Islamic Banks, Central Bank, Applicable Law & Shariah Advisors in the UAE

Sharjah Islamic Bank UAE

Banks in the UAE offer various types of Islamic banking products including Islamic Home Finance (IHFPs). The demand for IHFPs is due to the awareness of the UAE citizens to obtain home finance products that comply with the requirements of Islamic Law, for examples products that are not based on usury (riba’) and other elements that not compatible with Islamic Law.

The UAE is a civil law country. The governing Law of the IHFPs are the UAE Federal Law No. 5 of 1985 Concerning Civil Transactions (the UAE Civil Code) and Islamic Law pursuant to the UAE Federal Law No. 14 concerning the Central Bank and Organisation of Financial Institutions and Banking (the Banking Law (‘Law No. 14’). The Civil Code is still subject to Islamic Law (Sections 1, articles 1, 2 and 3). For example, pursuant to Section I, Article 1 of the Federal Law No. (5) of 1985 On the Civil Transactions Law of the United Arab Emirates states:

’…In presence of an absolutely unambiguous text, there is no room for personal interpretation. In the absence of a text in this Law, the judge shall adjudicate according to the Islamic Sharia taking into consideration the choice of the most appropriate solutions in the schools of Imam Malek and Imam Ahmad Ben Hanbal and, if not found there, then in the schools of Imam El Shafe’ i and Imam Abou Hanifa, as the interest so requires. Where no such solution is found, the judge shall decide according to custom, provided it is not incompatible with public policy and morals. In case the custom is restricted to a specific Emirate, it shall be effective therein.’(emphasis added).

Among the subject matters that the Law No. 14 deals with are contract, loan, sale of land, ownership, proof, personal obligations, tort, sale, gift, partnership, hire, custodianship, guarantee, the right of ownership, wills, real securities (mortgage) and pledge.

Apart from the above laws, the IHFPs applicable in the UAE are subject to the scrutiny of the supervisory body, i.e. the Central Bank of the UAE (‘CB’) through the Higher Sharia Authority (‘HSA’)  and the Shariah Supervisory Board (‘SSB’) through the Internal Sharia Supervisory Committee (‘ISSC’).

Central Bank of UAE

The UAE’s Constitution identifies shariah (Islamic Law) as the principal source of Law. While the UAE Federal Law No. 5 of 1985 Concerning Civil Transactions (the UAE Civil Code), which is deeply rooted in shariah, recognises the basic Islamic financing contracts, including:

  1. Murabahah (cost-plus financing): Article 506 of the UAE Civil Code;
  2. Mudarabah (trust financing): Article 693 of the UAE Civil Code;
  3. Musharakah (partnership financing): Article 654 of the UAE Civil Code;
  4. Ijarah (leasing): Article 742 of the UAE Civil Code;
  5. While there is no specific article in the UAE law that expressly deals with istisna’, the official commentary to the UAE Civil Code stipulates that the shariah principles of istisna’ are applicable in the case of construction contracts (muqawala), pursuant to Article 872 of the UAE Civil Code.

While the Emirate of Dubai has established itself as an important centre for business and commerce, the laws and regulations applicable to financial products and services (including Islamic finance) are basic – often just providing a mandate for the formation of regulatory authorities to govern the provision of the relevant financial products and services in the UAE. Consequently, the detailed rules, regulation and policies relating to financial products and services are left to the discretion of the relevant regulatory authorities. The internal regulations, policies and guidelines implemented by the authorities relating to the related financial products are not always made public. The pertinent laws to Islamic financial services are, in many cases, diffused in multiple pieces of legislation and the coverage of issues (including consumer protection) is general rather than comprehensive.

The key governmental and regulatory policies that govern the UAE banking sector, including Islamic banks (except in the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market, where the regulatory authorities are the Dubai Financial Services Authority and the Financial Services Regulatory Authority), are the UAE Federal Law No. 14 concerning the Central Bank and Organisation of Financial Institutions and Banking (the Banking Law) (‘Law No. 14’), which came into force on 30 September 2018 (Article 151 Law No. 14).

The Banking Law is the primary legislation giving the UAE Central Bank (‘CB’) the authority to regulate financial services (including Islamic financial services) in the UAE. According to the Banking Law, the UAE Central Bank has the power to license and monitor a wide variety of financial institutions operating in the banking and financial sector in the UAE, including the Islamic financial institutions. (Articles 4 and 15 Law No. 14).

Emirated Islamic Bank UAE

Concerning Islamic financial institutions, permissible activities are not specified in the Banking Law, which provides that ‘Islamic financial institutions’ means financial institutions licensed to undertake all the activities of a commercial bank but following the principles of Islamic shariah. The Banking Law provides that licensed Islamic financial institutions may undertake any of the following activities, provided they are done in a shariah-compliant manner (Article 65 Law No. 14):

  1. taking deposits of all types, including Shariah-compliant deposits;
  2. providing credit facilities of all types;
  3. providing funding facilities of all types, including shariah-complaint funding facilities;
  4. providing currency exchange and money transfer services;
  5. providing monetary intermediating services;
  6. providing stored values services, electronic retail payments and digital money services;
  7. providing virtual banking services;
  8. arranging or marketing licensed financial activities; and
  9. acting as a principal in financial products that affect the financial position of the licensed financial institution, including but not limited to foreign exchange, financial derivatives, bonds and Sukuk, equities, commodities and any other financial products approved by the UAE Central Bank.
Higher Sharia Authority UAE

Article 17 Law No. 14 establishes the Higher Sharia Authority (‘HSA’). The Board of Directors of the CB will appoint the members of the HSA. The source of fund for the establishment and operation of HSA is from a pool fund collected from the financial institutions licensed by the CS. The HSA has a duty to carry out supervisory activities to ensure that the activities, policies and the Islamic banking products in the UAE are in compliance with the Islamic Sharia. The HSA shall determine the rules, standards, and general principles applicable to Shari’ah-compliant businesses and Licensed Financial Activities, and shall undertake supervision and oversight of the Internal Sharia Supervisory Committees of Licensed Financial Institutions. The opinions and fatawa of the HSA shall bind the Internal Sharia Supervisory Committees (‘ISSC’) of Licensed Financial Institutions and the licensed financial institutions. The membership of HSA shall not less than five (5) members and not exceeding seven (7) members, of sufficient knowledge and experience in the jurisprudence of Islamic financial transactions (Articles 17 and 82 Law No. 14).

It should be noted that the CB together with the HSA shall be immune from any legal actions in the exercise of their statutory duties unless the exercise of the responsibility is tainted with bad faith and with intent to harm third parties (Article 25 Law No. 14).

Further, according to Article 111 Law No. 14 the UAE Central Bank (‘CB’) is given the right to intervene in any lawsuit filed involving a financial institution, with the CB to be notified of all such cases.

Dubai Islamic Bank UAE

Each Islamic financial institution must appoint and maintain a shariah committee, called the ‘Internal Sharia Supervision Committee’ (‘ISSC’) (Article 79 Law No. 14). The ISSC shall undertake sharia supervision of all businesses, products, services and the business conduct of the Islamic financial institution, to ensure that its operations and products comply with the rules and principles of sharia, as set by the Higher Authority. The ISSC will review all the proposed financial products and related documents and issue a fatwa on their sharia compliance. Once a financial product has received the approval of the ISSC, it can be offered by the Islamic financial institution to the public in the UAE. If there is any disagreement, either between the members of the ISSC or between the ISSC and the board of the Islamic financial institution in connection with compliance with principles of sharia, the dispute shall be referred to the HSA , whose ruling shall be final. Membership of ISSC shall consist of experienced specialists in Islamic finance and banking transactions jurisprudence (Articles  7 and 82 Law No. 14).

