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2011 MarsdenLR 2705
HIGH COURT MALAYA, KUALA LUMPUR
LEE MING CHONG SDN BHD – Appellant
Versus
PRUDENTIAL PROPERTIES SDN BHD – Respondent
[Suit No: D6-22-1569-2001]
A developer must not unreasonably withhold consent to a sub-sale when the purchaser has complied with the agreed terms, establishing a clear limitation on developer's rights to impose additional conditions.
Headnote:(A) Housing Development (Control and Licensing) Act 1966 - Sections 22D(1), 22D(4), and 4.09 of the Sale and Purchase Agreement (SPA) - Developer withholding consent to sub-sale on unreasonable grounds - Plaintiff's claim for loss of profit due to developer's conditions imposed during sub-sale process - Consent to sub-sale cannot be unreasonably withheld, especially when the purchaser complied with stipulated conditions (Paras 12, 18, 28).
(B) Imposition of condition to pay arrears of service charges as a pre-condition to consent ruled unreasonable; ambiguity resolved in favor of the weaker party (Paras 20, 34).
(C) The court emphasized the principle that the right to dispose of property should be free of undue constraint, particularly when there is substantial compliance with agreement terms (Paras 22, 56).
Facts of the case:
The plaintiff purchased an office lot but faced unreasonable demands from the developer while seeking to sub-sell the property due to the lack of strata title issuance. The defendant's requirements exceeded the agreed terms, hindering the sale.
Findings of Court:
The court found the developer's conditions to be unreasonable and recognized the purchaser's right to dispose of the property without undue restrictions; damages awarded for loss of profit were quantified at RM50,000.00.
Issues: The court addressed whether the developer had the right to impose extra conditions for consent and whether the refusal amounted to unreasonable withholding of consent.
Ratio Decidendi: The court interpreted the agreement to prioritize the three conditions set forth in the SPA, while the imposition of further conditions was deemed as unreasonable and contrary to the intentions of the contract.
Result: Plaintiff awarded RM50,000.00 in damages.
| Table of Content |
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| 1. developers face constraints in imposing fees. (Para 1 , 2) |
[1] Parliament had intervened in the unhappy state of affairs of developers imposing all kinds of fees and conditions on purchasers and sub-purchasers when they want to sell their properties to which strata titles have not been issued. The Housing Development (Control and Licensing) Act 1966 (HDA) was amended to allow only the imposition of RM50.00 (s 22D(4)) for the fee that a developer may charge to verify and confirm the beneficial interest of the purchaser and to take away the need for concurrence of the developer to a sub-sale (s 22D(1)) and only requires the developer to be given a copy of the Deed of Assignment (DOA) and other documents (s 22D(2)) presumably for the purpose of updating their record so that the strata title when issued is transferred to the right ultimate purchaser and beneficial owner (s 22D(3)).
[2] However the luxury of such a protection applies to only housing developments under the HDA which cover residential development, shop houses and recently even service apartments. It still leaves purchasers of office lots and industrial lots very much at the mercy of the developer when it comes to obtaining consent for sub-sale with purchasers having to pay as much as 1% of the subsequent sub-sale purchase price not to mention other terms that might be unilaterally imposed. The simmering complaints of purchasers become more strident when it is often the delay caused by the developer that had caused the delay in the issuance of the strata titles. Why should a purchaser who had already paid the full purchase price to a developer be in subservient homage to the developer having to silently stomach all kinds of conditions imposed on the sub-sale. Some purchasers protested softly but the purchaser in this case decided to sue the developer for its losses suffered as a result and to seek the court's pronouncement on the limits of the law where the rights of a purchaser is concerned vis-a-vis a developer in a sub-sale transaction where the strata title has not been issued yet.
