Developer has to compensate buyers for delays of projects, Court says


Take them to task: According to the liquidated damages clause, condo buyers can claim 10 per annum of the purchase price for the delay

KUALA LUMPUR: The Housing Controller has no power to grant an extension of time to developers who delay the completion of housing projects, the High Court has ruled in a landmark judgment.

This means a housing developer has to pay compensation to the affected buyers for delays in the delivery of vacant possession.

High Court (Appellate and Special Powers) judge Justice Hanipah Farikullah also held that the regulation which empowers the Controller to modify terms of the contract of sale was ultra vires the Housing Development, Control and Licensing Act.

The judge said this in allowing an application for judicial review by 71 buyers of the Sri Istana condominiums in Old Klang Road against the Housing Controller and Urban Well-being, Housing and Local Government Minister.

Their lead counsel Datuk Wong Kok Leong told The Star the judge held that the minister’s decision to grant the developer an extension of time to complete the project via a letter dated Nov 17, 2015 was invalid.

In the letter, the minister had granted the developer a 12-month extension to complete the project.

“This means that the Housing Controller has no power to grant an extension of time to housing developers for any delay in completing their projects,” Wong said.

“Now, the developer has to pay the liquidated damages (a pre-determined sum) for late delivery of vacant possession of those condominium units.”

Wong called the decision a landmark judgment as many project developers seek extensions to complete their projects in Malaysia.

“This is a victory for all house buyers. With this ruling, the housing developer can’t just go to the Housing Controller for an extension of time to complete the project in order to avoid paying the liquidated damages to house buyers.

“This is because if an extension of time is allowed, house buyers lose their rights to claim damages for late delivery of vacant possession,” he added.

Wong explained that according to the liquidated damages clause, the condo buyers can claim 10% per annum of the purchase price for the delay.

In their application for judicial review, the condo buyers stated that they wanted to quash the decision allowing BHL Construction Sdn Bhd an extension of time for the delivery of vacant possession from 36 months to 48 months.

They also asked the court for a declaration that Regulation 11(3) was ultra vires of the Housing Development Act (Control and Licensing) Act.

Wong said the judge has ordered the parties to address the issue of costs on the next date for case management.

When contacted, SFC Mohamad Rizal said the judge also allowed a similar application involving another group of condominium buyers involving the same developer and project.

Source: By  m. mageswari, royce tan, thean lee cheng, eugene mahalingam, The Star

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Service charges under strata title property in Malaysia

