutely assigned to the plaintiff all rights and
interests in a piece or parcel of property ('the said property') pursuant to a deed of
assignment dated 12 September 2002 ('the DOA');
(ii) a declaration that the issuance of an individual title for the said property did not affect the
validity and continuance of the aforesaid absolute assignment, and that the rights and

14
[2008] 1 CLJ 135
15
See Nouvau Mont Dor (M) S/B v Faber Development S/B [1985]1CLJ 56 depends on the construction of the
document. In this case the assignment was held to be an absolute assignment and not by way of charge only.
Phileoallied Bank (Malaysia) Bhd v. Bupinder Singh Avatar Singh & Anor[2002] 2CLJ621- held to be an absolute
assignment.
16
[2005] 3 MLJ 154
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privileges of the plaintiff as the assignee under the DOA were intact and preserved
regardless of the issuance of the said individual title; and
(iii) a declaration that the absolute assignment constituted an equitable mortgage of the said
property to the plaintiff and by reason thereof, the plaintiff was at liberty to dispose off the
said property in accordance with the agreed terms and conditions in the facilities agreement
dated 12 September 2002 and DOA, regardless of the issuance of the said individual title.
HC Held:-
(i) The DOA in this case stated that the defendant assigned 'the full and entire benefit of the SPA
together with all rights, title and interests of the assignor(s) therein'. It was evident in these
transactions that the assignor had paid the full purchase price for the property to the
developer utilizing the funds made available to him by the assignee. It was clear that the
developer was no more than a constructive trustee in this case but he still held the legal title
to the property until it was transferred, and until then, the assignor only had a right in
personem, i.e. the contractual right or benefit accruing to him under the SPA. That is a right
enforceable by action if unlawfully withheld by the developer and is a chose in action.
Following from this, an absolute assignment in such a case amounted to a transfer of the
legal right of the chose in action from the purchaser to the financier.
(ii) The law in relation to absolute assignments is clear. An absolute assignment is an equitable
mortgage and the essence of a mortgage is that there is a transfer of the ownership to the
mortgagee. There is no statute or rule in common law that once an individual title or
strata title is issued, the absolute assignment is extinguished. Likewise, there is nothing to
say that the assignee must extinguish the assignment by ensuring that the assignor takes a
transfer of the property and creates a charge in favour of the lender. In the absence of any
statutory provision or rule of common law, the court must give effect to the intention of the
parties that is reflected in the contractual provisions of the assignment. Unless the
contractual provisions in the assignment provide that it is extinguished upon the issuance of
an individual or strata title, the assignment is not extinguished. Unless the assignment
imposes an obligation on the assignee to ensure that the title is transferred to the
assignor and a charge is registered, the court cannot impose such an obligation on the
assignee in the absence of statutory power or common law enabling the court to do so.
(iii) So a lender having an assignment may, without obtaining an order of sale from the court,
realize his security consisting of immovable property in respect of which there is an issue
document of title but no registered charge.
(iv) order in terms of the declarations sought by the plaintiff.

RHB Bank Bhd V. Zalifah Juan & Anor [2005] 4 CLJ 430 -( Kuching HC)
Whether holder of equitable Mortgage must apply to court to exercise its contractual rights to
sell Property - Whether O.31 r.1RHC1980 provides court with jurisdiction to order judicial sale
HELD: court has an inherent power to order sale where it appears necessary or expedient".
In the case of an absolute assignment the assignee does not require an order of court to sell.

Ruzain bin Zainudin & Anor v RHB Bank Berhad [2012] 1 AMCR 318
Defendant granted loan facility to plaintiffs for purchase of property by way of an absolute
assignment. plaintiff defaulted in repayments. On 12,December 2008, judgment in default was
entered against the plaintiffs in the Sessions Court for a sum of RM210,369.59 as at June 30,
2008, interests and costs. Individual title for the said property was issued but transfer and charge
not done. The Deed of Assignment provided that:

5.1.3 the right and power to sell and assign the PROPERTY as the absolute unencumbered
owner thereof by way of public auction or private treaty with or without advertisement or
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valuation at such price or prices and in such other manner and upon such terms and conditions
as the BANK shall in its absolute discretion think fit free from any interest of the
ASSIGNOR.

The property was auctioned off by defendant pursuant to the deed of assignment.
Q. Whether an auction could be held before an order for sale is obtained.

HC Held: There was no provision in the deed of assignment for the defendant to issue a notice to
the plaintiffs to execute the memorandum of transfer and charge. Prior to the execution of the
charge, the interests of the defendant were protected by the deed of assignment and power of
attorney that had been executed by the plaintiffs in the defendants favour. The issuance of the
individual title for the property did not mean that the defendant could no longer rely on the deed
of assignment. The absolute assignment was not extinguished and the plaintiffs contention that
the defendant could no longer rely on it to dispose of the said property by public auction was
totally without basis. Under the deed of assignment, the defendant was entitled to proceed to
auction off the property in the event of a default.

