Liability of a Developer after the Defect Liability Period in Housing Development (Control and Licensing) Act 1966 (“HDA”) Contracts

When a purchaser buys a property from the developer, either Schedule G, H, I or J (“prescribed forms”) under the Housing Development (Control & Licensing) Regulations 1989 (“HDR”) will be adopted as the sale and purchase agreement. In these forms, one will find the defect liability period (“DLP”) clause.

Key Provisions of the DLP Clause

The DLP clause provides as follows (Clause 27 for Schedule G & I and Clause 30 for Schedule H & J):

"(1) Any defect, shrinkage or other faults in the said Building which becomes apparent within twenty-four (24) months after the date the Purchaser takes vacant possession of the said Property and which are due to defective workmanship or materials or; the said Building not having been constructed in accordance with the plans and descriptions as specified in the Second and Fourth Schedules as approved or amended by the Appropriate Authority, shall be repaired and made good by the Developer at its own cost and expense within thirty (30) days of the Developer having received written notice thereof from the Purchaser.

(2) If the defect, shrinkage or other faults in the said Building have not been made good by the Developer within thirty (30) days referred to in subclause (1), the Purchaser shall be entitled to carry out the works to repair and make good such defect, shrinkage or other faults himself and to recover from the Developer the costs of repairing and making good the same and the Purchaser may deduct such costs from any sum which has been held by the Developer’s solicitors as stakeholders under item 5 of the Third Schedule, provided that the Purchaser shall, at any time after the expiry of the period of thirty (30) days, notify the Developer of the costs of repairing and making good such defect, shrinkage or other faults before the commencement of the works and shall give the Developer an opportunity to carry out the works himself within thirty (30) days from the date the Purchaser has notified the Developer of his intention to carry out the works and provided further that the Purchaser shall carry out and commence the works as soon as practicable after the Developer’s failure to carry out the works within the said thirty (30) days. In such an event, the Developer’s solicitors shall release such costs to the Purchaser from the stakeholder sum held by the Developer’s solicitors under item 5 of the Third Schedule within thirty (30) days after the receipt by the Developer’s solicitors of the Purchaser’s written demand specifying the amount of such costs."

In this respect:

1. DLP is for 24 months after vacant possession;

2. The developer shall at their own costs repair and make good defects notified by the purchaser within 30 days after receiving a written notice thereof; and

3. If the defect is not being repaired or made good within the said 30 days, the purchaser is entitled to carry out the repair works and recover the costs of such repair from the developer.

The Object of HDA and HDR

HDA and HDR are social legislations enacted to protect the purchasers, who are typically in a weaker bargaining position compared to the developers.

This objective is highlighted in PJD Regency Sdn Bhd v. Tribunal Tuntutan Pembeli Rumah & Anor And Other Appeals [2021] 2 CLJ 441, where the Federal Court emphasized that the legislations aim to tip the scales of justice in favour of the purchasers.

In view of the spirit of these legislations, the prescribed forms shall be interpreted in the interest of the purchasers.

Can a Purchaser Sue the Developer for Defects After the DLP?

This issue was considered by the Court of Appeal in the case of Raja Lob Sharuddin Raja Ahmad Terzali & Ors v. Sri Seltra Sdn Bhd [2008] 2 CLJ 284, where His Lordship Azmel Maamor JCA (as His Lordship then was) held that DLP clause is meant to be an additional protection for purchasers, without affecting or limiting their rights under the common law.

As such, DLP clause is an additional protection to the purchasers to ensure that defects discovered during the 24 months will be duly rectified by the developer at their costs, provided that the necessary notices were given.

It does not bar the purchaser from suing the developer for defects after DLP within the limitation period (6 years based on contract). In other words, the purchasers’ rights to sue for defects in breach of contract continue to subsist even after the DLP.

This position was also affirmed by the Court of Appeal in the case of Chrishanthini Angela Regina Sebastiampillai v. View Esteem Sdn Bhd [2022] 1 LNS 2212 and the High Court in the recent case of Badan Pengurusan Bersama Tropicana Bay Residence @ Penang World City V. Mutiara Metropolis Sdn Bhd & Ors [2024] CLJU 1733.

In particular, the Court of Appeal in the case of Raja Lob and the High Court in the case of Badan Pengurusan Bersama Tropicana Bay Residence rejected the developers’ defence based on the lapse of DLP.  

After all, the developers under these prescribed forms are contractually obligated to construct the building in a good and workmanlike manner in accordance with the description set out in the Fourth Schedule and in accordance with the plans approved by the relevant authority in the Second Schedule (Clause 15 Schedule G & I and Clause 14 Schedule H & J).

Therefore, the purchasers can sue the developers for defects after the DLP. However, whether the developers are liable for the defects would be a question to be determined. For instance, whether the defects were due to poor workmanship by the developer or whether they were caused by the purchasers.