FC Case Update: What Can the Tribunal for Home Buyers Claims Decide?

A. Introduction

In the recent FC decision of Remeggious Krishnan v SKS Southern Sdn Bhd [2023] 1 LNS 362, the Federal Court decided that the Tribunal for Home Buyers Claims (“Tribunal“) has jurisdiction to hear split claims in respect of the same property. The monetary limit of RM50,000.00 applies for each claim and not all the split claims combined.

The following leave questions were posed before the Federal Court:

(i) In view of section 16Q and section 16M of the Housing Development (Control and Licensing) Act 1966 (“HDA“), whether there is a jurisdiction for the Tribunal to hear two (2) separate claims in respect of the same subject property where the total amount of dispute of these two (2) claims exceeds the monetary jurisdiction of RM50,000.00?

(ii) Whether the developer can be exempted to pay damages to the purchaser when the developer was in breach of the manner of delivery of vacant possession of the property as prescribed in Schedule H so long as the developer is still within the timeline to deliver vacant possession of the property?

(iii) By virtue of section 6 of Limitation Act 1953, whether a purchaser’s right to claim for breach of the manner of delivery of a property under Schedule H arise after the actual delivery of vacant possession of a property or after the deadline to deliver the vacant possession of a property?

(iv) In view of the definition of “ready for connection” as stated in Clause 1(k) of the Sale and Purchase Agreement and Clause 22 of the Sale and Purchase Agreement as well as admission of liability by the respondent, whether Clause 27 of the Sale and Purchase Agreement is breached?

The Federal Court only answered the first question in the affirmative and declined to answer the remaining questions. Nevertheless, the author opines that the second leave question should be answered in the negative based on the Federal Court’s reasoning on the issue underpinning this question.

B. Background Facts

The respondent is the developer of a residential project called Sky Habitat. The appellant is one of the purchasers of the units of this project. According to the sale and purchase agreement (“SPA“) entered between parties, the developer delivers vacant possession of the unit when “the water and electricity supply are ready for connection to the [unit]“.

The respondent delivered vacant possession with no electricity connection to the property. The appellant filed two separate claims with the Tribunal. One, for failure to provide adequate ceiling height and protruding beams and pillars. This claim amounts to RM40,000.00 and is called the “technical claim”. Two, for delay in the connection of electricity. This claim amounts to RM49,832.00 and is called the “non-technical claim”.

The Tribunal allowed the non-technical claim and awarded a sum of RM16,452.05 and costs of RM400.00 in favour of the appellant. The respondent applied for judicial review against this award. The High Court upheld the award. The Court of Appeal overruled the High Court’s decision.

C. Federal Court’s Decision

Jurisdictional Issue – Split Claims and Monetary Limit before the Tribunal

Section 16M(1) of the HDA provides that “… 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 fifty thousand ringgit“.

Section 16Q of the HDA provides that “claims may not be split, nor more than one claims brought, in respect of the same matter against the same party for the purpose of bringing it within the jurisdiction of the Tribunal“.

The issue before the Federal Court is whether a party can bring split claims before the Tribunal on the same property and where the total amount of the claims exceeds RM50,000.00.

The Federal Court disagreed with the Court of Appeal’s reasoning that the phrase “same matter” under section 16Q of the HDA should be interpreted as “same property“. It further held that the monetary limit under section 16M of the HDA applies to “a claim” and not “all the claims“. As such, each split claim before the Tribunal should be assessed independently and distinctly from one another. Having presented both the technical claim and non-technical claim before the Tribunal, with each claim being just under RM50,000.00, the appellant cannot be said to have violated the monetary limit under section 16M of the HDA.

The Federal Court acknowledged that there might be situations where claims for the same matter are split to circumvent the monetary limit under section 16M of the HDA. For example, a claim of liquidated ascertained damages in the sum of RM80,000.00 cannot be split into two claims of RM40,000.00 each.

Based on these reasons, the Federal Court answered the first leave question in the affirmative.

Substantive Issue – Electricity “Not Ready for Connection” Under the SPA

Clause 27 of the SPA provides that when the respondent delivers vacant possession of the unit, the water and electricity have to be “ready for connection”. The Federal Court disagreed with the Court of Appeal’s reasoning that “ready for connection” does not mean that the subject property must be installed with actual supply of electricity. Instead, the correct interpretation should be that electrical points must be fully functional and supply is available for tapping into the property.

The Federal Court also disagreed with the Court of Appeal’s reasoning that no losses were suffered by the appellant as the respondent was still within time for delivery of vacant possession. The Federal Court held that “time frame for delivery of vacant possession is quite separate from the manner of delivery of vacant possession“. It is premised on this reason that the author opines that the second leave question should be answered in the negative.

A developer cannot be exempted from paying damages arising out of its breach in the manner of delivery of vacant possession just because the developer has complied with the timeline to deliver vacant possession.