Lee Ming Chong Sdn Bhd v Prudential Properties Sdn Bhd [2012] 8MLJ1 (KL HC)

The plaintiff had, vide a sale and purchase agreement ('principal SPA') dated 17 October 1992,
purchased from the defendant, the developer, an office lot ('the property') in Imbi Plaza, in 1992
and the full purchase, a sum of RM434,720, had been paid to the defendant. In February 2001,
the plaintiff had entered into a sale and purchase agreement ('SPA') to sell the office lot to one
Abdul Haiyum ('sub-purchaser') for RM700,000 and a deposit of RM70,000 had been paid to the
plaintiff. As the strata title had not been issued, the plaintiff had sought the defendant's consent to
the sub sale of the property. However the defendant imposed seven conditions on the plaintiff in
the sub sale instead of the original three conditions stipulated in section 4.09 of the principal
SPA. In June 2001, the sub-purchaser terminated the SPA between him and the plaintiff. The
plaintiff sued the defendant for:
unreasonably withholding its consent to the sub sale
loss of profit of RM265,280 being the difference between the original purchase price and the sub
sale price.
declaration that the defendant had unreasonably withheld its consent to the deed of assignment
('DOA') and that
the imposition of the conditions as conditions precedent to the granting of the consent to the
DOA and the endorsement of the DOA was null and void and unenforceable
The issues for the determination of the court were as follows:
(i) whether the defendant/developer has a right to impose the condition of the payment of
arrears of service charge before consenting to the sub-sale by the plaintiff/purchaser;
(ii) whether the imposition of condition (i) above was reasonable in the circumstances of the
case; and
(iii) whether the loss suffered was the difference between the current purchase price in the
sub sale and the original purchase price.
Held, allowing the plaintiff's claim in part with costs:
(1) all conditions should have been spelt out it out in section 4.09 of the principal SPA.

(2) Had the developer applied for strata titles timeously to the whole Imbi Plaza, purchasers
would not have this problem. The principal SPA was signed as long ago as 17 October 1992.
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The purchaser having paid the full purchase price to the developer, owes the developer no
further obligation consistent with the purchaser's right as the absolute beneficial owner of
the property with the developer being a bare trustee.

(3) Any imposition of any conditions should be viewed with much circumspection as the only
reason for coming back to the developer was more for administrative expediency than having
to fulfill any continuing obligations on the part of the purchaser. The developer will have the
continuing obligation to ensure that the strata title once issued is duly registered in the name
of the purchaser and for so long as the developer delays in applying for the strata title it will
be saddled with this continuing obligation (see para 24).

(4) As Plaza Management Services Sdn Bhd ('PMS') was not duly licensed to collect service
charges, and other rates and charges including arrears under the Act, the defendant cannot
impose as a condition before it grants consent to the sub-sale. To insist on that would be to
act unreasonably in withholding consent to the sub sale

(5) There was also no justification in requiring the payment of three months advance service
charge from April to June 2001 to the defendant pending completion of transfer documents
when the same was not due.

(6) The purchaser had been wrongfully deprived of its right to sell to anyone consistent with his
right of ownership of its property.

** Note
1.what this means is that the assignor must join the assignee in suing or pay off the loan and
obtain a reassignment before he can commence an action in his own name.
2. unlike Novau Mont Dor where the assignor was suing the Developer, in Philieo it was the
bank that was seeking recovery under the loan.
3. Philieo has now settled the law on assignments and explained the distinction between an
equitable assignment and equitable charge.
4. A bank need not extinguish an assignment and convert it to a charge UNLESS this is
SPECIFIED in the DOA or LACA
5. Bank can sell the property by way of private treaty without order of court. ROC o.31 r.1 not
required either. Assignee can proceed to sell property under absolute assignment by way of
auction.

3.4.5 Apart from the above cases on the effect of an absolute assignment,

HDA s. 22D Assignment states that :-

(1) an absolute assignment in writing, under the hand of the assignor of the housing
accommodation, not purporting to be by way of charge only, of the proprietary right or
interest in the housing accommodation and the legal chose in action in the sale and
purchase agreement in respect of a housing accommodation, of which express notice in
writing has been given to the housing developer by the assignor in the manner set out in
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subsection (2) shall be deemed to have been effectual in law to pass and transfer the
proprietary right, interest, chose in action and all legal and other remedies for the same
to the assignee, from the date of the receipt of such notice by the housing developer,
and the concurrence of the housing developer shall not be required.

i.e. Developer is now deemed to have consented and cannot charge an administrative fee.
Vendor/ Purchasers Solicitors have a duty to send a notice of the sub-sale to the developer.

LO Exercise 3
Beli executes an SPA for an apartment from Developer S/B for RM350,000/- He obtains a loan
for RM 300,000/- from B Bank Bhd. As strata title has not been issued he executes a Deed of
Assignment in favour of B Bank assigning all his rights, title and interest in the said property.
1year later Beli is unable to keep up with the payments and B Bank proceeds to sell the property
by way of public auction..
Developer S/B objects. Can they do so?
Would your answer be different if strata title has just been issued?

Damai Freight (M) Sdn Bhd v Affin Bank Berhad [2015] 4 CLJ 1 [FC]
Whether a lender having an absolute assignment of rights to land may realize his security under
the terms of the assignment, where document of title to the land was issued subsequently,
without the need to resort to the remedies provided under the National Land Code, 1965.
HELD: appeal is dismissed with costs. Followed Goh Sin Khai
(i) The LACA, has created an absolute assignment not one by way of charge only. This means
that the Bank should have all the rights, title and interest of the assignor/appellant under the
Principal Agreement;
(ii) When title was issued to the Land, the Bank did not lose its security or its power of sale
under the LACA. The absolute assignment under the LACA survives;
(iii) The Bank is thus empowered to realize its security for the loans by way of a private sale of
the Land;
(iv) The Purchaser merely takes a legal right of the chose in action that was assigned to the Bank.
The sale of a chose in action is permissible under section 4(3) of the Civil Law Act 1956;
(v) There is no necessity to first create a charge or for the Bank to resort to the statutory remedy
of a foreclosure action under section 256 of the NLC, to realize its security. The Banks
recovery action stands independently;
(vi) Section 206 (3) of the NLC allows such a transaction relating to any alienated land to give
effect to the contractual obligations and rights of the parties as they had determined under the
LACA.

