Property Malaysia

I was mildly surprised to read this article in today’s Star Metro (17 April 2006, page M2) entitled ‘Stalled apartment project gets new lease of life’. The article was focusing on abandoned project Rhythm Avenue apartment project in USJ19. Residents who frequently pass the main road leading to Shah Alam and Putra Heights would know this project, as with those who have heard stories of this place.

I used to follow the proceedings of this project keenly via this local community forum, unfortunately the archives for that website was wiped out due to some problems. Anyway, the project has been a massive heartache for the 1000 or so buyers, who have invested in the 277 retail and 1,039 apartment units. Over 100 meetings have been held over the past 6 years, involving assemblymen, bankers, project receivers, lawyers, local council officers, etc.

The latest news is that the project will be revived by Ambank, who have appointed Mahasalam Group of Companies as the turnkey contractor for the project. According to the article, desperate housebuyers have even lodged police reports, wrote to the then Prime Minister Tun Dr. Mahathir Mohamad for help as well as complain to Bank Negara, Board of Architects (PAM) and the Bar Council for ‘suspected foul play over architectural, engineering and construction approvals granted to the project. They even considered suing the original developer for a refund of the money invested.’

This is a rare success story among many other abandoned projects, at least the families who have invested money in this project and have paying the bank all these years can look forward to the revival of the project. Maybe one day, the same can happen to these cases…

Further reading:
RM100 million (95% progress payment) collected, but project stops…
Hwa Beng’s moves now being watched
Attempts fail to disrupt buyers’ meeting
From the website of CASSA (Consumer Association of Subang and Shah Alam)
Rhythm Avenue buyer threatened with bankruptcy suit
Collection of articles from assemblyman’s website (Plenty of archived documents, in chronological order)

In today’s Star, the front page carried the news of the judgement of the Federal Court that the Ampang Jaya Municipal Council (MPAJ) was not liable for losses suffered by 73 residents of two blocks of the Highland Towers condominium who had to evacuate after the collapse of Block One 13 years ago, killing 48 people.

The three-member panel consists of Chief Judge of Sabah and Sarawak Justice Steve Shim Lip Kiong and Federal Court judges Datuk Abdul Hamid Mohamed and Datuk Arifin Zakaria.

According to the report:

They said local authorities such as the MPAJ were given full immunity under Section 95 (2) of the Street, Drainage & Building Act 1974 (Act 133) from claims for the pre-collapse period. The court was unanimous in allowing the MPAJ’s appeal to set aside the Court of Appeal’s decision holding the MPAJ 15% responsible for the pre-collapse period.

As for the post-collapse liability, it dismissed with a 2-1 majority the cross-appeal by the 73 residents of Block Two and Three against the Court of Appeal’s ruling that the MPAJ was not liable for losses suffered during the post-collapse period. Justice Shim gave a dissenting judgment.

Justice Abdul Hamid Mohamad said that if the local councils were made liable, it would open the floodgates to further claims for economic loss, and this would deplete the council’s resources meant for the provision of basic services and infrastructure.

But what really interested me was the views of the dissenting judge, Justice Shim. He said the MPAJ could not seek shelter in Section 95(2) of the Street, Drainage and Building Act because this was a case of negligence in failing to formulate and implement the master drainage plan so as to ensure the stability and safety of the adjacent Blocks Two and Three.

He said there was an assumption of responsibility by the MPAJ to do what it had promised.

“I do not think it would be in the public interest that a local authority such as the MPAJ should be allowed to disclaim liability for negligence committed beyond the expansive shelter of Section 95(2) or other relevant provisions of the Act nor would it be fair, just and reasonable to deprive the respondents of their rightful claims under the law”

There was also a side bar on reaction by the ex-residents of the Highland Towers. I won’t go into the article, but we suggest you read it here. We it, we could not help feeling the sense of defeat and helplessness the residents felt after 12 long years of struggle and setbacks to achieve some sort of closure for the great loss they had gone through.

It’s been 12 years since it happened, my friends. When it it the news, some of us were still in university. But it still remains of the the biggest tragedy in Malaysian social history, and the longer the members of Property Malaysia work immerse ourselves in this industry, the more feel the impact of this tragedy.

But hopefully, this will finally close the book on the case, and hopefully again, Malaysians will learn from our past mistakes.

Further reading:

This morning, we came across this excellent write up, with some legal case studies on the issue:

Highland Tower Collapse

You can also check out the articles of interest:
Implications of the Highland Towers Judgment in Relation to the Duties of Building Professionals in Malaysia
The Highland Towers Judgment - Civil Suit No. S5-21-174-1996
Highland Tower Episode Closed

We got this from REHDA’s website, fairly useful for people who want to get nitty-gritty on certain particular issues.