Previously, the adherence to the voluntary standards issued by standard-setting bodies such as the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board varied among individual Islamic banks and financial institutions in the UAE. However, this has changed following the recommendation by the HSA that all banks and financial institutions offering shariah-compliant products in the UAE comply with the requirements of the AAOIFI’s standards with effect from 1 September 2018. For now, Islamic financial institutions continue to seek guidance from their ISSC; this can be problematic when arranging syndicates of Islamic banks or financial institutions, as there may be differences of opinion between the different committees on the application of sharia principles to the financing structure.

In determining whether an Islamic financial instrument is shariah-compliant, the shariah scholars generally adhere to the following process:

  1. review the product concept description created by the product development team;
  2. evaluate the market conditions identified by the product development team;
  3. examine the product development team’s views on the Islamic principles on which the transactions will be based; and
  4. review the product development team’s proposals and issue fatawa.

The product development team then reviews the scholars’ resulting fatawa. It can be followed by a discussion between the scholars and the product development team to finalise the product. The need for a constant dialogue between the product development team and the scholars throughout this process should be stressed. In line with the majority of countries where shariah-compliant financial services are offered, each financial institution in the UAE has its own ISSC, making individual decisions for the institution.

Sources of information and pictures reference (accessed on 24 April 2020) on 24 April 2020) on 24 April 2020) on 24 April 2020) on 24 April 2020) on 24 April 2020) on 24 April 2020) on 24 April 2020) on 24 April 2020) on 24 April 2020)

Taxation transfer pricing law in Malaysia: Salient legal issues

Md Dahlan, Nuarrual Hilal, Jamaluddin, Abu Tariq & Abdul Rahman, Rohana. (2020). Taxation Transfer Pricing Law In Malaysia: Salient Legal Issues. International Journal of Advanced Science and Technology, 29 (6s). pp. 1688-1703. ISSN 2005-4238.


Globalisation and rapid growth of international trade have made intercompany pricing a common consideration for vast majority of businesses. Transfer pricing is not in itself illegal or abusive. What is illegal or abusive is transfer mispricing, also known as transfer pricing manipulation or abusive transfer pricing. Generally, related parties are required to transact on terms which might reasonably be expected to have been made by independent parties engaged in the same or similar transaction at arm’s length. The allocation of profits among different parts of the multinational enterprise (MNE) operating in different jurisdictions is dependent on the outcome of its transfer pricing strategy. It can decide how much tax an MNE pays and to which authorities. To curb manipulation and abuse of transfer pricing, the Government of Malaysia like any other tax jurisdictions, introduced transfer pricing guidelines and law. The first guideline on transfer pricing was published in 2003 by the Inland Revenue Board of Malaysia. Consequently, in 2009, specific transfer pricing provisions were inserted into the Income Tax Act 1967 (ITA). Under the new provision, the Director-General of Inland Revenue (DGIR) is empowered to substitute the price of any transactions entered into by related persons to reflect the arm’s length price of such transaction. The objective of the research writing is to study the legal issues arising from the transfer pricing law in Malaysia. The authors find that imposition of penalty is one of the most prevalent issue resulting from transfer pricing adjustment. It is an accepted tax principle that a taxpayer is entitled to plan his affairs to pay less amount of tax as it otherwise would be. A taxpayer has always been free to mitigate his tax liability. This research writing used qualitative case study and legal research methodologies to discuss and analysis the law and the legal issues of the subject matter. For this purpose, the authors focused on two transfer pricing adjustment cases. An examination was also carried out on the notices of appeal filed by the taxpayers to the Special Commissioners of Income Tax. The ultimate goal is to minimize manipulation and abuse of transfer pricing in the related parties transaction. The research aspires to contribute towards the implementation of a comprehensive transfer pricing law in Malaysia.

Keywords: Taxation Transfer Pricing Law; Malaysia; Arm’s Length; Penalty; Legal Issues.

Full paper:

Resolving Disputes in Abandoned Housing Projects in the UAE

8 April Housing Projects in UAE ada

Incomplete, stalled or abandoned housing projects are not uncommon phenomena in the United Arab Emirates (UAE). The reasons leading to this problematic housing projects are many. Mostly are due to the financial inability of the housing developers to complete the projects. The purchasers will be one of the aggrieved parties in the abandoned housing projects. Their losses include their failure to obtain the completed houses that they purchased, they have to pay monthly instalment to their respective bank financiers, and they may lose all their money for the purchase of the housing units.

In the UAE, there are relevant laws that are capable of dealing with the above problems. These laws are as follows:

  • Decree No. 21 of 2013;
  • Law No. 13 of 2008; and,
  • Executive Council Resolution 6 of 2010.

In the 2000s there was property collapse in the UAE. In response, the UAE government has promulgated certain laws to deal with this problem. On 23 July 2013, vide the Decree 21, the government introduced a law that specifically deals with the management of litigation cases of cancelled projects (incomplete, stalled or abandoned projects). Vide this decree also, a judicial committee is established to determine the issues relating to the failure of developers to refund payment of the aggrieved purchasers.

8 April Housing Projects in UAE RERA adaArticle 11(5) of Law Number 13 of 2008 (‘Law 13’)(as amended by Law No. 9 of 2009) gives the Real Estate Regulatory Agency (‘RERA’) a power to cancel a problematic housing developer’s project. The procedure, conditions and circumstances are laid down in Executive Council Resolution 6 of 2010.

Article 23 of the Resolution sets out nine (9) reasons according to which RERA may cancel a housing development project. The reasons are as follows:

  1. If the developer fails, without any good reason, to commence the construction works although the developer has already obtained all the required approvals from the relevant authorities;
  2. If the developer commits any of the crimes as provided under Article 16 of Law No. 8 of 2007 concerning the escrow accounts for housing developments in the Emirate of Dubai;
  3. If RERA confirms that the developer has no serious intention to perform the project;
  4. If the plot for the intended project is withdrawn due to the breach by the sub developer of any of its contractual obligations with the master developer;
  5. If the plot is fully affected by planning or re-planning projects undertaken by the relevant authorities in the Emirate;
  6. If the developer fails to perform the project due to its gross negligence;
  7. If the developer expresses its intention not to implement the project for reasons satisfactory to RERA;
  8. If the developer declares its bankruptcy; or
  9. Any other reasons as determined by RERA.

Article 27 Law 13 empowers RERA to do all things that can resolve the problems arising from cancellation of housing projects, including the failure of the developer to refund purchasers’ money. This will also include referring the matter to a ‘competent judicial authorities’. Competent judicial authorities mean ‘Judicial Committee’ (‘JC’).  If a housing project has been cancelled by RERA under Article 23 Law 13, then RERA shall give the said housing developer a 7 days to appeal against such a decision of cancellation (Article 24 Law 13). Further, once RERA received the appeal, RERA is given another 7 days to consider the appeal and deliver the final verdict, whether to allow the appeal or dismiss it. If RERA dismisses the appeal, then RERA is under an obligation to appoint an auditor to study the financial position of the project. The auditor is also to ensure that the purchasers will get the refund of payment they made to the developers. The refund must be made in 14 days after the appointment of the auditor (Article 25 Law 13).