Tan Ong Ban v Teoh Kim Heng [2016] 3 CLJ 193 [FC]

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Q. Whether the principle of beneficial ownership established by the decision of the Federal Court
in Borneo Housing Mortgage Finance Berhad v Time Engineering Berhad [1996] 2 AMR 1537
applies to the statutory form of contract prescribed by the Housing Developers legislation -
Whether section 340(1) of the National Land Code 1965 applied to immovable strata property in
respect of which no registered document of title has been issued by the appropriate authority

Prior to its liquidation, the second defendant was a licensed housing developer. 3.7.1996, SPA
between the D2 as the vendor, the plaintiff and Goldencolt (M) Sdn Bhd as the proprietor of the
land.

1.11.2002 D2 executed SPA2 with one Mohd Ismail Bin Md Ibrahim. On 31.05.2004, Mohd
Ismail sold the property to D1 vide SPA3. D3 obtained vacant possession. Upon discovery P
lodged a police report. D2 was in liquidation.

FC: s.340(3) NLC does not apply as the strata title is yet to be issued at the material date.

The Principle of Beneficial Ownership applies equally to private contracts and statutory
contracts. Beneficial Ownership differentiates the rights of a purchaser of a property who has
fully settled the purchase price with one who has not. This principle clothes a purchaser who has
settled the full purchase price with a distinct privilege equivalent to a legal owner, although he or
she has yet to be registered as the legal owner. But a purchaser who has not settled the full
purchase price does not enjoy such benefit. The right of such purchaser is contractual in nature
and in personam. Therefore plaintiff is not vested with beneficial interest in the property as
he had not paid the full purchase price of the property. Appeal dismissed.
3. 5 Tribunal for Homebuyer Claims Part VI HDA

s.16A homebuyer - a purchaser and includes a person who has subsequently purchased a
housing accommodation from the first purchaser of the housing accommodation

s. 16 M (1) Subject to ss 16N and 16O, the Tribunal shall have jurisdiction to determine a claim
lodged under section 16L where the total amount in respect of which an award of the Tribunal is
sought does not exceed RM 50,000/-

s. 16 N Limitation of jurisdiction

the Tribunal shall have no jurisdiction in respect of any claim-

(a) for the recovery of land, or any estate or interest in land; and
(b) in which there is a dispute concerning-
(i) the entitlement of any person under a will or settlement, or on intestacy (including partial
intestacy);
(ii) goodwill;
(iii) any chose in action; or
(iv) any trade secret or other intellectual property right.

(2) The jurisdiction of the Tribunal shall be limited to a claim that is based on a cause of
action arising from the SPA entered into between the homebuyer and the licensed
housing developer which is brought by a homebuyer not later than 12 months from-

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(a) the date of issuance of the certificate of completion and compliance for the housing
accommodation or the common facilities of the housing accommodation intended for
subdivision, whichever is later;
(b) the expiry date of the defects liability period as set out in the sale and purchase agreement; or
(c) the date of termination of the sale and purchase agreement by either party and such
termination occurred before the date of issuance of the certificate of completion and
compliance for the housing accommodation or the common facilities of the housing
accommodation intended for subdivision, whichever is later.

(3) Notwithstanding subsection (2) no claim shall be affected or defeated on the ground that no
sale and purchase agreement has been entered into between the homebuyer and the licensed
housing developer at the time when the cause of action accrues if there exists a previous
dealing between the homebuyer and the licensed housing developer in respect of the
acquisition of the housing accommodation.
(4) Nothing in this section shall be deemed to authorize the Tribunal to deal with a claim arising
from personal injury or death.
(5) For the purposes of subsection (1), "land" does not include fixtures.

Tribuanal Tuntutan Pembeli Rumah v Westcourt Corpn. S/B & Ors. [2004]17
Tribunal has jurisdiction to hear and determine homebuyers' claims arising from sale and
purchase agreements entered into before appointed date i.e. 1 Dec. 2002.( retrospective effect).

s. 16 O - Notwithstanding that the amount or value of the subject-matter claimed or in issue


exceeds fifty thousand ringgit, the Tribunal shall have jurisdiction to hear and determine the
claim if the parties have entered into an agreement in writing that the Tribunal shall have
jurisdiction to hear and determine the claim.

s. 16Y the Tribunal shall make its award within 60 days of the 1st. day of hearing before it.

s. 16Z Reference to a Judge of the High Court on a question of law.

(1) Before the Tribunal makes an award under section 16Y, it may, in its discretion, refer to a
Judge of the High Court a question of law-
(a) which arose in the course of the proceedings;
(b) which, in the opinion of the Tribunal, is of sufficient importance to merit such reference; and
(c) the determination of which by the Tribunal raises, in the opinion of the Tribunal, sufficient
doubt to merit such reference.

(2) If the Tribunal refers any question of law under subsection (1) for the decision of a Judge of
the High Court, it shall make its award in conformity with such decision.

s.16AC Decisions / awards of the tribunal are to be final and binding and shall be deemed to
be an order of the Magistrates court or Sessions court as the case maybe ( according to its
quantum of jurisdiction) and enforced as such.

