There have been a number of key cases on conveyancing and real estate that have gone through the Courts in recent years. Here, we provide the highlights of key cases in 2021 and 2022.
- CALCULATION OF LIQUIDATED AGREED DAMAGES BEGINS FROM THE DATE OF PAYMENT OF THE BOOKING FEE
The Federal Court held in PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah and Ng Chee Kuan and Other Appeals that where a developer fails to deliver vacant possession according to the time stipulated in the statutory sale and purchase agreement (in respect of Schedule G and/or H type contracts under Regulation 11(1) of the Housing Development (Control and Licensing) Regulations 1989 (“HDR”)), the calculation of the liquidated agreed damages begins from the date of payment of the booking fee and not from the date of the sale and purchase agreement.
The Federal Court’s reasons in arriving at its judgment are as follows:
- When it comes to interpreting social legislation such as the Housing Development (Control and Licensing) Act 1966 and its subsidiary legislation, the courts must give effect to the intention of Parliament and not the intention of parties;
- Regulation 11(2) of the HDR clearly stipulates and expressly provides for an absolute prohibition against the collection of booking fees; and
- In construing the illegality against the developers, if it was their attempt to have secured an early bargain through the illegal collection of booking fees, then the protective veil cast by the Legislature over the purchasers should operate in a way so as to bind the developers to the booking fees.
- UNREGISTERED INTEREST CANNOT DEFEAT INDEFEASIBLE TITLE
The Federal Court in Bayangan Sepadu Sdn Bhd v Jabatan Pengairan dan Saliran Negeri Selangor overturned the Court of Appeal’s and the High Court’s decision by allowing the appellant’s appeal and held that an unregistered interest cannot defeat the registered and indefeasible title of the appellant.
Mohd Zawawi Salleh FCJ in his judgement states
“It is trite that land law in Malaysia is based on title and interest by registration which is derived from the Torrens System. There are two fundamental principles of the Torrens System, namely the mirror principle and the curtain principle. The mirror principle portrays a concept in which the land title mirrors all relevant and material details that a perspective purchaser, lessee and chargee ought to know. This mean that a person can obtain all such material information of the land, based on what is endorsed on the register of document of title and issue document of title. On the other hand, the curtain principle is a concept that dispenses with the need to look beyond the register – as the land itself provides all relevant information reflecting the validity of the same…”
- MANAGEMENT CORPORATION IS ALLOWED TO ENACT HOUSE RULES TO PROHIBIT SHORT-TERM RENTAL ACTIVITIES
In the case of Innab Salil & Ors. v Verve Suites Mont’ Kiara Management Corporation the Federal Court ruled that management corporations can enact house rules to prohibit short-term rentals in residential strata buildings.
Two questions of law were posed in the Federal Court:-
Question 1: Whether management corporation may override and supersede the express land use on the title imposed by the State Authority (i.e. to enact and pass house rule to prohibit the owners of the commercial service suites from commercial usage, in particular, for short-term rental)?
Question 2: Whether the implementation of such house rule is in violation of Section 70(5) of the Strata Management Act 2013 (“SMA 2013”)?
In this case, there appears to be a conflict between the house rule prohibiting short term rental and the express condition of the land use, i.e Commercial Building, and this, by extension, leads to a conflict between Section 70 of the SMA 2013 (which confers the power for management corporation to enact by-laws) and Section 120 of the National Land Code (which provides power to the State Authority to impose express conditions on land use).
In answering Question 1, the Federal Court held that both provisions must be read harmoniously such that they do not diametrically contradict each other. Hence, simply because the State Authority has issued conditions and restrictions of use in the title of the land, that does not preclude the management corporation from promulgating further rules, regulations or by-laws for the purposes provided for by law, in particular the purposes stipulated in Section 70(2) of the SMA 2013.
As for Question 2, the Federal Court held that the short-term rental arrangements by the Defendant owners are nothing more than mere licences, and therefore do not amount to “any other dealing” within the ambit of Section 70(5) of the SMA 2013.
- DEVELOPER CANNOT MODIFY THE STATUTORY FORM OF SALE AND PURCHASE AGREEMENT WITHOUT THE APPROVAL OF THE HOUSING CONTROLLER
In Loh Tina & Ors v Kemuning Setia it was held by the Court of Appeal that developers are prohibited from modifying the statutory form of Sale and Purchase Agreement (“SPA”) under the Housing Development (Control and Licensing) Act 1966 without prior approval from the Housing Controller.
The Court of Appeal also commented as follows:
“Where a developer makes changes to Schedule G SPA that are not approved by the Controller, the purchaser would have a right to enforce the SPA in Schedule G as prescribed as if unamended and unmodified.”
Mira Syahida – email@example.com