If the developer does not have sufficient money or the available money is not sufficient, RERA will request the directors to use their funds to return all payment made by purchasers within sixty (60) days from the date of cancellation of the project, which period can be extended at the discretion of RERA (Article 26 Law 13).

8 April Housing Projects in UAE Dubai Court ada

If the developer is still unable to refund, RERA will hand the matter to the JC (Article 27 Law 13). The JC will liquidate the developer company and accumulate all assets, money and properties of the insolvent developer companies to settle off the debts of the creditors (Article 2A Decree 21; Articles 25 and 26 Council Resolution).

The JC will investigate as to whether the liquidation administration is viable or otherwise for they also have to consider the other secured and unsecured creditors’ claims such as the contractors, suppliers, service providers etc., not just the purchasers’. There may be a situation where the purchasers may not get any money from the liquidation, as there is nothing left. The decision of the JC is final and not appealable (Article 5 Decree 21).

According to Articles 1, 3 and 5 Decree 21, the constitution of the JC should consist of at least three (3) judges from the Dubai Courts. Further, these provisions emphasise the importance of proper jurisdiction and power to deal with the cases brought under the purview of the JC.

Article 2A Decree 21 spells out the purpose of the JC. The JC aims to consider and decide such issues, demands, and claims that may arise between the housing developers and purchasers, whose housing projects have been cancelled. Thus, problematic, delay, stalled, incomplete and abandoned housing projects will not be subjects of the JC for determination.

To assist in the performance of the JC’s duties, Article 2B Decree 21 provides that the JC may do any of the followings without limitation:

  1. To seek the assistance of experts and consultants and in particular from the Dubai Lands Department.
  2. To appoint auditors at the cost of the developer to audit the financial position of the cancelled real estate project and to verify the amounts paid to the developer by the purchasers or deposited in the escrow account of such project and the amounts spent.
  3. To issue such orders to the trustee of the escrow account of the project or the developer, in any issue in connection with the liquidation of the project, including refunding the amounts deposited in the account or paid by the developer to the relevant persons.
  4. To take all the required procedures to secure the rights of the purchasers.

Article 3 Decree 21 establishes the exclusive authority of the JC in relation to cancelled housing projects in the Emirate of Dubai. In particular:

  1. All courts in the Emirate of Dubai, including the Dubai International Financial Centre Courts (DIFC), are prohibited from hearing any matter concerning a cancelled real estate project, and any existing cases are to be referred to the JC to handle; and
  2. Judgments issued before the effective date of the New Decree (Decree 21) by any court in the Emirate of Dubai, including the DIFC, in connection with the liquidation of a cancelled housing development project, must be referred to the JC for consideration.

Judgments, orders and resolutions issued by the JC shall be final and binding, not subject to appeal and can be enforced by the Execution Section of the Dubai Courts (Article 5 Decree 21).

Finally, it is worth noting that the liquidation procedures of real estate projects together with all demands, claims and issues handled by the JC are exempt from court fees (Article 7 Decree 21).

Examples of housing developers whose housing projects have been cancelled by RERA are as follows:

  • Khyool Investment LLC
    Abjar Tower
    Faras 2
  • Reliance Estate Development
    Reliance 1 to 16
  • High Rise Properties LLC
    Dorna Tower
    Orchid Residences
    The Heights-Golden
    Waves Business Tower
    The Heights-Silver
    Rotating Residence
    High Rise Boulevard 1
    High Rise Boulevard 2
  • Hampstead & Mayfair Development Limited
    Hampstead Residences
  • Dujan Properties Ltd
    Eden Blue
  • Escan Tower

Eden Blue Tower UAE 1 ada

Eden Blue Tower

Eden Blue Tower is a skyscraper housing development project carried out by a housing developer known as Dujan Properties Ltd. It is located at Dubai Marina with 28 storeys. The project is adjacent to ‘Ibn Battuta Mall’, ‘The Walk JBR’, ‘Mall of the Emirates’, ‘Burj al-Arab’ and ‘Palm Jumeirah’. The construction of the project was commenced in 2008, but in 2009, the housing developer abandoned the project. The project is now a cancelled project by RERA. The project consists of 402 housing units, and 395 have been sold to public. The price of the units range between AED 200,000.00 (USD 54,458.82) – AED 7 million (USD 1,906,058.54). Majority of the purchasers have paid a substantial part of the purchase price to the developer.

The project land has been auctioned off, and the proceeds will be distributed to purchasers as refund.

Escan Tower UAE ada

Escan Tower

Escan Tower is a project which is of AED 2 billion mixed development 60 storey skyscraper property project. A part of the project is for housing. 20 floors for commercial units, while 40 floors for housing residence. It is located at Sheikh Zayed Road, Dubai. The housing developer was Escan Real Estate PJS. The project if completed, would offer half a million or 570,000 square feet of mixed-use space. The project is adjacent to Burj Dubai.

Escan Tower project was stalled and abandoned. The project is a cancelled project by RERA. The developer also was unable to make a refund to all purchasers. Thus, the project was transferred to the JC for liquidation, settlement and resolution. The JC made the decision on 19 November 2018.

According to the decision, the developer had a mortgage loan of AED 219,250,000.00 from Emirates Islamic Bank in 2009 to finance the development of the project. The mortgaged land was also auctioned off on 2 June 2015, and the proceeds from the auction are used to settle off the banks’ debts. However, the JC found that there is insufficient money to refund all the purchasers’ money.

Upon determination of the dispute, the JC decided to liquidate the project (No. 846 ESCAN TOWER) and distribute the available money according to the followings:

  • The amount of AED 116,181,730 for the mortgagee lender bank Emirates Islamic Bank;
  • The amount of AED 112,294.40 for the House of Lights Real Estate Management LLC;
  • The amount of AED 3,443,480.02 to the investors and purchasers listed in the list attached to the judgment and the amounts indicated by each of them.


  • Whether the Islamic Home Finance (IHF) products offered by Islamic banks in the UAE protect the rights and interests of purchaser customers in the cancelled housing development projects by RERA and that which had been subjected to the JC determination?
  • Whether the conventional Housing Loan Facility products offered by conventional banks in the UAE protect the rights and interests of purchaser customers in the cancelled housing development projects by RERA and that which had been subjected to the JC determination?

Information and picture reference sources: (access on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020). on 8 April 2020).

Housing Delivery System in the United Arab Emirates (UAE) and Related Issues Arising From Housing Transactions


There are two (2) types of housing delivery system that are applicable in the United Arab Emirates (UAE), viz:

  • ‘Full build then sell’, i.e. the housing developer will fully construct the houses before selling them to public purchasers.
  • ‘Full sell then build’ or ‘buying off-plan’, viz, where the housing developers sell the incomplete housing units to purchasers effected through sale and purchase agreement (‘S&P’), purchasers having paid certain amount of deposit, while the balance purchase price will only be paid on the duly completion of the houses and the houses’ titles are ready for due transmission into purchasers’ name.

The terms in the S&P between the housing developers and the purchasers are up to the discretion of the contracting parties. In other words, both parties are at liberty to incorporate whatever terms they wish to incorporate into the S&P to protect their respective rights and interests. Thus, getting competent and expert lawyers is vital in the UAE. This is because there is no specific government law that regulates and governs standard formatted S&P between housing developers and public purchasers. Thus, for unwary purchasers, they may become victims in the S&P.


The dispute settlement and resolution (‘DSS’) arising from the S&P usually is dependent on the terms of the S&P. If there is an arbitration clause, then the disputant parties must settle the dispute through arbitration. If there is no specific DSS mechanism in the S&P, the parties have to resort to court.