17
[2004]2CLJ 617
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Court Orders Developer To Return RM1.8 Million In Maintenance Charges

Pengkalen Holiday Resort Sdn Bhd V. Perbadanan Pengurusan Paradise Lagoon Apartment
(North) & Anor [2016] 1 LNS 1114

Pengkalen Holiday Resort Sdn Bhd (PHR) a developer ordered to return about RM1.8 million
paid for the maintenance and management of common facilities at nine apartment blocks in Port
Dickson to two management corporations set up under the Strata Title Act 1985. This was
inclusive of five per cent interest from the time the suit was filed and the management
corporations be paid a further RM50,000 in costs.

Perbadanan Pengurusan Paradise Lagoon Apartment North and South sued PHR last year after
the developer did not want to sign a statement of accounts and hand over the sinking fund money
amounting to RM1.8 million. Perbadanan Pengurusan Paradise Lagoon Apartment North and
South, referred as management corporations, currently maintained and managed the property.
The developer had been collecting money, which included a management fee, from property
owners since 1994. In 2000, the management corporations were formed but the developer had
since then refused to return money of about RM1.8 million on grounds:

The plaintiffs (management corporations) had no locus standi to file the suit because the money
was collected from the individual owners before the management corporations were established.
Developers in main cities maintained condominium units of property owners through
associations before the introduction of the Strata Title Act in 1985. Under the Building and
Common Property (Maintenance and Management) Act 2007, management corporations are now
accountable to the Commissioner of Buildings and the local authorities.

KLHC Judge Datuk V.T. Singham HELD: it would be grossly inequitable and unjust to permit
the developer to transfer assets which belonged to proprietors into his personal account. The
developer had in fact kept the "surplus fund" in trust after collecting the money from property
owners. The common practice in the industry to retain all money collected for maintenance and
management during the pre-formation of the management corporation was a "mere creation of an
expectation" and this was insufficient legal right.

House Buyer Tribunal and Another v Unique Creations Sdn Bhd; Date: 05/03/2014; Suit
No: Civil Appeal No. W-01-503-10

Delivery of vacant possession was only effected on 30 March 2007. It was agreed that there was
a delay of 2391 days. The appellant claimed for liquidated ascertained damages (LAD) in the
sum of RM57,875.30 pursuant to clause 22 of the SPA. The Defendant refused to pay. The
appellant, therefore, on 9 May 2007, filed his claim for the LAD before the Tribunal pursuant to
sections 16L, 16M(1) and 16N(2) of the Act. The Defendant claimed that the action was time
barred under the Limitation Act s.6(1)(a). The Tribunal adopted the criteria in s.16N and awarded
the maximum of RM50,000/- LAD under its jurisdiction. The Defendant referred to the HC on a
point of law which quashed the decision of the Tribunal.

CA: reversed the HC decision and reinstated the award of the Tribunal. Time began to run as per
criteria in s.16N
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3.6 Strata Titles Act 1985 ( 2013 Amendments w.e.f. 1.6.2015)

Enacted to facilitate the subdivision of building or land into parcels and the disposition of titles
thereto and for purposes connected therewith. It shall be read and construed with the NLC as if it
forms part thereof. It has been legislated along the lines of the Australian New South Wales
Conveyancing (Strata Titles) Act 1961. Strata title ownership means that the building is sub-
divided into horizontal strata. This would in turn be further divided into two or more parcels
thereby allowing for separate titles to be issued to each of the parcels

s.4 parcel- in relation to a subdivided building, means one of the individual units comprised therein,
which (except in the case of an accessory parcel) is held under separate strata title, and in relation to a
subdivided land, means one of the individual units of land parcel

s.6(1) Any building having 2 or more storeys on alienated land held as one lot under final title
(whether Registry or Land Office title) shall be capable of being subdivided into parcels; and
any land on the same lot shall also be capable of being subdivided into parcels each of which is
to be held under a strata title or an accessory parcel

ss. 6(1), 10(4) and (5), 34(2) and 69 relate to accessory parcels for car parks, stores and
accommodation for employees.

s.34. Rights of proprietor in his parcel and common property.

(1) a proprietor shall have-


(a) in relation to his parcel (in the case of a parcel proprietor) the powers conferred by the NLC
on a proprietor in relation to his land; and
(b) in relation to the common property, the right of user which he would have if he and the other
proprietors were co-proprietors thereof.
(2) No rights in an accessory parcel shall be dealt with or disposed of independently of the parcel
to which such accessory parcel has been made appurtenant.
(3) No rights in the common property shall be disposed of by a proprietor except as rights
appurtenant to a parcel; and any disposition of a parcel by a proprietor shall without express
reference include a like disposition of the rights in the common property which are
appurtenant to the parcel.

s. 39 management corporation" - in relation to any subdivided building or land shown in an


approved strata plan, means the body through which the parcel proprietors, including in the case
of phased development, the proprietor of the provisional block or blocks, control and manage the
strata schemes.
s.39(1) The management corporation comes into existence upon the opening of a book of the
strata register by the Registrar of Titles or the Land Administrator ( depending on the registry
titles). It is a statutory creation and shall be a body corporate having perpetual succession and a
common seal. It can sue and be sued.

