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Homebuyers' association sues Ministry of Housing over late delivery of property

Palace Court buyers were denied liquidated ascertained damages (LAD) for the delay in vacant possession. Palace Court buyers were denied liquidated ascertained damages (LAD) for the delay in vacant possession.

Buyers of Palace Court in Kuchai Lama, KL suffered a delay in the delivery of their homes and the granted Extension Of Time (EOT) will now extinguish their compensation rights, says the HBA.

The National House Buyers Association (HBA) has declared that it will be pursuing legal action against the Ministry of Urban Wellbeing, Housing and Local Government (KPKT) with regard to a project called Palace Court in KL, developed by BHL Construction Sdn Bhd.

The decision, said the association, is so it can challenge the existence of Extension of Time (EOT) issued by KPKT to the developer, which has denied unit buyers the rights for entitlement of compensation in the form of liquidated ascertained damages (LAD) for the delay in delivering vacant possession of purchased units.

According to HBA’s honorary secretary-general Chang Kim Loong, the claim of LAD for late delivery is a well-recognised right and is clearly mentioned in the sale and purchase agreement (SPA).

“Such rights and entitlement were taken away by the Controller of Housing of KPKT when the EOT was issued to the developer,” he said.

Chang explained that the issue of granting of EOT has been a long-running point of contention, as it has been utilised to the benefit of developers and delayed housing projects on countless occasions.

“The granting of a 12-month EOT to the developer effectively extinguishes purchasers’ claims to compensation,” he explained.

Chang said HBA has brought together a team of 12 lawyers to help take action on behalf of the buyers through a Judicial Review process at the High Court.

“We want to challenge the existence of an EOT in this case, because we believe the main reasons given for its issuance are simply not justified,” he said.

He noted that two sets of cases had been filed this week, and lawyers from HBA stand ready to aid the 120 affected house buyers on a pro bono basis.

The project, located in Jalan Kuchai Lama and close to the Taman Desa neighbourhood, comprises two blocks of 23-storey residential condominiums totalling 496 units.

According to buyer Darren Ang, the project was supposed to have been handed over to him in May 2015, but there was no communication from the developer about delays or anything.

“In March this year, there was a memo from the developer saying that the LAD claims would be processed for the buyers,” Ang said.

However, in April, the developer informed affected buyers that they would not proceed with claims as they had obtained the EOT from the National Housing Department, which falls under the purview of KPKT.

Ang said that the developer’s intention is doubted, as the letter of approval for the EOT was dated 17 November 2015, but they failed to make mention of it even in the March 2016 memo it circulated.

Chang said that the Controller of Housing has given a 12-month EOT to the developer. This scenario robs all the unit buyers of their rights, benefits and entitlements under LAD for late delivery.

In addressing the case, HBA will be invoking Regulation 11(3) of the Housing Development (Control & Licensing) Regulations 1989 (HDR).

Regulation 11(3) stipulates that the Housing Controller has the power to allow modification or changes to the prescribed format provided that the Controller is “satisfied that owing to special circumstances or hardship or necessity, compliance with any of the provisions in the contract of sale is impracticable or unnecessary”.

He or she may, by a certificate in writing, waive or modify such provisions – provided that no such waiver or modification shall be approved if such an application is made after the expiry of the time stipulated to deliver vacant possession.

Chang said that the power given to the governing authority, just like other discretionary powers, must not be misused and the Housing Controller must understand and be mindful of the purpose of housing legislations so as not to affect such purpose, and undo accrued rights, and make a mockery of Parliament.

He said that in this case, the Housing Department did not disclose the grounds on which the EOT was given, nor invite affected purchasers to state their objections.

“No reasonably-minded person, let alone the Housing Minister and those under his charge, can possibly imagine that the powers given are meant to be used against the interest of house buyers, let alone blatantly take away house buyers’ rights which are expressly and clearly conferred on house buyers,” Chang said.

He added that the Housing Development (Control & Licensing) Act, 1966 (Act 118) and its Regulations, where the statutory forms for contracts of sales are prescribed, have been tweaked and tuned on several occasions.

“Be mindful that it reads ‘An Act to provide for the control and licensing of the business of housing development in Peninsular Malaysia, the protection of the interest of purchasers and for matters connected therewith’,” Chang said.

 

News Source: Property360 Online, original article written by Roznah Abdul Jabbar dated 2 August 2016

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