In 2015, there was a proposal by the UAE government to provide housing legislation governing public housing development and sales. Further,  in 2019, there are two (2) new laws aimed at boosting investor confidence in the Dubai real estate sector came into force on 18 November 2019. These laws are Dubai Law No. 6 of 2019 on the joint ownership of properties (Joint Ownership Law) and Dubai Law No. 4 of 2019 on the Real Estate Regulatory Agency (RERA Law)


In addition, the proposed law is to regulate and improve transparency in the emirate’s real estate sector, requiring brokers and developers to be licensed and introducing rules to protect purchasers of projects that are not yet completed.

According to the 2015 decree, all housing development projects must be registered with the government along with sales transactions listing the purchasers, although it did not specify when the new rules would come into force. Developments cannot be promoted or sold until they receive government approval. For unfinished or abandoned housing projects, payments by purchases will be held in a separate, ring-fenced account, while brokers will not be allowed to represent more than one party in a single transaction.


It is evident, there are grievances. losses, sufferings, injustices and unfairness done to public purchasers in housing transactions involving housing development projects. For examples:

  • Issues of late delivery of housing units by developer or project delay.
  • Problems of cancelled housing projects.

This type of projects is projects that have been stalled and abandoned due to the inability of the developers to complete the project. The aggrieved parties may consult the Dubai Real Estate Regulatory Agency (‘RERA’) to cancel the abandoned housing projects/stalled housing projects in Dubai. The investors and purchasers will be entitled to refund of all money they paid to the defaulting developers. If the refund amount is insufficient to pay off the investors and purchasers, RERA will oblige the developers to settle from their personal funds. Should the developers fail to refund the amount to investors, RERA may take any appropriate decision against the developers. This includes bringing the matter to the Judicial Committee for liquidation purpose and protect the rights of the purchasers.

  • Problems in the enforcement of court order. Thus, in this situation, the winning aggrieved purchasers or investors only obtained paper judgment, but they are unable to enforce them due to certain problems, or there is nothing left by the insolvent developers to settle off the creditors’ debts.
  • Problems arising from abandoned housing projects or stalled housing projects. The issue of getting refund and compensation may be impossible if the developers run away or have left nothing to cover the creditors’ debts.

Resolving Disputes in Housing Transactions in the UAE

There are certain methods to resolve disputes of housing purchase in the UAE. In Dubai, UAE, the followings are the common methods used:

  • Amicable Settlement Centre (‘ASC’) at Dubai Land Department (‘DLD’)
  • DLD Legal Affairs Department (‘DLD Legal’)
  • Judicial Committee for Liquidation of stalled projects (‘JCL’)
  • Judicial Committee for bounced cheques
  • Arbitration via Dubai International Arbitration Centre (‘DIAC’) and other institutions
  • Rent Disputes Settlement Centre (‘RDSC’)
  • Dubai Property Court
  • Dubai International Financial Centre (‘DIFC’) free zone court.

The aggrieved purchasers and stakeholders are recommended not to use the court process, as this may take a long time to settle and may involve high cost. Instead, court should only be used as a last resort to resolve housing disputes. Often, non-court approaches are preferred because of their speed, costs and convenience. For example, the amicable settlement centre (ASC) at Dubai Land Department, where the appointed mediator will resolve the issues without any fee and the agreed amicable settlement will be binding over the parties.

The JCL is empowered to deal with the abandoned and cancelled projects. JCL too, will liquidate these projects and provide remedies to the victim stakeholders. Settlement through DIAC is another method to resolve housing disputes. Nevertheless, it may involve costs, and in some cases, the arbitration may refer to court for enforcement and other relevant pressing matters that the arbitration has no jurisdiction. On the other hand, Dubai Property court is also a preferred choice to resolve housing disputes. However, it has certain jurisdiction and limitation in respect of the amount of claim. Further, the method may also take some time before the court can issue any decision.


Unlike the above-listed methods, DIFC has its courts and DIFC Law Number 9 of 2004 highlights the roles and responsibilities of DIFC Courts. As opposed to earlier, the Dubai Law number 16 of 2011 permitted the contracting parties to agree to DIFC Court jurisdiction even when there is no connection to DIFC courts. In such cases, DIFC holds exclusive jurisdiction concerning civil and commercial cases, it submitted including housing dispute claims and redresses, falling within the following matters, under the Law Number 9 of 2004, viz:

  1. Commercial or civil claim to which DIFC company is a party;
  2. Any claim arising out of any contract to be performed wholly or partially in DIFC;
  3. Any claim and actions arising out of any transaction which was performed in DIFC or any part thereof;
  4. Appeals against the laws framed by DIFC bodies;
  5. The claim which provides exclusive jurisdiction to DIFC Court under DIFC rules.


  • Whether the Islamic Home Finance (IHF) products offered by Islamic banks in the UAE protect the rights and interests of purchaser customers in housing issues?
  • Whether the conventional Housing Loan Facility products offered by conventional banks in the UAE protect the rights and interests of purchaser customers in housing issues?
  • Whether the insolvency law in the UAE protects the rights and interests of the purchaser stakeholders in insolvency administration of the bankrupt housing developer companies?
  • Whether the corporate takeover, merger and acquisition laws protect the rights and interests of purchaser stakeholders in the corporate takeover, merger and acquisition exercises involving housing developer companies in the UAE?

Information and picture reference sources: (accessed on 3 April 2020). on 3 April 2020). on 3 April 2020). (accessed on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020). on 3 April 2020).











Abandoned housing luxury boutique Cronulla Apartment at 25-29 Tonkin Street, New South Wales

NSW Cronulla Apartment E

Despite there are legal framework and housing delivery system that seem to protect the rights and interests of purchasers against abandonment of housing projects, housing abandonment does still occur in New South Wales. An example of the housing project that falls under the category of abandoned housing project in New South Wales, Australia (NSW) is the luxury boutique Cronulla apartment project at 25-29 Tonkin Street on the shores of Gunnamatta Bay. The development included one to three-bedroom apartments as well as penthouses. It will also have two retail units and underground parking. The project consisted of a 28-unit project and was abandoned six months before the scheduled settlement with buyers.

NSW Cronulla Apartment A

NSW Cronulla Apartment

However, in this housing development project, there is no proof that the pending completion units have been sold to public buyers. There is also no evidence to show any losses, sufferings and grievances to buyers due to the termination of the construction works. This might be that the Administrator has addressed the rights and interests of the buyers after the project was taken over.

The reason for the abandonment was that the developer Lainson Holdings was unable to service the loan to its non-bank lender.  The non-bank lender appointed an Administrator to take over the project and subjected the borrower developer Lainson Holdings into an insolvency administration. The administrators were HLB Mann Judd’s Todd Gammel and Barry Taylor.

One of the reasons as to why the developer was unable to complete the project was that the developer found that there were inadequate purchasers. Thus, the developer was unable to ensure healthy cash inflow and outflow of the project money.

NSW Cronulla Apartment D

It is also reported that the developer Lainson had some disputes with the builder of the Cronulla apartment project. The Administrator has put the half-built project on the market for sale. Colliers International’s Matthew Meynell and Miron Solomons are handling the expressions of interest sale. It is understood only about half of the 28-apartment project has sold through local selling agent Highland Property Agents.