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STA s. 42(1) the management corporation shall, on coming into existence, become the
proprietor of the common property and be the custodian of the issue document of title of the lot.

management fund" means a management fund established under section 45, 63 or 66;

40A. Transfer of ownership of strata titles

(1) Any original proprietor or any person or body appointed by a court of competent jurisdiction
shall execute the transfer of strata titles to the parcel proprietors within 12 months from the
date of issue of strata titles by the Land Administrator or any extended period approved by
the Director upon the opening of the strata register.

s.41 (1) duty of the original proprietor to convene the 1 st. AGM of the management corporation
within one month after the expiration of the initial period.

(2) on failure of (1),- guilty of an offence and shall be liable on conviction to a fine not
exceeding RM25,000/- and to a further fine not exceeding RM2,000/- for each day the offence
continues to be committed.

LO Exercise 4
What is the initial period of the Management Corporation?

s. 42. Ownership of common property and custody of issue document of title.

(1) The management corporation shall, on coming into existence, become the proprietor of the
common property and be the custodian of the issue document of title of the lot.

Amendment To 2016 Strata Ownership Act Eases Strata Ownership Application For Old
Building

KUALA LUMPUR, June 20 (Bernama) -- The 2016 (Amendment) Strata Ownership bill which
was approved in Dewan Negara today, will ease strata ownership title applications specifically
for buildings before April 2007.

Deputy Natural Resources and Environment Minister Datuk Hamim Samuri, who tabled the bill,
said the process of issuing strata ownerships would be simplified with the exemption of the need
to furnish certain documents for purposes of application and approval of strata ownership.

"As of December 2015, 1.2 million strata ownerships have been registered in peninsula
Malaysia. With the increase in the number of strata ownerships registered, the number of
transactions of units are also estimated to go up," he said.

Summary of changes STA2013


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Change in period for compulsory application for subdivision of a building or land s.20, penalty s.22A,
s.40A
Meaning of super structure stage s.4
Certificate of proposed strata plan
Schedule of parcels
Limited common property and subsidiary management corporations
deletion of Part VII Duties and Powers of the Management Corporation ss. 45, 52, 53, 53A, 75.
and The Second and Third Schedules
Amendment of Fifth Schedule computerised system of Strata Titles
new Sixth Schedule - Electronic land administration System for Strata Titles in Peninsular Malaysia.

Strata Titles Management Act 2013 (STMA) (with cross refs. to STA 1985) (Repeals Building and
Common Property( Maintenance & Management) Act 2007) w.e.f. 1 June 2015
s.2 STMA 2013

"building or land intended for subdivision into parcels" means-


(a) any building or buildings having two or more storeys in a development area and intended to be
subdivided into parcels, and any land on the same lot intended to be subdivided into parcels to be
held under a separate strata title; or
(b) any development area having two or more buildings intended to be subdivided into land
parcels as defined in the Strata Titles Act 1985;

"common property"-
(a) in relation to a building or land intended for subdivision into parcels, means so much of the
development area-
(i) as is not comprised in any parcel or proposed parcel; and
(ii) used or capable of being used or enjoyed by occupiers of two or more parcels or proposed
parcels; or
(b) in relation to a subdivided building or land, means so much of the lot-
(i) as is not comprised in any parcel, including any accessory parcel, or any provisional block as
shown in a certified strata plan; and
(ii) used or capable of being used or enjoyed by occupiers of two or more parcels;

"limited common property" means such part of the common property in a lot-
(a) that is designated in a comprehensive resolution referred to in section 17A of the Strata Titles
Act 1985 for the exclusive benefit of the proprietors of two or more, but not all, parcels; and
(b) for which a certificate has been issued by the Director certifying that the subsidiary
management corporation has been constituted under the Strata Titles Act 1985;

"proprietor" has the meaning assigned to it in section 4 of the Strata Titles Act 1985;

"original proprietor" has the meaning assigned to it in section 4 of the Strata Titles Act 1985;

"purchaser" means the purchaser of a parcel and includes any person or body who has acquired
an interest as a purchaser in the parcel or any person or body for the time being registered as a
parcel owner in the register of parcel owners under subsection 30(1);

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"parcel owner" means the purchaser or the developer in respect of those parcels in the
development area which have not been sold by the developer;

"occupier" means the person in actual occupation or control of the parcel or land parcel, but, in
the case of premises for lodging purposes, does not include a lodger;

"management corporation" means the management corporation which comes into existence
under the Strata Titles Act 1985;

"subsidiary management corporation" means the subsidiary management corporation which


is created under the Strata Titles Act 1985;

"parcel"-

(a) in relation to a building intended for subdivision, means one of the individual units comprised
therein, which (except in the case of an accessory parcel) is to be held under a separate strata
title;
(b) in relation to a land intended for subdivision, means one of the individual units of land
parcels which is to be held under a separate strata title;
(c) in relation to a subdivided building, means one of the individual units comprised therein,
which (except in the case of an accessory parcel) is held under a separate strata title; and
(d) in relation to a subdivided land, means one of the individual units of land parcels which is
held under a separate strata title;

"accessory parcel" has the meaning assigned to it in section 4 of the Strata Titles Act 1985;

"land parcel" has the meaning assigned to it in section 4 of the Strata Titles Act 1985;

"Tribunal" means the Strata Management Tribunal established under Part IX;

STRATA MANAGEMENT

Before MC After MC

s.7 Developers Management Period Preliminary Management Period -


from delivery of VP by Developer - until 1 month after
JMB established from delivery of VP until 1 month after
the MCs 1st AGM

JMB Management Committee

If VP delivered before SMA - 12 months from SMA

If VP delivered after SMA - 12 months from VP

JMB established upon convening of the JMB 1st AGM

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s.7 Prior to formation of Management Corporation

(a) vacant possession of a parcel in the building or land intended for subdivision into parcels has
been delivered by the developer to a purchaser; and

(b) at the time of delivery of vacant possession of the parcel, the management corporation has
not come into existence.