Criminalising non-payment of service charge under the Strata Management Tribunal

A recent conversation with a relative on urban living raised a couple of interesting issues. One led to suggest that many high-rise buildings in Malaysia were fast becoming urban slums, of which I agreed, having noticed that although Malaysians have started living in stratified development properties, they express the devil-may-care attitude and expect “free lunch”. Clearly, there is a huge need for a paradigm shift in responsibilities with regard to community living.
This so-called freedom of not paying of service charges will come to an end with the establishment of the Strata Management Tribunal (SM Tribunal). It states that any parcel owner or tenant who fails to pay service charges, can be brought before the SM Tribunal with the implementation of the Strata Management Act 2013, Strata Management (Maintenance & Management) Regulations 2015 (June 2, 2015) and Strata Management (Strata Management Tribunal) Regulations 2015 (July 1, 2015). It is interesting to note that limitation is not applicable to the SM Tribunal and the maximum that can be claimed is RM250,000 per claim. Any non-compliance of an award (decision) of the SM Tribunal is now a criminal offence.
“Any person who fails to comply with an award made by the Tribunal commits an offence and shall, on conviction, be liable to a fine, not exceeding RM250,000 or to imprisonment for a term not exceeding three years, or both, in the case of a continuing offence, to a further fine not exceeding RM5,000 for every day or part thereof during which the offence continues after conviction.” (Section 123)
The Tribunal shall consist of the following members who shall be appointed by the Minister:
 (a) a Chairman and a Deputy Chairman to be appointed from among the members of the Judicial and Legal Service; and
(b) not less than 20 other members
to be appointed from among:
(i) the persons who are members of or who have held office in the Judicial and Legal Service; or
(ii) the persons who are admitted as advocates and solicitors under the Legal Profession Act 1976 [Act 166], the Advocates Ordinance of Sabah [Sabah Cap. 2] or the Advocates Ordinance of Sarawak [Sarawak Cap. 110], and who has no less than seven years’ standing, each appointed for a period of three years.
The Tribunal shall have the jurisdiction to hear and determine any claims where the total amount in respect of which an award of the Tribunal is sought, does not exceed RM250,000 or such other amount, as may be prescribed to substitute the total amount.
Claim can be filed in relation to the following:
1. A dispute or complaint concerning an excercise or the performance of, or the failure to exercise or perform, a function, duty, or power conferred or imposed by Strata Management Act 2013 or the by-laws;
2. A dispute cost costs or repairs in respect of a defect in a parcel, building or landed intended for subdivision into parcels, or subdivided building or land, and its common property or limited common property;
3. A claim for the recovery of charges, or contribution to the sinking fund, or any amount which is declared by the provisions of this Act as a debt;
4. A claim for an order to convene a general meeting;
5. A claim for an order to invalidate proceedings of meeting where any provision of the Act has been contravened;
6. A claim for an order to nullify a resolution where voting rights has been denied or where due notice has not been given;
7. A claim for an order to nullify a resolution passed at a general meeting;
8. A claim for an order to revoke amendment of by-laws having regard to the interests of all the parcel owners or proprietors;
9. A claim for an order to vary the rate of interest fixed by the joint management body, management corporation or subsidiary management corporation for late payment of charges, or contribution to the sinking fund;
10. A claim for an order to vary the amount of insurance to be provided;
11. A claim for an order to pursue an insurance claim; 
12. A claim for compelling a developer, joint management body, management corporation or subsidiary management corporation to supply information or documents; 
13. A claim for an order to give consent to effect alterations to any common property or limited common property; or 
14. A claim for an order to affirm, vary or revoke the Commissioner of Building’s decision.
The Orders that the SM Tribunal can make are:
1. Pay a sum of money to another party.
2. Order the  price or other consideration paid by a party to be refunded to that party.
3. Order the payment of compensation or damages for any loss or damage suffered by a party.
4. Order the rectification, setting aside or variation of a contract or additional by-laws, wholly or in part.
5. Order costs to or against any party to be paid.
6. Order interest to be paid on any sum or monetary award at a rate not exceeding eight per centum per annum.
7. Dismiss a claim which it considers to be frivolous or vesatious.
8. Any other order as it deems just and expedient.
9. Make such ancillary or consequential orders or relief as may be necessary to give effect to any order made by the Tribunal.
Where a claim is filed with the SM Tribunal and the claim is within the Tribunal’s jurisdiction, the issues in dispute in that claim, whether as shown in the initial claim or as emerging in the course of the hearing, shall not be the subject of proceedings between the same parties in any court unless:
(a) the proceedings before the court were commenced before the claim was filed with the Tribunal; or
(b) the claim before the Tribunal is withdrawn, abandoned or struck out.
This means that a claimant has to decide in advance as to which forum he has to file a case because having filed a case in the SM Tribunal means he cannot file the proceed in the same courts or vice versa.
This is a free for all Tribunal with many claimants and they are:
(a) a developer;
(b) a purchaser;
(c) a proprietor, including an
original proprietor;
(d) a joint management body;
(e) a management corporation;
(f) a subsidiary management
(g) a managing agent; and
(h) any other interested person, with the leave of the Tribunal. Filing procedure is inexpensive, pay only RM20 and simply fill in the required forms. These forms have not been uploaded yet on the KPKT web site but requests can be made by email.
At the SM Tribunal, no party shall be represented by an advocate and solicitor at a hearing unless, in the opinion of the Tribunal, the matter in question involves complex issues of law and one party will suffer severe financial hardship if he is not represented by an advocate and solicitor. A corporation or unincorporated body of persons may be represented by a full-time paid employee of the corporation or body. The Tribunal may conduct the proceedings in such manner as it considers appropriate, necessary or expedient for the purpose of ascertaining the facts or law in order that it may determine a claim.
The SM Tribunal shall make its award without delay and, where practicable, within sixty days from the first day of the hearing before the Tribunal commences. In making an order under subsection (3), the Tribunal shall have regard to:
(a) the relevant provisions of this
Act; or
(b) the interest of all parcel owners or proprietors in the use and enjoyment of their parcels or the common property or limited common property. The award given are final and binding on all parties to the proceedings and are be deemed to be an order of a court and be enforced accordingly by any party to the proceedings. However, any person dissatisfied with the decision of the SM Tribunal can, apply to the High Court challenging the award in the proceedings on the ground of serious irregularity affecting the awards which means an irregularity of one or more of the kinds which the court considers has caused substantial injustice to the applicant.
With the establishment of the SM Tribunal there is hope for better maintenance and management culture to spur our quest to become a developed nation and zero nonpayment issues.
By Datuk Pretam Singh,
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By-laws governing strata property in Malaysia, part 3

