Category Archives: Article

Scheme of Arrangement (SOA) in the Rehabilitation of Abandoned Housing Projects: A Case Study of Malaysia

Md Dahlan, Nuarrual Hilal (2013) Scheme of arrangement (SOA) in the rehabilitation of abandoned housing projects: A case study Of Malaysia. Asian Studies International Journal, 1 (1). pp. 36-53. ISSN 2279-1949

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Abstract

If a company is insolvent and is unable to pay its debts, it may be subject to a scheme of arrangement (SOA) on the application of the creditors or members or the liquidator or the company itself. The usual purpose of SOA is for the SOA manager to take over the affairs and business of a debtor insolvent company in order to settle off the debts of the creditors and once all the debts are fully paid, the control of the debtor insolvent company will be handed over back to the previous management. The SOA manager is armed with certain powers and duties in the SOA administration. The benefit of obtaining SOA is to give some time to the SOA manager to run the debtor insolvent company in order to settle its debts. Moratorium power will be given to SOA Manager against any actions and proceedings by the creditors in the course of the SOA administration. This moratorium power is to allow the SOA manager to exercise the SOA effectively without any interference by the creditors and the members of the debtor insolvent company. In respect of insolvent housing developer company which becomes subject to SOA, similar duties are carried out by the appointed SOA manager, viz to take over the affairs of the company, to settle off all the debts of the creditors, to carry on any project and business left by the company if this is expedient in accordance with the law and the wish of the creditors or the members. Once all these have been dispensed with, the affairs and management of the company will be handed back to the previous management.

Keywords: Scheme of Arrangement (SOA); Insolvency Administration; Rehabilitation; Abandoned Housing Projects; Grievances of Purchaser.

Doctrine of laches and its application in actions founded on contract in Malaysia

Md Dahlan, Nuarrual Hilal (2002) Doctrine of laches and its application in actions founded on contract in Malaysia. Malayan Law Journal, 2 (2002). Ixxx-xcvi. ISSN 0025-1283

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In a remedial contractual action, the limitation period plays an important part before one commences an action against the defaulting party to a contract. The provision of a limitation period to enforce a contract is found in section 6 of the Limitation Act 1953 (‘the Act’). By virtue of this provision, one has to commence remedial action either in the form of specific performance or damages within six years from the date of accrual of the cause of action, failing which his action is deemed to have failed and shall be struck out by the court. Apart from this, at common law and in statutory footing under the Malaysian Limitation Act 1953 (Act 254), there is another equitable doctrine that could affect the plaintiffs action.This doctrine is called the doctrine of laches.In short, this doctrine states that if the plaintiff commences an action with unreasonable delay (laches) after the accrual of the cause of action, his action will be defeated.

Keywords: Doctrine of Laches; Contract; Limitation Period; Equity.

Shariah and legal issues in house buying in Malaysia: The legality of Bay’Bithaman-Al-Ajil(‘BBA’) with special reference to abandoned housing projects

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Md Dahlan, Nuarrual Hilal and Syed Abdul Kader, Sharifah Zubaidah (2011) Shariah and legal issues in house buying in Malaysia: The legality of Bay’ Bithaman al-Ajil(‘BBA’) with special reference to abandoned housing projects. Pertanika Journal of Social Sciences & Humanities , 19 (2). pp. 349-361. ISSN 0128-7702

Abstract

The primary duties of Islamic banks and financial institutions in Malaysia are to carry out Islamic banking and financial activities and to offer products that are in accordance with the Islamic teachings. These products are subject to the scrutiny and approval of Bank Negara’s Shariah Advisory Council (SAC) and the internal Shariah Advisory Bodies (SAB) or the Shariah Committees of the respective financial institutions.Despite having been in existence for more than 25 years, in the authors’ view, it is still questionable whether or not the Islamic banks and financial institutions in Malaysia have been satisfactorily carrying out these duties. One area worth examining is the transaction involving house buying, particularly the one that falls under the purview of the Housing Development (Control and Licensing) Act 1966 (Act 118) and transactions involving houses pending completion. This paper examines this area of transaction and the loan agreement, affected via Bay’ Bithaman al-Ajil (BBA), provided by Islamic banking and financial institutions in Malaysia.The purpose is to see to what extent the sale and purchase agreement and the loan agreement have complied with the requirements of the Islamic Law in protecting stakeholders and to provide practical suggestions to improve the existing practice.The paper concludes that the current practice of the BBA contradicts with the teachings of Islam and should therefore be modified and revamped until it is fully able to protect the interests of the purchasers/borrowers.