(2), "developer's management period" means the period commencing from the date of delivery
of vacant possession of a parcel to a purchaser by the developer until one month after the
establishment of the joint management body or such other time as may be extended by the
Commissioner.

s.9 Duties and powers during the developers management period

(a) to determine and impose the Charges to be deposited into the maintenance account;

(b) to determine and impose the contribution to the sinking fund account

(c) to effect insurance according to this Act;

(d) to comply with any notice or order by the local authority or any competent public authority
requiring the abatement of any nuisance, repairs, improvements or other work on the common
property,

(e) to prepare and maintain a register of all parcel owners of the buildings or lands intended for
subdivision into parcels;

(f) to ensure that the accounts required under this Act are audited and to provide audited financial
statements for information to all purchasers;

(g) to enforce by-laws; and

(h) to do such things as may be necessary for the proper maintenance and management of the
buildings or lands intended for subdivision into parcels and the common property.

(3) The powers of the developer during the developer's management period shall be as follows:

(a) to collect the Charges from the parcel owners in proportion to the allocated share units of
their respective parcels;

(b) to collect the contribution to the sinking fund from the parcel owners;

(c) to authorize expenditure for the carrying out of maintenance and management of the
buildings or lands intended for subdivision into parcels and the common property;

(d) to recover from any parcel owner any sum expended by the developer in respect of that
parcel in complying with any such notice or order referred to under paragraph (2)(d); and

(e) to do all things reasonably necessary for the performance of its duties under this Act.
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(4) During the developer's management period- ensure a separate and distinct area is set aside
out of the common property for an administration office

(b) the developer shall not enter into any contract relating to the maintenance and management of
a building or land intended for subdivision into parcels and the common property in the
development area for any period after the expiration of the developer's management period.

(5) Any developer who fails to comply with subsection (1), (2) or (4) commits an offence and
shall, on conviction, be liable to a fine not exceeding two hundred and fifty thousand ringgit or
to imprisonment for a term not exceeding three years or to both.

s.15 A developer shall, before the developers management period expires- hand over all
documents, audited accounts, monies, to the Management Corporation.

s.17 A joint management body shall be established upon the convening of the first annual
general meeting of that joint management body-within 12 months of handing vacant
possession.

The joint management body shall be a body corporate having perpetual succession and a
common seal, may sue and be sued in its name

(4) The joint management body shall comprise the developer and the purchasers.

s.22 for the purpose of determining the quorum, the developer shall be considered as one person,
regardless of the number of parcels.

s.21 Powers and duties of the MC , Sch. 2 composition 3-14 members inclusive of any
subsidiaryMC members.

Summary of changes

. Repeal of Building and Common Property (Maintenance and Management) Act 2007
Dealings in building or land intended for subdivision developer cannot sell unless
a schedule of parcels has been filed
What is contained in a schedule of parcels
Phase development amended schedule of parcels
Strata Management before existence of management corporation
Strata Management after existence of management corporation
Subsidiary management corporation and limited common property
Compulsory contributions to the sinking fund
Compulsory insurances
Strata Management Tribunal
Inter-floor leakage

LO Exercise 4
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What is the initial period of the Management Corporation?

*Hong Leong Finance v Sun Projects (Bros.) Sdn. Bhd. [2009] 1LNS 1075
The obligation to pay the service charges lay on the 1 st.purchasers and remained with the
1st.purchasers notwithstanding the deed of assignment as only the rights, title and interests in
the SPA were assigned to the plaintiff. As such, the defendant ought to recover the arrears in
service charges from the purchasers. The defendant was precluded from raising any claims
by way of defence of set off against the plaintiff

(6) A proprietor of a parcel who is not the proprietor of the parcel at the time when the repairs, work
or act referred to in subsection (5) were or was performed shall not be liable to pay the
management corporation any amount due under that subsection if he has, at any time on or
within twenty-one days before the date he acquired the title or interest in the parcel, made a
requisition in writing to the management corporation to inquire about the amount (if any)
recoverable by the management corporation under that subsection in respect of the parcel and the
management corporation has-
(a) certified that no amount is recoverable by the management corporation in respect of the
parcel; or

(b) not given a reply to the requisition at any time within fourteen days of the date of the service
of the requisition.

(7) Where the management corporation incurs any expenditure or performs any repairs, work or
act rendered necessary by reason of any wilful or negligent act or omission on the part of, by,
any person or his tenant, lessee, licensee or invitee, the amount of that expenditure shall be
recoverable from that person as a debt in an action in any court of competent jurisdiction.

John Denis De Silva v Crescent Court Management Corpn.[2006] .18

The plaintiff was the owner and resident of a condominium unit 17-B of the Crescent Court
condominium (CCC) complex (the "said unit"). The plaintiff was allocated parking bay 106
during the 1st. AGM of the CCC management corporation. The plaintiff had no problems when
entering the CCC complex and parking his motor car at bay 106 as well as obtaining water at the
said unit until 25 Sept. 2004.He was denied entry and an argument ensued.He had to obtain and
serve an ex parte injunction order on the defendant.

