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THE OFTEN-FORGOTTEN PROVISION - SECTION 22C OF THE HOUSING DEVELOPMENT (CONTROL AND LICENSING) ACT

Lui & Bhullar’s Housing Development Miniseries Episode 3

By:-

Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]


Image by Markéta Machová from Pixabay


INTRODUCTION


Once a homebuyer brings an action under the scheduled contract of sale in relation to a housing development, the issue of locus standi becomes a live issue which is often forgotten by the very homebuyer.


The relevant provision in the Housing Development (Control and Licensing) Act 1966 (“HDA”) on the issue of locus standi is Section 22C. Accordingly, the said provision is reproduced herein as follows:-


“Notwithstanding anything contained in any written law or any rule of law, agreement, assignment, or charge lawfully entered into between a homebuyer as defined in section 16A and his financier, a homebuyer shall be entitled on his own volition and in his own name to initiate, commence, institute, and maintain in any court or tribunal any action, suit or proceeding against a housing developer or any other person in respect of any matter arising out of the sale and purchase agreement entered into between the homebuyer and the housing developer provided the homebuyer’s financier under a deed of absolute assignment is notified in writing either before or within thirty days after the action, suit or proceeding against the housing developer has been filed before any court or tribunal.”


Appropriately, at this juncture, if the homebuyer is self-funded, Section 22C of the HDA would not bite. However, for those that have had their sale and purchase funded by a bank or financial institution, the said provision would be of importance and relevance.


THE IMPORTANCE AND RELEVANCE OF SECTION 22C HDA


Section 22C of the HDA, put simply, allows a homebuyer to bring an action in any court or tribunal in relation of their sale and purchase agreements if the said homebuyer has notified his financier of the action either before, or within thirty days of bringing the said action.


In the High Court case of Leong Keng Chiang v Prema Bonanza Sdn Bhd [2021] 1 LNS 659, the Defendant (Developer) contended that the Plaintiff (Purchaser) did not have the locus standi to initiate the action. However, Judicial Commissioner Quay Chew Soon (as he was then) found the contention without merit as the Plaintiff (Purchaser) had given a notice pursuant to Section 22C of the HDA to his financier.


Similarly, in the High Court case of Chong Eng Neo v Mammoth Empire Land Sdn Bhd [2021] 1 LNS 2232, Judicial Commissioner Tee Geok Hock found that the Plaintiff (Purchaser) had given a written notice to Malayan Banking Berhad of his intention to claim liquidated damages under the sale and purchase agreement, thus possessing the necessary locus standi.


The above cases, however, ought to be contrasted with the High Court case of Dr Looi Mun Choon v Paragon Promenade Sdn Bhd & Another [2022] 1 LNS 317. The Court was brought to the attention that the Plaintiff (Purchaser) did not tender any evidence that the Plaintiff’s Financer was ever given any notice pursuant to Section 22C of the HDA. Judicial Commissioner Alice Loke Yee Ching, however, found that Section 22C of the HDA cannot clothe homebuyers with locus and neither its non-compliance be used to defeat any action brought by homebuyers. Accordingly, the lack of a notice cannot have the effect to render any claim unsustainable as that would defeat the very purpose of Section 22C of the HDA. The said Judicial Commissioner referred to the Federal Court decision in Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals [2020] 1 MLJ 281 in stating that the HDA is a social legislation designed to protect homebuyers and their interest shall be the paramount consideration against the developer.


Similarly, in the High Court case of Austin Heights Sdn Bhd v Pang Woo [2019] 1 LNS 2239, Judicial Commissioner Awg Armadajaya Awg Mahmud referred to the Long Title of the HDA which states, amongst others, that the HDA is for the protection of the interest of the purchaser. The Court was of the view that Section 22C of the HDA ought to be read as a procedural matter of informing a purchaser’s financier. Accordingly, Section 22C of the HDA cannot impede complaints of purchasers as it is contrary to the purpose of the HDA. In concluding, the said Judicial Commissioner held that the purchaser did indeed possess the necessary and relevant locus standi; the financier’s right to the notice is procedural in value and not substantive; and the failure to give notice does not impede the action brought by the purchaser.


In Lestari Puchong Sdn Bhd v Md Noor Othman & Another [2014] 1 LNS 1246, learned Judge Kamaludin Md Said found that when a financial loan has been fully paid, the said rights would then be reassigned to the purchaser. Such financial loan cannot be regarded as an absolute assignment. Appropriately, the learned Judge referred to the decisions in Chooi Siew Cheong v Lucky Height Development Sdn Bhd & Anor [1995] 2 CLJ 11 Max-Benefit Sdn Bhd v Phuah Thean An & Anor [2001] 2 CLJ 70, and Lim Hock Lai v Hwa Kwong Development [2001] 5 CLJ 515 in that respect.


CONCLUSION


In conclusion, should a homebuyer intend to bring an action in relation to the sale and purchase agreement for a housing development, the said homebuyer ought to give written notice to his financier of the said intention. This is notwithstanding that such financial loan may not be an absolute assignment or that the said failure to give such notice would not render his intended claim unsustainable. After all, it is better to be safe than sorry.


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