General prohibitions of a proprietor according to the Third Schedule of Strata Management Regulation 2015

A PROPRIETOR shall not use his strata parcel for any purposes, illegal or otherwise, which may be injurious to the reputation of the development area; use as fuel of any substance or material which may give rise to smoke or fumes or obnoxious smells or shall not use any substance which the management corporation in a general meeting shall decide; and throw or allow to fall, any refuse or rubbish of any description on the common property or any part thereof except in refuse bins maintained by him or in refuse chutes or in refuse bins in common refuse chambers provided in the building.

A proprietor shall not use language or behave in a manner likely to cause offence or embarrassment or nuisance to any other proprietor or to any person lawfully using the common property.

A proprietor shall not change the appearance, colour code and façade to any part on the exterior of his parcel without the prior written approval of the management corporation and, where necessary, the approval of the appropriate authority.

A proprietor shall take all necessary steps to prevent his parcel from infestation by termites, vermin, rodents, pests and insects provided that any netting installed shall first be approved by the management corporation.

A proprietor shall not keep any particular animal in his strata parcel or on the common property thereof that may cause annoyance or nuisance to the other proprietors or which may be dangerous to the safety or health of the other proprietors or which contravenes any written law or rules and regulations of the relevant state or the local authority.

In a building used for residential or dwelling purposes, a proprietor shall not, except with the prior written approval of the management corporation, hang any washing, towel, bedding, clothing or other article on any part of his strata parcel in such a way as to protrude outside, other than at the areas designated for such purpose and leave them there only for a reasonable period.

The management corporation may require any person on the common property to identify himself for security purposes and any person who refuses to comply and who is not a proprietor to leave the common property or the development area immediately.

All fire escape routes, including but not limited to, the stairways, landings and passageways in the building or the common property shall not be obstructed by the proprietor at any time and the management corporation may, without prior notice, remove or confiscate any property of a proprietor, including but not limited to, bicycles, potted plants, vases, furniture, trolleys, boxes,goods or objects of any kind whatsoever. The management corporation may put up a notice of any removed or confiscated property which may be claimed by the proprietor within fourteen days from date of the notice subject to payment to the management corporation of a charge not exceeding RM200. If a removed or confiscated property is not claimed at the expiry of the period of fourteen days, the management corporation may discard or dispose of such property as it deems fit without any liability to the proprietor.

A proprietor shall not damage any lawn, trees, shrubs, plants or flowers in the common property.

A proprietor shall not do anything to his strata parcel which may encroach on any part of the common property or any other strata parcels. A proprietor shall not mark, paint, put up posters or banners or notices, drive nails or screws, or fasten brackets or the like into, or otherwise damage or deface, any part of the common property except with the prior written approval of the management corporation. An approval given by the management corporation shall not authorise any addition(s) to the common property.

Every vehicle shall be properly parked in the designated parking bay without causing any obstruction to any adjacent vehicle or the flow of traffic. An improperly parked vehicle may be towed away or wheel-clamped by the management corporation, at the vehicle owner’s cost without prior notice, and in such a case, the wheel clamp will only be removed after payment to the management corporation of a charge imposed by the management corporation which shall not exceed RM200, and with any towing cost and holding charge actually incurred by the management corporation.

A proprietor shall not cause any unsightly accumulation of dirt, garbage, rubbish or debris in his strata parcel and accessory parcel that is visible from the outside and affecting the appearance or façade of the building or common property.

A proprietor shall not carry out any renovation works to his strata parcel without first obtaining a prior written approval from the management corporation and, where necessary, from the appropriate authority.