The dispute between the developer Lainson and their builder is reported in Duffy Kennedy Pty Ltd v Lainson Holdings Pty Ltd [2016] NSWSC 371 (Supreme Court). In this case, the plaintiff being the builder employed by the defendant developer Lainson was required to complete the construction of the defendant’s housing development project at Cronulla. This reported case concerned an application by the plaintiff builder for a summary judgment. That contract was made on or about 23 June 2015. The plaintiff builder Duffy sought a judgment for unpaid amounts of progress payments alleged to be due under Part 3, Division 1 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (‘the Act). The amounts claimed were $760,943.41, and in the alternative, $411,942.85. However, the court dismissed the application for summary judgment. The court found that the payment claims were served contrary to the requirement in section 13(7) of the Act, and the defendant should be permitted to withdraw its admission to the contrary. The dismissal of the summary judgment application was due to the failure of the plaintiff builder Duffy to abide by the tripartite agreement between the plaintiff builder Duffy, the defendant developer Lainson and National Australia Bank Ltd (NAB). The agreement stipulated that the plaintiff builder Duffy will be entitled to progress payment if they had provided with a statutory declaration in the form of a supporting statement as required under section 13(9) of the Act. In addition, the plaintiff builder Duffy’s second and third claims had not been supported with the required supporting statements.

Further, the claim pleaded was not the same with the amount of claim that was served on the defendant developer Lainson. These discrepancies in the claims’ service and the pleading were contrary to the requirement under section 13(7) of the Act. The defendant developer Lainson also defended that they were entitled to a set-off for the works that they did in favour of the plaintiff builder Duffy and this set off had not been taken into account for calculating the progress claim. Because of these two failures on part of the plaintiff builder Duffy, their application for the summary judgment was dismissed as the purported application affronted the requirement of the provision under the Act.

NSW Cronulla Apartment B

In another reported case, the developer Lainson Holdings Pty Ltd sued the defendant builder Duff – Lainson Holdings Pty Ltd v Duffy Kennedy Pth Ltd [2017] NSWC 203 (Supreme Court). In this case, the plaintiff developer Lainson sued the defendant builder Duff for 2 declaratory orders, namely:

  1. A declaration that the dispute between the [Builder] and the [Principal], as constituted by the current pleadings in the Expert Determination (the Dispute), is not a ‘dispute’ within the meaning of clause 9 of the [Side Deed]; and
  2. Alternatively, a declaration that on a proper construction of clause 9 of the [Side Deed], the parties did not intend that the Dispute be determined by Expert Determination.”

The legal proceedings was instituted by the plaintiff developer Lainson as the plaintiff was not satisfied with the appointment of an Expert Determination to settle the dispute on the issue of the inability of the plaintiff to secure adequate facility approval to finance and pay the construction costs and works done of the plaintiff’s housing development project at Cronulla pursuant to clause 9 of the side deed. However, the court dismissed the application of the plaintiff on the ground that the term in the Side Deed is clear that if there is any dispute, the dispute should be referred to an Expert Determination.

The plaintiff developer Lainson dissatisfied with the decisions of the court in the above cases again sued the defendant builder Duff on the reasons that the defendant had failed to produce a bank guarantee as security. The plaintiff issued a Notice to Show Cause under clause 39 of their main building contract. Nevertheless, the defendant failed to produce the required guarantee. The plaintiff terminated the building contract. This is reported in Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 576 (Supreme Court).

However, the court dismissed the argument of the plaintiff. According to the court, clause 9 of the Deed mandated an Expert Determination to occur in accordance with specified rules before commencing arbitration or litigation. Under rule 5.1, the expert was required to determine the dispute ‘according to law’. An Expert Determination took place. The expert found that in issuing the Notices, Lainson was subject to an implied condition to act reasonably and in good faith. He found that Lainson had breached this condition and repudiated the contract. Therefore, Lainson was liable to pay Duffy $1, 837, 212 plus interest. The court established that the parties would be bound where the expert did what the contract required. They will not be so bound if the expert exceeded the contract’s limits.

NSW Cronulla Apartment C

Against this background, ‘according to law’ was to be determined objectively using the ‘reasonable person’ test. If ‘according to law’ was construed according to Lainson’s argument, the determination would be open to appeal on any question of law determined, or legal principle relied upon, by the expert. This would create a commercial inconvenience, offending established authorities. Instead, the term ‘according to law’ should be construed to require an expert to determine the dispute in a manner that gives it contractual efficacy and that the law requires of a person in such a position. The expert is to do so honestly, without bias, and while unintoxicated. The court rejected the proposition that expert determination is a ‘record’ in the legal sense (as are records of courts and tribunal, and arbitration awards). Expert Determination is no more than a contractual mechanism. While it creates binding contractual obligations, it does not involve the exercise of judicial power. As such, the determination is not susceptible to the court’s intervention to correct a mistake of law if the expert acts within the ambit of the contract.


  • Whether the Cronulla housing development project was subject to Home Building Compensation Scheme (‘HBCS’) protection?
  • Whether the aggrieved purchasers received State Indemnity from New South Wales Government?
  • Are the aggrieved purchasers’ rights and interests protected?
  • Whether the aggrieved purchasers commenced legal actions against the defaulting developer for legal and equitable remedies?
  • What happened to the purchasers’ rights and interests when the project was sold to the third party purchaser?
  • Did the administrator protect the rights and interests of the purchasers in the abandoned housing projects?
  • Had the aggrieved purchasers received any refund and other equitable reliefs from the defaulting parties and/or from the Administrator?

Sources of information and pictures: (accessed on 29 March 2020) on 29 March 2020) on 29 March 2020) on 29 March 2020) on 29 March 2020) on 29 March 2020) on 29 March 2020)

Australian Dispute Centre. (2019). Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 576. Retrieved from on 29 March 2020)/

Duffy Kennedy Pty Ltd v Lainson Holdings Pty Ltd [2016] NSWSC 371 (Supreme Court).

Lainson Holdings Pty Ltd v Duffy Kennedy Pth Ltd [2017] NSWC 203 (Supreme Court)

Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 576 (Supreme Court).


Housing Delivery System in New South Wales, Australia and Abandonment of Housing Development Projects

NSW Residential Project C

In New South Wales, Australia, (‘NSW’), there exist two types of housing delivery concepts. The first is ‘full build then sell’. The second type is ‘buying off-plan’. Under the first concept, the construction of the houses is duly completed by owner-builders who have owner-builder permits or developers, following the requirements of the law and then they are sold to public purchasers. Thus, under this concept, there is a guarantee that the purchaser will not be aggrieved by any possibility of abandonment. Under the second concept, ‘buying off the plan’ purchasers will need to pay the deposit of the price to the developers while the balance unpaid purchase price will be paid upon the duly completion of the houses. It means that under the concept of ‘buying off the plan’, purchasers buy from developers, the houses that are still pending completion.

‘Owner builder’ means a land proprietor whose land is erected with a residential building. While ‘developer’ means the land proprietor whose land is constructed with four or more residential building units. The joint venture partner of the land proprietor in erecting the residential building unit can also be called a ‘developer’ together with the land proprietor.

Under both concepts, the developers are required to possess Home Building Compensation Scheme (‘HBCS’). The objective of this HBCS is to cover any losses and grievances of the purchaser if the house is not completed due to the inability, death, disappearance and insolvency of the developer to complete the construction of the house. Thus, it is opined, through this method – HBCS, the problems of abandoned housing project and its consequential losses can be minimized in NSW.

