Federal Court holds date of calculation of liquidated agreed damages begins from date of payment of booking fee

25 February 2021

PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor and other appeals (Appeal No. 01(f)-29-10/2019(W))

In PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor and other appeals, the issue before the Malaysian Federal Court was whether the date for calculation of liquidated agreed damages (“LAD”) begins from:

  • the date of payment of deposit/booking fee/initial fee by a purchaser or a written expression by a purchaser of his intention to purchase; or
  • the date of the sale and purchase agreement (“SPA”).

Having regard to the concept of social legislation, the legislative history of the Housing Development (Control and Licensing) Regulations 1989 (“HDR”), statutory interpretation, the legal effect of booking fees and formation of contract, the court held that the date of calculation of the LAD begins from the date of payment of deposit/booking fee/initial fee by a purchaser or a written expression by a purchaser of his written intention to purchase, and not from the date of the SPA in the form provided under Schedule G or Schedule H of the HDR (“Statutory Contracts”) for the following reasons:

  • when 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 for the protection of the interest of purchasers and for matters connected therewith; 
  • regulation 11(2) of the HDR prohibits the collection of booking fees (howsoever called or described), and in the instant appeals, the developers have committed an illegal act in securing the contracts. Hence, if developers attempt to secure an early bargain through the illegal collection of booking fees, then the protective veil cast by legislature over the purchasers should operate in a way so as to bind the developers to the booking fees and developers would have to bear the full extent of LAD payable to purchasers consistent with the overall intent of the written law in respect of the late delivery of vacant possession; 
  • in the case, had the developers complied strictly with the terms of the Statutory Contracts, the payment of the initial 10% deposit and the signing of the Statutory Contract would have been done simultaneously and there would be no question of whether the date of calculation of LAD runs from the date of payment of the booking fee or from the formal date of agreement; and 
  • the fact that the developers nonetheless bypassed the statutory prohibition against the collection of booking fees and the pro forma agreements being amply clear as to the fundamentals of the agreement, means that a bargain was indeed made at the time of the payment of the booking fee.