Unless prior approval in writing has been obtained from the appropriate authority and the management corporation, a proprietor shall not:
• construct another floor level to his strata parcel (e.g. to split the level of any portion of the existing floor in the strata parcel by adding platforms);
• relocate any external door or window of his strata parcel;
• remove or make changes to any building safety feature in his strata parcel and notwithstanding such approvals, the proprietor shall indemnify and keep indemnified the management corporation against any liability which may be incurred or suffered as a result of such removal;
• shift any plumbing and sewerage system in a strata parcel;
• change or upgrade the whole electrical system in a strata parcel; or
• illegally connect or tap electricity supply.


Where the condition of any strata parcel(s) in the development area affects or is likely to affect the support or shelter provided by that parcel for another parcel in the same building or the common property, or causes or is likely to cause damage or destruction to another parcel or any property therein in the same building or the common property; and the proprietor of the parcel in that condition has neglected or refused within a reasonable time of two written notifications of at least fourteen days each from the management corporation to take such action as is necessary to have that condition rectified; the management corporation may, as agent for the proprietor of the parcel in that condition, take such actions and proceedings as are necessary to have that condition rectified and the management corporation may recover the cost and expense of such actions and proceedings from the proprietor of the parcel in that condition as a debt due to the management corporation.


A developer during the developer’s management period may make additional by-laws or make amendments to such additional bylaws, not inconsistent with the bylaws in the Third Schedule, with the approval of the Commissioner of Building.

A joint management body may, by a special resolution, make additional by-laws or make amendments to such additional bylaws, not inconsistent with the bylaws in the Third Schedule, for regulating the control, management, administration, use and enjoyment of the building or land intended for subdivision into parcels and the common property, including all or any of the following matters:
• safety and security measures; • details of any common property of which the use is restricted;
• the keeping of pets;
• parking; • floor coverings;
• refuse control;
• behaviour;
• architectural and landscaping guidelines to be observed by all strata parcel owners; and
• imposition of a fine, not exceeding RM200 against any parcel owner, occupant or invitee who is in breach of any of the by-laws.

Follow our article next week on The Strata Management Tribunal, highlighting criminalising nonpayment of service charges.


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A strata property living nightmare: leakage

The party responsible is not your upstairs neighbour but the management

Stiff penalty: Whoever fails to give access to the party carrying out the inspection commits an offence. The fine imposed is up to RM50,000 or imprisonment of up to three years or both, under regulation 63(2).

IF you live in a high rise building and have an inter-floor leakage issue, you can be rest assured that you are not alone. Inter-floor leakage is without a doubt one of the biggest problems faced by many dwellers of high rise buildings.

Whilst the leakage may appear only in a particular parcel, the source of the leakage may lie in the parcel above or even elsewhere. The cooperation of more than one party is therefore required; without which one cannot even begin to identify the problem, let alone solve it.

Two issues must be identified when there is an inter-floor leakage. Firstly, the source of the leakage and secondly, the person or body responsible for repair or rectification. Who is supposed to identify the source of the leakage to start with? The person or body responsible of course, you may say, but how do you know who is responsible before the cause of the problem is ascertained? A bit of a chicken and egg situation arises.

New Act

Will the new management Act answer to all ceiling leakages?

In February 2013 the Strata Management Act 2013 (SMA) was passed by Parliament. With that came a presumption in law, under Section 142 of the SMA, that if the leakage is on the ceiling, then such leakage is presumed to be from the parcel above unless it is proven otherwise. So, if you have a leakage from your ceiling, go to your upstairs neighbour and tell him/her that he/she is responsible and must therefore find the source of the leakage and do the repair. What if he/she disclaims responsibility? Simple, You just quote Section 142 of the SMA. What a magical section with a “one fits all” answer to ceiling leakages! I thought so too when I first read Section 142, but I was not completely right for the law does not place the entire responsibility squarely on the upstairs parcel owner.

It was to be another couple of years before the SMA was implemented in June 2015 but the good news is that with that came also the implementation of the Strata Management (Maintenance & Management) Regulations 2015 (SMR). Many thanks to those (including HBA volunteers) who worked tirelessly on drafting and fine tuning the provisions of the SMR, we now have some definite answers on what to do if you have a leakage from your ceiling.

Who is responsible?

In dealing with inter-floor leakage one must not just look at Section 142 of the SMA but also Part XV of the SMR. Indeed it is Part XV of the SMR which tells you what to do if you discover dampness, moisture or water penetration from your ceiling or if you were to go home one day only to find that it is raining in your apartment.