Keywords: Bay’ Bithaman al-Ajil, Gharar al-Fahish, Islamic Banking Law, abandoned housing projects, Malaysia

Comparative legal analysis between the rehabilitations of the failed residential projects of the liquidated housing developer companies in Malaysia and the Republic of Singapore

Md Dahlan, Nuarrual Hilal (2012) Comparative legal analysis between the rehabilitations of the failed residential projects of the liquidated housing developer companies in Malaysia and the Republic of Singapore. Journal for Global Business Advancement, 5 (2). pp. 126-149. ISSN 1746-966X

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Abstract

This paper discusses the liquidation law and practice in the rehabilitation of failed residential projects in Malaysia of the liquidated housing developer companies in comparison with the position in the Republic of Singapore.This paper is the fruit of a legal case studies research funded by the Ministry of High Education Malaysia (MOHE) through the FRGS Grant. The objective of this paper is to highlight the problems in the current liquidation laws applicable in Malaysia and Singapore in the face of the failed residential projects’ problems and the grievances of the purchasers. This paper suggests that there are lacunae in the current law of liquidation and insolvency in Malaysia and Singapore in dealing with the rehabilitation of failed residential projects for protecting the rights of the aggrieved purchasers. This paper also proposes solutions for the lacunae and the problems.

Keywords: liquidation law issues; failed residential projects; rehabilitation; liquidation of housing developer companies; Malaysia; Republic of Singapore.

Issues of Khiyar (option) in housing agreements in Peninsular Malaysia

lestari30Md Dahlan, Nuarrual Hilal (2014) Issues of Khiyar (option) in housing agreements in Peninsular Malaysia. Malayan Law Journal, 1. pp. 1-21. ISSN 0025-1283

Abstract

It is well entrenched in lslamic Law that khiyar is an inherent right of the contracting parties in a contract.This right provides the contracting parties with a right of option to void the contract they entered into if the subject matter of the contract does not comply with the specifications, terms and conditions of the contract.In Peninsular Malaysia, all house purchasers who wish to buy houses built by the licensed housing developers who are subject to the Housing Development (Control and Licensing) Act 1966 (Act 118) and subject to the control of the Ministry of Housing and Local Government (MHLG) are required to use the prescribed housing statutory standard sale and purchase agreements as contained in Schedules G, H, I and J (‘the said agreements’). However after close scrutiny over the said agreements, there is no term of khiyar provided.  Thus, due to the absence of term of khiyar in the said agreements, the said agreements, it is submitted, are null and void under lslamic Law. Likewise, it follows that due to this nullity, the subsequent housing transactions involving loan agreements, effected through Bai’ Bithaman al-Ajil (BBA), Musharakah Mutanaqisah, ljarah Thamma al-Bay’ and Istisna’ used by lslamic banks, may also be affected and are void.This academic paper is a fruit of a completed research undertaken by the author.Its objective is to discuss and explore the issues of khiyar in the said agreements, particularly when the housing projects are abandoned.The author used qualitative legal research methodology to unravel the issues of khiyar in the said agreements.This paper contends that due to the absence of khiyar in the said agreements, the said agreements have not complied with the requirements under lslamic law and could cause the housing transactions and the subsequent loan transactions entered into by the purchasers/borrower, developers and lslamic banks, void too.This paper also provides certain proposals to improve the current terms and conditions in the said agreements in order to render them harmonious with the spirit and intent of lslamic law.

Keywords: khiyar; housing statutory standard sale and purchase agreements; abandoned housing projects in Peninsular Malaysia; housing law in Peninsular Malaysia; lslamic law.

Issues in the statutory housing sale agreements in Peninsular Malaysia: A case study of abandoned housing projects

Md Dahlan, Nuarrual Hilal (2015) Issues in the statutory housing sale agreements in Peninsular Malaysia: A case study of abandoned housing projects. The Law Review. pp. 377-397. ISSN 1985-0891

Abstract

The use of statutory housing sale agreements (“the said agreements”) as enshrined in the Housing Development (Control and Licensing) Regulations 1989 is mandatory for all housing developers in Peninsular Malaysia.The use of the said agreements is to ensure protection to house purchasers against irresponsible housing developers.However, in practice, it is evident that the terms of the said agreements are inadequate to provide purchasers with the required protection particularly in abandoned housing projects. This paper aims to highlight this issue.This paper is also the fruit of a research exercise using legal research and qualitative case study methodologies. It finds that there are certain lacunae in the terms of the said agreements that have caused the said agreements’ inability to face the problems of abandoned housing projects to the detriment of the house purchasers’ rights.Further, there are certain housing transaction practices that have caused grievances to the house purchasers. The author provides, at the ending part of this paper, some proposals to overcome the highlighted problems.This is a part of the initiatives to strengthen the said agreements to become more protective to house purchasers.

Keywords: Statutory housing sale agreement, issues, abandoned housing projects, Peninsular Malaysia, grievances to purchasers.

