Thorn in the flesh for consumers

The frequent setting aside of the Housing Tribunal's awards is not likely to gain the confidence of the people.

Buyer’s perspective: Having won the case at the Tribunal for Home Buyer Claims, commonly known as the Housing Tribunal, and having been granted an award of RM7,500 as compensation for late delivery, the defaulting developer has refused to abide by the award. The developer wants to challenge the award by filing for judicial review (JR) at the High Court. I checked with several lawyers and they say the legal fees and expenses to represent the client would be approximately RM20,000 at the level of the appellate division of the High Court.

The lawyer is uncertain whether he would be able to win the case. Thus, why take a risk?

Developer’s perspective: Yes, the completion of the building has been delayed because of several factors beyond the scheduled completion date. But we must fight the case for the sake of delaying tactics. We can’t afford to pay all the 350 apartment buyers.

We will go bankrupt when each unit’s compensation (for late delivery) costs us RM7,500. It will run into the millions. We will get our lawyers to adopt delaying tactics, by whatever means, to frustrate the awards by filing for JR proceedings.

With the JR proceedings, the owners will drop their claims and “beg” to settle out-of-court.

It will not be worth their while to pursue the matter. It’s an expensive game and time-consuming at the High Court stage.

Having set the above scenario, I have written three articles vis-à-vis the Housing Tribunal, namely, Damages for late delivery, Jan 25, 2014, Is the Housing Tribunal effective? Feb 15 and Vital to act against errant developers, Feb 22, in which I praised the Housing Tribunal for a job well done. However, this issue of JR proceedings has been a thorn for both house buyers and the Housing Tribunal, as both parties are cited as a party to the JR proceedings.

Need for representation

Perhaps the need for representation ought to be seen beyond a just and reasonable outcome of JR cases and the protection of house buyers. Statutory laws have been passed, case law must be developed. Bad precedents lead to bad case law. Representation in JR cases is an effective way to shape the development of case law.

My initial thoughts basically cover three points:

(A) The far-reaching effect of one adverse JR outcome sets a precedent and affects many,

(B) The need for positive development of case law, and

(C) An alternative option.

A. One adverse JR outcome affects not one but many purchasers.

The number of JR cases is small only if they are considered as a percentage of the total number of cases filed. When there are 1,200 cases, the number is not small.

More importantly, the implication/ramification of 1,200 cases goes far beyond 1,200 purchasers. One adverse outcome affects the purchasers in the same housing project and other projects as well.

So, we are looking at potentially hundreds of purchasers who can be affected by just one Tribunal award being quashed.

The ramifications

– The Tribunal cannot ignore a High Court decision, which will remain binding until and unless set aside by the Court of Appeal.

– The purchaser is unlikely to appeal against the High Court decision. So, a High Court decision remains and has to be followed. If it is not followed, then the developer will take it on JR again.

– The developer will also use the decision to pressure purchasers into settling for a fraction of what they are entitled to, or even avoid making any claims.

– Purchasers become afraid to file claims at the Tribunal for fear of being taken to the High Court on JR. Or they may think that it is just not worth the while going to the Tribunal.

– The public loses confidence in the Tribunal.

– Developers have a battalion of lawyers to go all the way to the higher courts.

– Developers’ lawyers will practically do the JR for free in exchange for future legal work.

Developers have nothing to lose by going on JR because their arguments are unilaterally heard without the presence of the “opposing parties, or respondents”. They may not even be ordered to pay the cost if their application is dismissed because there is no opposition.

The Housing Tribunal cases are supposed to be straightforward cases, so why is there the need for JR? Many developers go for JR just to buy time, to frustrate house buyers and for cash-flow purposes.

They must be stopped or at least discouraged and that cannot be done without opposition. Opposition has to come from the law enforcers. Otherwise, the Parliament’s efforts in setting up the Tribunal are wasted.

In Hazlinda Hamzah V. Kumon Method of Learning Centre (Court of Appeal, Putrajaya [Civil Appeal No. W-04-78-2004] – March 6, 2006, Gopal Sri Ram JCA remarked that the Tribunal for Consumer Claims has several provisions to protect consumers from the provision of defective goods and services and to give claimants speedy relief.

The Parliament in establishing the Tribunal conferred it with extraordinary powers to do speedy justice for consumers. As such, its awards should not be struck down save in the rarest of cases, where it has misinterpreted some provision of the Act in such as to produce an injustice. (http://www.hba.org.my/laws/CourtCases/H/hazlinda)

Frustration of Parliament’s intention

Despite this strong statement, too many Tribunal awards are taken on JR and some are quashed (or varied) as can be seen above. It makes one wonder if the above and other relevant cases and statutory provisions related to housing laws and the Parliament’s intention to protect house buyers are ever brought to the judge’s attention at the JR proceedings.

(B) Legal representation a positive way forward for the development of housing laws

Good precedents can be set

If the Tribunal were represented, then the cases before the High Court can be better argued, the housing laws can be better presented and understood, contradictory decisions are more likely to be scrutinised and good precedents can be set and followed. This will contribute positively towards the development of case law, which is just as, if not more, important as statutory laws for the housing industry.

Bad precedents lead to bad case law. With no opposition, the developers’ presentations are, at best, one-sided and at worse, intentionally misleading. There can be no positive development in the case law in such an environment. In fact, it has already led to some undesirable precedents.

If left unchecked, it will have far-reaching effects. Examples of such “bad” precedents include Liquidated Ascertained Damages (LAD) cases being set aside, cost being ordered against unrepresented buyers and even the Tribunal.

Tribunal scope of cases – Technical and non-technical

There are so many LAD cases involving car parks being sold separately, cases involving inflated purchase prices, connection of utilities, and issues with regards to vacant possession. Case law needs to be put in the right perspective.

Otherwise, we will have to amend the statutory laws again and start over again. The Tribunal ought to be able to deal with such cases instead of the purchasers having to go to the civil court for an order.

Technical claims relating to latent defects and defects discovered after the developer’s liability period is over are among some of the cases that come up for mention.

The Tribunal must want to put the law in its right perspective and set some precedents.

Law enforcers, by representing the Tribunal, can contribute positively to the development of case law and help shape the legal environment for the housing industry. With developers now having three months instead of 40 days to file their application for leave (for JR proceedings), more developers are likely to go for JR and something must be done now.

(C) An alternative solution

Legal officers of the Attorney-General’s (AG) chambers who are most conversant in the functions, law and specific objectives of the housing laws applied by the Tribunal are those in the Housing Ministry.

It is suggested that they be required to defend the awards made by the Tribunal.

Even if the AG’s chambers is not keen for there to be representation in all JR cases, there must be a system with sufficient qualified personnel, whereby the merits are looked at, a system whereby the Tribunal’s decision can be defended, where deemed necessary, by the Tribunal.

Conclusion

The frequent setting aside of the Housing Tribunal’s awards is not likely to gain the confidence of the rakyat in the Housing Ministry’s commitment to service house buyers.

This may lead to serious consequences which will put a greater strain on the Government.

Chang Kim Loong, AMN, is the secretary-general of the National House Buyers Association: www.hba.org.my, a non-profit, non-governmental organisation manned purely by volunteers. - The Star