The defendant unhappy with the ex parte injunction order, cut off the water supply to the
Plaintiffs unit on 16 October 2004 and once again prevented the plaintiff's motor car from
entering the CCC complex in order to recover monies purportedly due and owing to the
defendant for maintenance and water charges. The water clamp was subsequently removed, later
on the same day, by the defendant or its agents when no monies were found due and owing by
the plaintiff to the defendant in regard to the water charges.

In the interest of justice and on the balance of convenience, it would be ideal to maintain the
status quo of the parties pending the determination of the other issues at hand by allowing the
injunction to continue.

18
[2006]2 CLJ 605
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Badan Pengurusan Bersama Desa Skudai Apartmen lwn. Maraya Sdn. Bhd.[ JBHC ]
[2010] 1 LNS 291 - right to audited accounts

Perbadanan Pengurusan Endah Parade v Magnificient Diagraph Sdn Bhd W-02(NCVC)


(W)-1549-07/2012 CA charges that may be imposed by the Management Corporation.

Kiaramas Development Sdn Bhd v Perbadanan Pengurusan Kiaramas Cendana CA [2016] 4


MLRA 503
CA Held that where the developer had waived 3 months collection of maintenance charges he
was entitled to do so under Sch. H clause 19. Management Corporation not entitled to claim for
waived amount from developer.

Palm Spring Joint Management Body and Another v Muafakat Kekal Sdn Bhd and Another
FC [2016] 3 CLJ 665

Q. Can a Joint Management Body ("JMB"), be formed after and/or co-exist with, a Management
Corporation ("MC") formed vide the opening of a Strata Register under Section 39(1) of the
Strata Titles Act 1985 whilst awaiting the First Annual General Meeting ("AGM") of the
Management Corporation which has not taken place [since the JMB can exist until the time 3
months have expired from the date of the said first AGM of the MC, in which case the JMB will
be dissolved under Section 15(1) of the Building And Common Property (Maintenance And
Management) Act 2007]?

HC: dismissed Muafakat Kekal's claims and allowed the JMB's counter-claims. The Joint
Management Body (JMB) is only an interim body established for the purpose of carrying out
the functions of the Management Corporation (MC) pending its establishment and once the
MC is established, the JMB is automatically dissolved. The fact that no general meeting of the
MC was called until 3 years down the line did not affect the legality of the MC.

The High Court made the following orders:

(a) that the meeting held on 11.9.2011 is declared valid in line with Act 318;

(b) that the subsequent meeting held on 15.10.2011 is declared void;

(c) that the JMB is a body validly stablished under Act 663;

(d) that all the management accounts set up by Muafakat Kekal under the Act 318 following
from the meeting held on 15.10.2011 be closed forthwith and all monies therein be paid over to
the account held by the JMB; and

(e) that Muafakat Kekal has to pay the sum of RM500,000.00 as general and aggravated
damages to the JMB.

CA: a) Paragraphs (a) and (b) of the High Court Order were affirmed;

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(b) Paragraph (c) of the Order and the order for damages were set aside;

(c) in paragraph (d) of the Order, the reference to the 2nd Defendant (the Joint Management
Body) was replaced with the reference to the 2nd Plaintiff (the management corporation)."

In short, the Court of Appeal held that the establishment of the JMB was void ab initio as it was
contrary to the relevant provisions of Act 318 and Act 663.
FC: Section 4 of Act 663 provided that a JMB shall be established before a management
corporation comes into existence.
the MC was in fact established prior to the JMB.
The JMB is intended to be an interim body to cater for instances where there has been a delay in
the issuance of strata titles.
In the present case where strata titles have in fact been issued and the book of strata register has
been duly opened, the establishment of a JMB was unnecessary.
The preparation and maintenance of strata titles would come under the sole purview of the MC by
virtue of Act 318.
The MC and the JMB was never intended to co-exist side by side at one and the same time.
Agree with the High Court on a similar issue in Cayman Development (SP) Sdn Bhd (in
winding up) v. Badan Pengurusan Bersama Kompleks Cayman & Anor [2014] 8 MLJ 894.
In the instant case the MC was established on 8.1.2008 while the JMB was established on
5.4.2008. This means to say that on the date of the purported establishment of the JMB, the MC
was already in existence. The fact that no general meeting of the MC was called until three years
down the line, in our view, does not affect the legality of the MC. It is thus contrary to the
legislative scheme under Act 318 and Act 663 to have the JMB established after the
establishment of the MC, which the appellants in the instant case purported to do.
In the result, we agree with the Court of Appeal that the JMB was unlawfully constituted and its
establishment is thus null and void ab initio.
Answer to Qs: -no. Appeal accordingly dismissed with costs.

Badan Pengurusan Bersama Mahkota Parade v Pesuruhjaya Bangunan Majlis Bandaraya


Melaka Bersejarah [2016] 1 LNS 1080
Where previously under BCPA 2007 now governed by s.17 SMA 2013 and SMMMR 2015 and
comes within jurisdiction of the Commissioner.

Armanee Terrace Joint Management Body v Saujana Triangle Sdn Bhd [2016] 1 LNS 818
Sale of common property by developer what is common property and common facilities?

Ken Property Sdn Bhd v Badan Pengurusan Bersama Ken Damansara II Condominium
[2016] 1 LNS 309

Property maintenance - Developer - Right to determine and impose maintenance charges - Car
park bays. The shop lots were meant to provide common facilities to the residents; No concrete
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evidence adduced by the plaintiff/developer to show that the car park bays in dispute are
accessory parcels or comprise in any parcel, as defined by section 2 of BCPA 2007.So car
park bays are common property.

