Faber Union(1) is good law.
In total, there were seven appeals before the Federal Court by purchasers and housing developers. The key question that the court considered was where there is a delay in the delivery of vacant possession, does the date for the calculation of liquidated and ascertained damages (LADs) begin on the date of the payment of the booking fee or on the date of the sale and purchase agreement (SPA)?(2)
This article refers to the appeals pertaining to
GJH Avenue Sdn Bhd.(3)
GJH Avenue
The
GJH Avenue appeals comprised three appeals by purchasers of units of bungalows under a Schedule G statutory contract as prescribed under the Housing Development (Control and Licensing) Regulations (HDR) 1989. One of the bungalow units is known as Unit Number L274/PT Number 5415.
DEVELOPERS may not be in such a rush to collect booking fees in the future following a recent Federal Court ruling that not only is such a practice expressly prohibited by the law, but perhaps more crucially, that the calculation for late delivery of a house commences from the date a booking fee is paid, and not when the sale and purchase agreement (SPA) is signed.
Commenting on the recent landmark ruling, legal experts say developers will likely be more cautious about collecting a booking fee or initial payment on a house as this would be considered illegal. Furthermore, they expect new residential SPAs to be signed only when developers are genuinely ready to commence a project, a move that could potentially deter them from building too many houses unless there is strong demand and help to reduce the significant property glut (see accompanying story, “What should developers do moving forward?”).