Most or all of these books can be found in big bookshops like MPH or Times, if not, those old bookstores on Jalan Tuanku Abdul Rahman would have.

for starters, we recommend the HDA, Strata Titles Act, and Local Government Act. Not easy reading though, you need to know what you’re looking for…

LAWS AND REGULATIONS RELATING TO REAL ESTATE AND HOUSING DEVELOPMENT INDUSTRY

Ministry of Housing and Local Government

Housing Development (Control and Licensing) Act 1966
Housing Development (Control and Licensing) Regulations 1989
Housing Development (Housing Development Account) Regulations 1991
Housing Development (the Tribunal for Homebuyers Claims) Regulations 2002
Housing Development (Compounding of Offences) Regulations 2002

Local Government Department

Street, Drainage and Building Act 1974 (Act 133)
Town and Country Planning Act 1976 (Act 172)
Town Planners Act 1995 (Act 538)
Local Government Act 1976 (Act 171)
Road Transport Act 1987 (Act 333)
Control of Rent (Repeal) Act 1997 (Act 572)
Control of Rent Act 1966 (Act 363) (Revised 1988)
Federal Territory of Kuala Lumpur Land Rules 1995
Uniform Building By-Laws 1984
Malaysian Constitution, Schedule 9, Item 76(4) & 95(A)

National Housing Department

Street, Drainage and Building Act 1974 (Act 133)
Uniform Building By-Laws 1984

Fire Services Department
Fire Services Act 1988 (Act 341)
Uniform Building By-Laws 1984

Department of Town and Country Planning, Peninsular Malaysia

FMS Town Board Enactment (Cap 137) Chapter IX
National Land Code Act 56 of 1965
National Land Code (Penang and Malacca Titles) Act 1963 (Act 518)
Street, Drainage and Building Act 1974 (Act 133)
Strata Titles Act 1985 (Act 318)
Town and Country Planning Act 1976 (Act 172)
Uniform Building By-Laws 1984

Sewerage Services Department

Sewerage Services Act 1993 (Act 508)

Other Related Legislation

Communications and Multimedia Act 1998 (Act 588)
Continental Shelf Act 1966 (Act 83)
Electricity Supply Act 1990 (Act 447)
Energy Commission Act 2001 (Act 610)
Environmental Quality Act 1974 (Act 127)
Food Act 1983 (Act 281)
Land Acquisition Act 1960 (Act 486) (Revised 1992)
Land and Mining Plans and Documents (Photographic Copies) Act 1950 (Act 233) (Revised 1980)
Land Conservation Act 1960 (Act 385) (Revised 1989)
Lembaga Pembangunan Industri Pembinaan Malaysia Act 1994 (Act 520) (Construction Industry Development Board / CIDB)
Malaysian Communications and Multimedia Commission Act 1998 (Act 589)
Mining Enactment (FMS Cap 137)
Municipal Ordinance S.S. Cap 133
National Land Rehabilitation and Consolidation Authority (Incorporation) Act 1966 (Act 398) (Revised 1989)
Occupational Safety and Health Act 1994 (Act 514)
Pengurusan Danaharta Nasional Berhad Act 1998
Real Property Gains Tax Act 1976 (Act 169)
Urban Development Authority Act (Act 46)
Waters Act 1920 (Act 418) (Revised 1989)
Waters Enactment FMS Cap 146

Any foreigner buying property in Malaysia is required to get approval from the FIC (Foreign Investment Committee) and the State Authority. The FIC is part of the EPU (Economic Planning Unit) in the Prime Minister’s Department (JPM).

But before we go any further, who qualifies as a ‘foreigner’? (please insert your own AOR rock band joke here)

• Someone who is a not a Malaysian citizen; or a PR of Malaysia; or,
• A foreign-owned company or institution incorporated outside Malaysia; or,
• A local company or local institution with more than 50% of shares held by (i) or (ii) above.

According to the FIC, foreigners can only purchase properties valued more than RM150,000 and above, but there is no limit to how many units a foreigner may buy.

Foreigner on-selling to another foreigner requires to approval from FIC, if on-selling to a Malaysian individual / corporation, no approval necessary, but FIC need to be notified.

Some state authority approvals are specific, it would be best to check with them for a particular project you are interested in. Usually the developer can obtain the info for you. If you have queries for them, a good place to start would be the website for the Department of the Director of Land Office. (It’s in Bahasa Malaysia, though).

Most of you would have read sad story of the 8-year old girl who drowned in a condominium swimming pool in PJ two days ago. Her foot got sucked into a drainage hole at the bottom of the pool wall. The Star ran the article.

We are deeply saddened by this incident, and we our condolences go out to the parents and family members.

Two of my friends have actually bought units in the newly completed apartment, one was them was actually moving in when the incident occurred.

(We wish to emphasize that this entry is only our sincere opinion, we do not represent any party related to the family or developer)

I was asked by one of them, “Can the family sue the developer?”

After discussing with a few legal experts, the answer is ‘yes’ and ‘no’.

Without going into too much detail, patrons using any public or semi-public amenities (like condominium facilities) are bound by the house rules or terms or usage usually displayed in the premises. This is common in swimming pools, outdoor parks and carparks (where it is usually printed on the back of the ticket).

In addition to that, the management corporation of condos usually include specific clauses in the handbook for residents or the Deed of Mutual Convenant (if applicable) indemnifying them of any damages, injuries or losses.

These are usually signed by purchasers together with the S&P agreements. Buyers can query the developer regarding these issues before signing these documents, their lawyers should be able to explain them to you clearly.

If this is the case, the developer is reasonably well protected against lawsuits. But of course, this is not a cut and dry protection, every case warrants a careful study of the contractual documents.

Having said that, the developer CAN still be sued if:
• The developer can be proven to be negligent in any way to have caused the death/loss;
• There is an inherent flaw in the design of the pool that makes it unsafe for use.

Basically, the law can only cover the developer so much, if there is substantial evidence that the developer can be held responsible, nothing can stop them from being sued.