NSW Residential Project A

The subject matter and period of coverage of the insurance must include loss arising from non-completion of the work for a period of not less than 12 months after the failure to commence, or cessation of, the residential building works. Other types of losses covered are–structural defect if discovered in 6 years after the completion of the work or the end of the contract relating to the work, whichever is the later. For losses other than structural defect, the insurance can cover defects within 2 years after the completion of the work or the end of the contract relating to the work, whichever is the later. (section 103B(2(b) HBA).  The contract of insurance too must contain a mandatory provision imposing obligation on the part of the insurer to pay any claim once the losses as covered by the policy occurred. For example, in the case of a construction period insurance contract—$340,000 in relation to each dwelling to which the insurance relates, or in the case of a warranty period insurance contract—$340,000 in relation to each dwelling to which the insurance relates.

NSW Residential Project F

Nonetheless, purchasers will not be covered by the insurance coverage if the damage or poor quality of the building occurred after the expiry of the coverage period and the owner-builder or developer is the one who is exempted from possessing the required insurance. Further, there is a certain limit of coverage.

NSW Residential Project B

The obligation of the developers to possess HCBS can be exempted if certain requirements of the law have been fulfilled by the owner-builder or the developer, through application to the Executive Director, Workers and Home Building Compensation Regulation Division, State Insurance Regulatory Authority, New South Wales. The exemption can be due to there are exceptional circumstances, or full compliance is impossible or would cause undue hardship (section 97 HBA; Division 6 of the HBR; State Insurance Regulatory Authority, n.d.c).

NSW Residential Project

The HBCS cover is not required for:

  • residential home building works with a contract price of less than $20,000, including GST
  • work that is excluded from the definition of ‘residential building work’.
  • Work involved in the construction of new multi-storey buildings (buildings with a rise in storeys of more than three and containing two or more separate home units, and where ‘storey’ and ‘rise in storeys’ have the same meaning as they have in the Building Code of Australia of the National Construction Code Series.
  • Certain residential building work in specified types of retirement villages.
  • Contracts to do built-in-furniture work, and any incidental electrical wiring work involved in the installation of lighting as part of built-in furniture.
  • contracts to supply components of kit homes (kit home suppliers do not require a licence or insurance to sell the components of a kit home to a homeowner, as long as the supplier will not be doing any residential building work involved in assembling the house)
  • projects with an exemption approved in writing under section 97 of the Home Building Act 1989 before work starts.
  • House building work is done by or on behalf of public sector agencies from 1 September 2018. An automatic exemption to residential building work done under a contract for public sector agencies will not apply unless the contract specifies that the person is relying on the exemption under section 103E Home Building Act 1989.

NSW Residential Project G

State Indemnity

In NSW, there is a State Indemnity to indemnify insured persons who are victims in housing projects’ works in which the insurer has become insolvent or dissolved, or there is no insurance coverage or other matters that in law the victims cannot get the required coverage (section 103I and 103O HBA).

NSW Residential Project E

Thus, the losses, sufferings and grievances of the purchasers abandoned housing projects in NSW will be covered by the HBCS or if there is none, then the NSW state indemnity will give the required equitable indemnity to the aggrieved purchasers.

The beneficiary (usually the aggrieved purchasers) who are entitled to claim for State Indemnity may claim to the Guarantee Corporation (‘GC’) to pay all the costs for completing the non-completion works and any defective works done.

NSW Minister of Fair TradeGC is a statutory body and body corporate representing the Crown and known in the corporate name as the Building Insurers’ Guarantee Corporation (‘BIGC’). BIGC is constituted under Division 3. BIGC is a fund belonging to GC. GC is managed by the Minister for Fair Trading. One of the functions of the GC is to deal with the residential work claims.

NSW Minister of Fair Trade A

The HBA, empowers the Commissioner for Fair Trading, Department of Finance, Services and Innovation (or the Secretary of the Department of Finance, Services and Innovation) to appoint a suitable person subject to his consent and the consent of the person for whom the work is being done to carry on the supervision and coordination of the uncompleted works left by the earlier developers in the interests of the public, subject to certain terms and conditions he considers fit.

Information and pictures are from the following reference sources:

Home Building Act 1989 (New South Wales).

Home Building Regulations 2014 (New South Wales).

Md Dahlan, Nuarrual Hilal and Md Desa, Rejab (2010) Rehabilitation of abandoned housing projects: A comparative analysis on laws and practices in Peninsular Malaysia, New South Wales and Australia. US-China Law Review, 7 (8). pp. 1-26. ISSN 1548-6605.

State Insurance Regulatory Authority. NSW Government. (n.d.a). Buying off the Plan. Retrieved from (accessed on 23 March 2020).

Fair Trading, NSW Government. (n.d.a). Becoming an owner-builder. Retrieved from (accessed on 23 March 2020).

Fair Trading, NSW Government. (n.d.b). Retrieved from (accessed on 23 March 2020).

State Insurance Regulatory Authority. NSW Government. (n.d.b). What is Home Building Compensation? Retrieved from (accessed on 23 March 2020).

State Insurance Regulatory Authority. NSW Government. (n.d.c). HBC Exemptions. Retrieved from (accessed on 23 March 2020).

State Insurance Regulatory Authority. NSW Government. (n.d.d). Buying off the Plan. Retrieved from (accessed on 23 March 2020).

State Insurance Regulatory Authority. NSW Government. (n.d.e). Buying from Spec Builders. Retrieved from (accessed on 23 March 2020).

State Insurance Regulatory Authority. NSW Government. (n.d.f). Owner-Builders. Retrieved from (accessed on 23 March 2020).

State Insurance Regulatory Authority. NSW Government. (n.d.g). How you’re protected. Retrieved from (accessed on 23 March 2020). on 23 March 2020). (accessed on 23 March 2020). (accessed on 23 March 2020). (accessed on 23 March 2020). on 23 March 2020). on 23 March 2020). (accessed on 23 March 2020).

Building Insurers’ Guarantee Corporation. (n.d.). Annual Report, 2015-16. Retrieved from (accessed on 25 March 2020).

Icare. (n.d.). HIH/FAI Rescue Package. Retrieved from  (accessed on 25 March 2020). (accessed on 25 March 2020). (accessed on 25 March 2020).



2020 NST Covid19 C

Di kala kita berdepan dengan cabaran COVID-19 disebabkan oleh virus corona, adalah baik sekiranya penulis berkongsi maklumat dan pengetahuan mengenai suatu akta yang penting iaitu Akta Pencegahan dan Pengawalan Penyakit Berjangkit 1988 (‘Akta 342’).

Tujuan Akta 342 ini adalah untuk mengawal penularan dan jangkitan penyakit serta pencegahannya oleh kerajaan dan rakyat.

Pada masa ini cabaran penyakit COVID-19 adalah amat mencabar di Malaysia.  Ini adalah kerana, bilangan pesakit sentiasa bertambah saban hari tanpa ada tanda-tanda berkurangan.

2020 NST Covid19 E

Di bawah ini, sukacita penulis ingin berkongsi pengetahuan mengenai pencegahan penyakit berjangkit menurut peruntukan Akta 342.

2020 NST Covid19

Untuk pengetahuan, COVID-19 ini tidak dinyatakan sebagai suatu penyakit berjangkit di bawah Akta 342 ini. Namun, menurut Jadual Pertama Akta 342, ia boleh dikategorikan sebagai penyakit berjangkit yang dibawa oleh microbial yang mengancam nyawa.