Perantara Properties Sdn Bhd v JMC- Kelana Square, and Anor.CA [2016] 5 CLJ 367

This appeal raises a point relating to the manner as to how provisions in the Building and
Common Property (Maintenance and Management) Act 2007affect the terms of contract in the
SPA. Definition of common property car parks and who is to responsible for repairs needed
to the basement car parks. HC Held: Car parks part of common property under s. 7 BCPA 2007.

CA:1. It is trite law that the courts cannot rewrite contracts when they are freely entered into. The
1995 SPA were perfectly legal agreements at the material time. There were no common law or
statute law which prohibited the same. The provisions of the BCPA did not apply to the 1995
SPA. Thus, the proprietary rights in the car parks of the appellant remained with it pursuant to
the SPA signed with the purchasers.

2. There was no evidence tendered in court that the defects were discoverable within the defect
period of 12 months. Hence, the respondent's appeal was dismissed with no order as to costs.
The respondent's alternative prayer did not come into play as, at the High Court, it was found
that the car parks belonged to the respondent.
.

Reading List:-

1.Housing Development (Control & Licensing) Act 2007


2.Housing Development (Control and Licensing ) Regulations 1989 & amendments
3. Housing Development (Tribunal for Homebuyer Claims) Regulation
4. Strata Titles Act 1985
Strata Titles(Amendment) Act 2013
5. Strata Management Act 2013 and 2016 amendments
6. Salleh Buang :- Malaysian Law on Housing Developers (4th. edition) Malaysia: Sweet & Maxwell Asia
7. Robert Tan, Buying Property from Developers, (Sweet & Maxwell Asia, Petaling Jaya, 2009).

TUTORIAL 3

Q.1 On 15 March 2011, purchaser paid a booking fee to Sunshine Developers Sdn. Bhd for the
purchase of a double storey terrace house costing RM300,000/-. On 30 March 2011 he paid
the balance of his first 10% deposit and duly signed the Sale & Purchase Agreement.
However the SPA was dated 15 April 2011. Delivery of vacant possession was to be in 24
months of the SPA failing which Sunshine Developers Sdn. Bhd. would be liable to pay
agreed liquidated damages. Purchaser received a letter dated 15 September 2013 advising
him of the completion and delivery of vacant possession. Purchaser is very upset with the

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delay which has caused him a great deal of expense resulting in stress and hypertension. He
further discovers that the vacant possession has not been certified by the Local Authority.

Purchaser seeks your advise on the remedies available to him.

Q.2 About 10 months after taking delivery of vacant possession Purchaser begins to notice
cracks on the walls of the house and finds that his car porch is in fact sinking. Sunshine
Developers Sdn. Bhd refuse to take any remedial action claiming that instability of the land has
been caused by works carried by Hill View Developers on adjacent land. They advice
Purchaser to sue Hill View Developers.

Advise your client the Purchaser on the remedies available to him.

Q. 3 (i) Discuss the changes introduced to the law on stratified property in Malaysia by the Strata
Titles (Amendment) Act 2013 and the Strata Management Act 2013 and subsequent
amendments.
(ii) Discuss with reference to cases what amounts to common property and common
facilities.
(iii) Discuss the various stages in the management of stratified property from the stage of the
developers management period to the establishment of the Management Corporation.
Discuss the powers, duties and responsibilities of each body during the period of its
management.

Q. 4 Two years ago Simran bought an apartment (the said property) from Eco Developers Sdn.
Bhd. (EDSB) financed by Green Bank Bhd. (GBB). As individual document of title had yet
to be issued Simran assigned all her rights, title and interests in the said property by way
of a Loan Agreement cum Assignment to GBB. Strata title has now been issued and EDSB
instructs Simran to sign the transfer form to enable title to be transferred and registered in
Simrans name. However, as Simran did not keep up with her loan repayments, GBB
proceed to sell the said property to Ajit. Consequently, GBB request MDSB to execute the
Memorandum of Transfer directly to them based on the Loan Agreement cum Assignment.
However, EDSB refuse to do so on the grounds that it had not given its consent to the
assignment and no administrative fee had been paid to it for the assignment.

Advise GBB on the validity or otherwise of the claim by EDSB and how it may correctly
sell the said property to recover the amount outstanding on Simrans loan.

Q.5 Sunshine Developers Sdn. Bhd.(SDSB) built 4 blocks of apartments and delivered vacant
possession to its purchasers some time in 2012. They continued to collect charges towards
maintenance fees to manage the common areas and facilities and the sinking fund as well
as insurance. A Joint Management Body (JMB) was established under the Building and
Common Property (Maintenance and Management) Act 2007 sometime in June 2014. The

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JMB is managed by the elected committee known as the Joint Management Committee
(JMC). However SDSB have not furnished the accounts and refuse to hand over the
monies collected for the maintenance account and sinking fund account.

Discuss whether the JMC are governed by the Building and Common Property
(Maintenance and Management) Act 2007 or by the Strata Titles Management Act 2013.
Advise the JMC on their rights, responsibilities and duties in the above situation.

Q. 6 Discuss the significance Tan Ong Ban v Teoh Kim Heng [2016] 3 CLJ 193 [FC]. What
measures could be adopted to avoid losing rights under a beneficial ownership?

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