Go to the developer if you are still covered by the defects liability provisions.

If the leakage is still covered by the provisions of your sale and purchase agreement (SPA), follow the provisions of your SPA. For homebuyers, these are typically cases where the leakage or defect occurs during the defects liability period, and which the housing developers are required to rectify, as provided in the statutory SPA.

JMB/MC/Management first in the line of responsibility – regulation 56

If the leakage is not one which is covered by the SPA, then notice may be served by the owner of the affected parcel on the developer or the joint management body (“JMB”) or the management corporation (“MC”) or the subsidiary management corporation (“sub-MC”), as the case may be.

This is provided for in regulation 56(1) of the SMR. What regulation 56 essentially means is that you serve notice on the body responsible for the maintenance and management of the common property, which for convenience I shall refer to as “the management”. So, now you see, the party first in the line of responsibility is not your upstairs neighbour but the management.

Once notice is received, the management must, within seven days, carry out an inspection to determine the cause of the leakage and the party responsible for rectification (regulation 57). Thereafter, the management must issue a “Certificate of Inspection” stating the cause of the inter-floor leakage as well as the party responsible for rectification (regulation 59). A standard form certificate for this purpose can be found in Form 28 under the Second Schedule of the SMR.

So, what is the purpose of Section 142, you may ask? Section 142 merely creates a presumption that the defect lies in the parcel above. In practical terms, this does nothing towards resolving any inter-floor leakage issues other than perhaps as a starting point for inspection. After all, one cannot possibly rectify a defect which causes the leakage until and unless the actual defect is identified. The legal implication of Section 142, however, is perhaps best left to those much more qualified than I but I do wonder if this statutory presumption alone can be a valid ground for holding the upstairs parcel owner responsible and if so under what circumstances in light of the provisions of the SMR.

Determining factor(s)

Under regulation 58 of the SMR, the management must take into account not just the aforesaid presumption but also the following matters which to my mind are far more relevant once the defect is identified:-

(1) that any defect in something which serves more than one parcel is a common property defect; and

(2) that any defect in something which serves only one parcel is a defect of that particular parcel even though that something is situated in common property or in void space.

In other words, the determining factor is not the location of that defective something but which parcels that something serves. If it serves just one parcel, that particular parcel owner is primarily responsible and must rectify the defect failing which the management shall carry out the rectification works and charge the expenses to that particular parcel owner. I say primarily because whilst regulation 61 of the SMR imposes the obligation on a specific parcel owner such obligation is expressly stated to be without prejudice to that parcel owner seeking indemnity from someone else.

That of course begs the question of who can be held liable for such indemnity; a question which is beyond the scope of this article but I certainly will not rule out any parcel owner, including the affected parcel owner, who contributes towards the defect or any delay in the rectification of the defect.

The decision of the management is, as expected, not final. Anyone not satisfied with a decision made against him/her may refer to the Commissioner Of Buildings (COB) who shall ascertain the cause of the leakage and the party responsible in accordance with regulation 64(1) & (2) and the decision of the COB shall be complied with by all parties concerned.

Grant access for inspection or risk prosecution

It goes without saying: that neither inspection nor rectification works can be effectively carried out without access to all relevant parcels and common property. Hence, the imposition of a statutory obligation on all relevant parties to give access as provided by regulation 63(1) of the SMR comes as no surprise at all.

Whoever fails to give access to the party carrying out the inspection commits an offence! And the punishment is severe too; a fine of up to RM50,000 or imprisonment of up to three years or both, under regulation 63(2).

Given that the lack of cooperation on the part of some parcel owners/occupiers has remained one of the main causes of delay in resolving inter-floor leakage problems, these provisions are definitely a step in the right direction. It does puzzle me, however, that whilst a failure to give access for inspection tantamount to an offence, the same does not seem to apply to a failure to give access for rectification.

Some of you cynics out there may be tempted to brush this aside as something unlikely to be enforced by the authorities but do you want to take that chance? Do you really want to risk prosecution over something as simple as giving access for inspection and/or rectification?

Beside, now that the Strata Management Tribunal has been set up you may be slapped with an order much sooner than you think.

By Chang Kim Loong Buyer Beware

Chang Kim Loong AMN is the honorary secretary-general of the National House Buyers Association: , a non-profit, non-governmental organisation manned purely by volunteers.

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