Penyakit-penyakit berjangkit lain yang dinyatakan dalam Jadual Pertama ini adalah:

  1. Avian Influenza
  2. Batuk Kokol
  3. Campak
  4. Chancroid
  5. Demam denggi dan demam denggi berdarah
  6. Demam kuning
  7. Difteria
  8. Disenteri (Semua jenis)
  9. Ebola
  10. Jangkitan Gonococcal (Semua jenis)
  11. Jangkitan virus Zika
  12. Leptospirosis
  13. Keracunan makanan
  14. Kusta
  15. Malaria
  16. Middle East Respiratory Syndrome Coronavirus (MERS-CoV)
  17. Penyakit tangan, kaki dan mulut (HFMD)
  18. Plague
  19. Poliomielitis (Akut)
  20. Rabies
  21. Relapsing fever
  22. Sifilis (Semua jenis)
  23. Tetanus (Semua jenis)
  24. Tifoid dan paratyphoid
  25. Tifus dan ricketsioses lain
  26. Tuberkulosis (Semua jenis)
  27. Viral ensefalitis
  28. Viral hepatitis

2020 NST Covid19 B

Penyakit COVID-19 ini boleh dianggap sebagai ‘wabak’ menurut maksud di bawah Akta 342 ini iaitu: “wabak” ertinya kemerebakan sesuatu penyakit dengan bertambahnya kes dalam sesuatu kawasan. (seksyen 2).

Adalah merupakan suatu tanggungjawab pihak-pihak tertentu iaitu orang yang menjaga rumah tumpangan (Hotel & Homestay, rumah sewaan dan sebagainya), penghuni rumah, penjaga rumah, pihak yang bersama pesakit berjangkit, bukan pengamal perubatan yang menjaga pesakit berjangkit, pengamal perubatan, polis dan ketua kampung yang menerima maklumat relevan untuk memberitahu tentang kewujudan penyakit berjangkit yang berlaku di sekitar kawasan kediamannya, mengenai orang yang dirawat dan pesakit yang dalam pengetahuannya menghidap penyakit ini, kepada pihak berkuasa paling hampir tanpa kelengahan tentang jangkitan penyakit dan pesakit itu. Pihak berkuasa ini adalah pusat kesihatan daerah, balai polis dan ketua kampung (seksyen 10)

2020 NST Covid19 A

Sekiranya mereka yang di atas gagal melaksanakan tanggungjawab, maka boleh dianggap sebagai bersalah dan boleh dihukum sekiranya terbukti bersalah di bawah Akta 342 ini. (seksyen 22). Hukuman itu adalah denda dan/atau penjara 5 tahun (seksyen 24).

Mereka juga boleh dikenakan denda kompoun tidak melebihi RM1,000 (Seksyen 25).

2020 NST Covid19 D

Rujukan dan sumber gambar:






Housing Delivery System in the United Kingdom and an Abandoned Housing Project North Point Global Project (‘NPG’) – North Point Pall Mall, Liverpool

2020 UK Liverpool abandoned housing 6

There are two (2) types of residential or housing delivery concept in the United Kingdom (‘UK’). Firstly, ‘full build then sell’ concept. Under this concept, the developer will construct the housing units until duly completion and once completed, only are these units sold to purchasers.

Secondly, in the UK, there is ‘buying new homes off-plan’ or ‘selling off-plan’ concept of housing development. Under this concept, the purchasers are required to pay 10% of the purchase price, and the balance 90% shall be paid on the completion of the house. Under the ‘buying new homes off-plan’, the vendor-developers may obtain a residential insurance home warranty insurance. If in case the construction of the house is abandoned or stopped mid-stream or the developer becomes bankrupt thus terminating the development of the project, the insurance coverage may be utilised to finance the completion or the rehabilitation of the failed and abandoned units.

2020 UK Liverpool abandoned housing 5

2020 UK Liverpool abandoned housing 4

Nonetheless, there is no statutory standard sale and purchase agreement governing residential purchase in the UK. The terms and conditions in the contract of sale of house are dependent on the prudence of the vendor and purchaser or their solicitors. Thus if the vendor developer builder or the purchaser do not possess residential insurance home warranty insurance, and abandonment occurs, the purchaser will become the aggrieved party. However, pursuant to clauses 7.5.1, 7.5.2 and 7.5.3 of the Standard Conditions of Sales (Fifth Ed-2018 revision) if the seller (vendor developer builder) fails to complete the purported housing unit in accordance with a notice to complete (i.e. abandons the construction of the house), the purchaser may rescind the residential contract, and is entitled to the return of the deposit with accrued interest and that the purchaser retains his other rights and remedies against the defaulting seller (vendor developer).

There is also no specific legislation in the United Kingdom, making residential development insurance home warranties compulsory, and there are no statutory builder registration procedures.

2020 UK Liverpool abandoned housing 3

However, in the UK, there is a non-statutory ‘Buildmark’ residential development insurance scheme run by the National House and Building Council (‘NHBC’), being a private association. This insurance covers major defects and against the insolvency of the builder, i.e. when the residential projects fail, this insurance can cover the cost of rehabilitation. The developer builder should possess NHBC buildmark cover.

Other than NHBC, the other warranty bodies, which provide similar protection, are Premier Guarantee, Local Authority Building Control Warranty and Checkmate which provide home warranty. These warranty bodies represent over 95% of the new homes built in the UK. Other than these bodies there are other warranty bodies, for example, the Federation of Master Builders (FMB) and BLP. It is a requirement for mortgage lenders, banks and building societies that the builder and developer must possess home warranty insurance, for otherwise, they will not provide loan mortgage to purchasers.

Another reason as to why housing development insurance is required for all new houses is that it is a standard requirement of the lending institutions in the UK that new residential properties are protected by insurance. Without such protection, the property will become un-mortgageable, and its future marketability adversely affected.

As in the ordinary circumstances, purchasers need to get loan facility from financial institutions to purchase houses and then, in turn, the houses would be mortgaged to the financial institutions as security. It follows that the houses need to be insured to be saleable and mortgageable. Thus, to avoid any possibility of un-saleable houses, it becomes indispensable that the builders/developers need to possess housing development insurance for the houses, be it duly completed or pending completion houses.

2020 UK Liverpool abandoned housing 2

2020 UK Liverpool abandoned housing 1

Thus, it is opined that the problems of abandoned housing projects in the UK can be prevented if the builders and developers possess home warranty insurance. Nonetheless, if the builders and developers do not own the coverage, the rights and interests of the purchasers will be affected if abandonment occurs. This can be seen in the abandoned North Point Global Project (‘NPG’) – North Point Mall, Liverpool, an off-plan housing project. It was launched in 2014 but abandoned since 2016. The Pall Mall site consists of a 2.6-acre site with planning permission for a 4 to 18 storey mixed-use development scheme. Some construction works have already been undertaken in relation to the demolition of the old buildings and the erection of a concrete frame building. The site had been promoted by NPG as a £90m, 366-apartment scheme, and was designed by Blok Architecture.

2020 UK Liverpool abandoned housing 7

This housing development involved apartment units sold to Chinese businesspeople in Liverpool, England, with residential units built alongside leisure units, a luxury spa and Chinese retail space, comprising a  200 million pound sterling scheme. The project was terminated and abandoned as the residential contractor faced insolvency issues and subjected to an administration. The developer builder North Point Global too became embroiled in a legal dispute over payments with the Liverpool City Council, who owns the land. Later, it was reported that North Point Global has been subject to a receivership.

2020 UK Liverpool abandoned housing 8

Until now, the project is still abandoned, and the developer builder is trying hard to refund all payment made to purchasers. As of today, the project is still stalled and that the stalled building is being demolished by Elliot Group who announced that the company had bought the North Point site for an “undisclosed sum” and said it wanted to create a “mixed-use scheme with a range of residential and employment uses”. In January 2020, the Serious Fraud Office announced it had opened a criminal investigation into a suspected fraud concerning three property developments, including the North Point scheme on Pall Mall and the New Chinatown development.

Questions as regards the abandoned North Point Global Project (‘NPG’) – North Point Mall, Liverpool:

  • Whether the aggrieved purchasers have initiated legal actions against the defaulting vendor developer builder?
  • If so, whether they can succeed to obtain legal and equitable remedies? For example, claim for compensation and damages and other equitable remedies.
  • What are the approaches taken by the authority to protect the interests and rights of the aggrieved purchasers?

The sources of information and pictures are from the followings:

Singapore’s Abandoned Housing Projects – Sycamore Tree at Joo Chiat and Laurel Tree near Hillview Terrace

In Singapore, the Housing and Development Board (‘HDB’) of Singapore provides about 80% of public housing, while the private housing developers implement the remaining 20% of housing development. The latter is subject to the Housing Developers (Control and Licensing) Act (Chapter 130) (Original Enactment: Act 4 of 1965).

Nonetheless, within this 20% development, there is still abandonment of housing development projects by the private developers.

For examples are the housing projects Sycamore Tree at Joo Chiat and Laurel Tree near Hillview Terrace.

2020 UOB Singapore Scycamore Tree Joo Kiat Road

2020 UOB Singapore Laurel Tree Hillview Terrace

Astoria Development was the developer for Sycamore Tree, a five-storey block in Joo Chiat with 96 residential units and 17 shops. Lerida Pte Ltd was the developer of Laurel Tree a housing development comprising of a 70-unit condo in Hillview Terrace.

The price of each unit in the development is estimated to be $500k and $600k (Singapore Dollar).

In these two projects, the developers of the projects were insolvent. Thus, they have been subjected to receivership administration. United Overseas Bank (UOB) was the mortgagee of the development lands.

About 183 people were affected when construction of the 70-unit freehold condominium at Laurel Tree and the 96 residential units and 17 shops at Sycamore Tree were terminated and abandoned. The two freehold projects were supposed to have received their Temporary Occupancy Permit in 2016.

Both developers relate to Tan Hock Keng, a former property player. It is evident that Astoria and Lerida all had the same major shareholder and company secretary.

In respect of Astoria Development, it was reported that the delay of the construction was due to the changes in its building methods and disagreement among the contractors regarding the installation of a mechanised carpark system.

Further, an unsecured creditor, Jay Machinery, which makes and rents construction equipment, filed a winding-up application in August last year against Astoria. The developer owes it $1.3 million (Singapore Dollar).

KPMG Service through its three partners led by Bob Yap, took over the Sycamore Tree Project, as receivers appointed by United Overseas Bank (UOB) – the project’s paramount mortgagee.

OUB and the receivers agreed to revive the project provided that the purchasers need to waive the liquidated damages and claim any compensation from the receivers. They also decided not to impose any top-up fund on the purchasers. Instead, the bank said, the purchasers may use the balance loan still not released to complete the incomplete stages to completion. The latest news reveals that the receivers are still searching for suitable contractors to do the rehabilitation works.

It is also revealed that the project accounts (housing development account) of the purchasers’ fund, which were in the hands of the developers were also empty. The Controller of Housing at the Urban Redevelopment Authority (‘URA’) is studying the project accounts of the two projects to check whether money earmarked for them has been misused.

There might be breaches of the statutory duties and the law on the part of the developers in handling the fund in the project accounts. It is opined that the receivers may require the purchasers to top up additional fund to finance the rehabilitation costs, for otherwise, the rehabilitation cannot proceed successfully.


2020 UOB Singapore 2

As of today, the receivers are still in the course of negotiation with the purchasers on certain terms before they agree to proceed with rehabilitation of the projects.

It is reported that while awaiting the completion of the projects, the purchasers are renting other premises.  They also had sought help of Members of Parliament and the URA.

2020 UOB Singapore 4

The Laurel Tree and Sycamore Tree projects involved HDB upgraders, some of whom had sold their flats and are incurring rents while waiting for the completion of their new homes

Questions to ponder:

  • Whether the negotiation terms for the rehabilitation of both projects fair to the purchasers?
  • Whether there are new burdensome costs and new requirements before the Certificate of Statutory Completion (‘CSC’) can be issued by the authority that can affect the smooth running of the rehabilitation?
  • Whether the insolvent and unethical developers punished?
  • What are unfair practices during the rehabilitation process?
  • What are the apparent and hidden losses, grievances and sufferings of the purchasers?
  • Will the purchasers being unsecured creditors get full protection?
  • Has URA implemented the law to protect the rights and interests of the purchasers?
  • How long can the rehabilitation be successfully completed?

References and pictures derived from the following sources:

Grievances, Losses And Sufferings Of Purchasers In Abandoned Shoplot Property ‘Super Taipan’ In Bukit Beruntung, Ulu Yam, Ulu Selangor

The author had an opportunity to meet and discuss the issues of abandoned shop-lot property in Bukit Beruntung with the purchasers recently.

This project has been abandoned since 1997, i.e. more than 20 years of abandonment. The developer was Perwira Indra Sakti Sdn Bhd and was insolvent. The developer was subjected to a Scheme of Arrangement (SOA) and was later wound up by the Court while the land proprietor was Larut Consolidated Berhad.

The project consists of 12 blocks of shop-lot property, where only 50% of them have been completed, while, another half is between 50% – 95% completion.

The purchasers, mostly businessmen and professionals, entered into the sale and purchase agreements with the developer and the land proprietor, in 1997. The properties included shophouses and offices. The range of the prices was between RM 65,000.00 to RM 299,000.00. The end financiers were Citibank and Maybank. There were not final title issued yet. So the bank lenders secured the loan by way of deed of assignment.

The local authority was Majlis Daerah Hulu Selangor. There were about 1,200 units to be built and with only 400 over buyers.

The project was stopped and generally completed at the stage of 95 per cent. It means a 5% loan is still with the lender bank end financiers. Until today no Certificate of Fitness for Occupation (CFO) or Certificate of Completion and Compliance (CCC) has been issued by the authority. According to purchasers, the developer did not apply the CFO or CCC, as they refused to pay Late Ascertained Damages (LAD).

After the developer abandoned the project due to its inability to settle debts of the creditors, the court-appointed liquidator – Messrs HLB Ler Lum took over the management and attempted to settle the debts of the insolvent developer. The court wound up the developer company in 2005.

The purchasers also have made several attempts to get help from the State Government, Ministry of Housing and Local Government (KPKT) and the Prime Minister to revive the project. Nonetheless, of no avail. Likewise, discussion with some developers and third parties to revive the project also have failed.

The awaiting aggrieved buyers expect that some parties can revive the abandoned shop-lot project.  Some of the losses of the buyers are that they have to settle off the bank loan, without having received the keys to the shop lots and occupy the premises. Some of them even did not want to pay the monthly instalment to the bank lender. As a result, some of them are subject to bankruptcy proceedings and execution legal actions.

In the opinion of the author, the rehabilitation of the project cannot proceed as there are hidden liabilities, interests and costs that need to settle before relevant parties can continue with the purported rehabilitation.