Malaysia: Islamic Banks Urged To Be Sympathetic To House Buyers

From: http://islamic-finance-malaysia.blogspot.com/ (accessed 18 October, 2012)

KUALA LUMPUR: Islamic banking players have been urged to be sympathetic to house buyers of abandoned projects and not burden them with debt as it may lead to bankruptcy.

Malaysian Muslim Consumers Association (PPIM) financial services monitoring bureau chief, Sheikh Abdul Kareem Said Khadaied said many house buyers face legal action filed by Islamic banking players demanding high payment for uncompleted houses.

Sheikh Abdul Kareem, who was the third panel member, said as an Islamic entity, banks should think of problems faced by Muslim consumers and the officers should discretion to help the house buyers.

PPIM activist Shirazdeen Adam Shah served as forum moderator with Bank Islam Malaysia Bhd sharia division head, Ustaz Mohd Nadzri Chik as second panel member and Bank Muamalat Malaysia Bhd former chief executive officer, Datuk Abdul Manap Abdul Wahab as fourth panel member.

First panel member was Dr Nuarrual Hilal Md Dahlan, director of Institute for Governance and Innovation Study, Universiti Utara Malaysia (UUM).

Nurrual said Bank Negara should improve Islamic banking to benefit consumers, especially buyers of houses in abandoned projects.

The government should compel all private developers to complete the houses and sell them by including warranty insurance to avoid problems.

He also urged consumers to buy from government developers like Syarikat Perumahan Nasional Berhad (SPNB) to avoid the risk of bankruptcy.

(Borneo Post Online / 15 Oct 2012)

ISSUES OF KHIYAR IN CONTRACT: A CASE STUDY OF THE HOUSING STATUTORY STANDARD SALE AND PURCHASE AGREEMENTS IN THE HOUSING DEVELOPMENT (CONTROL AND LICENSING) REGULATION 1989 IN PENINSULAR MALAYSIA

INTRODUCTION

It is well entrenched that the application of the statutory standard formatted sale and purchase agreements (Schedules G, H, I and J (hereinafter referred as ‘the said agreements’)) as provided in the Housing Development (Control and Licensing) Regulations 1989 (‘Act 118’), is mandatory for all house purchases in Peninsular Malaysia pursuant to regulations 11(1) and 11(1A) of the Housing Development (Control and Licensing) Regulations 1989 and the principles decided in Rasiah Munusamy v. Lim Tan & Sons Sdn. Bhd [1985] 2 MLJ 291, Sea Housing Corporation Sdn. Bhd v. Lee Poh Choo [1982] 2 MLJ 31 (FC), Kimlin Housing Development Sdn. Bhd. (Appointed Receiver and Manager) (In Liquidation) v. Bank Bumiputra (M) Bhd. & Ors [1997] 2 MLJ 805 (FC) and MK Retnam Holdings Sdn. Bhd v. Bhagat Singh [1985] 2 MLJ 212.

Parliament enacted the Housing Developers (Control and Licensing) Act 1966 (Act 118) for the purpose of protecting the rights of the purchasers. In Khau Daw Yau v. Kin Nam Realty Development Sdn. Bhd. [1983] 1 MLJ 335, HC, VC George J, at page 341, said:

‘The scheme of the Housing Developers (Control and Licensing) Act 1966, and the Rules of 1970 is to provide a measure of protection to purchasers of housing accommodation in a housing development against unscrupulous developers’.

1) Whether the said agreements contain khiyar terms?

2) Whether the said agreements comply with Islamic Law insofar as khiyar term is concerned?

3) If there is a khiyar term, whether the term is sufficient to protect the purchasers’ rights in abandoned housing projects?

4) If there is no khiyar term in the said agreements, how to formulate a khiyar term that can provide certain protection to the purchasers against the problems of abandoned housing projects?

KHIYAR

Khiyar means a right of the parties to the contract to choose either to proceed with the contract or to void it due to defect found in the subject matter or the subject matter does not comply with the specifications and terms of the contract.

The authority for khiyar is the hadith of the Prophet Muhammad (Peach Be Upon Him) who said: ‘whenever you enter into contract, say to the other party that there shall be no fraud, and I reserve my right of khiyar in three days’. The purpose of the right of khiyar is to protect the interests of both parties to the contract against fraud (ghabn) or risk (gharar).

There are various types of khiyar according to the Muslim jurists. For example, according to the Hanafi school, there are seventeen types, according to the Maliki school there are two, while the Shafiee’ school opines there are sixteen.

Khiyar al-Shart

Khiyar al-’Ayb

Khiyar al-Wasf

Khiyar al-Ru’yah

Whether The Said Agreements Contain Terms of Khiyar?

There is no term for a right of khiyar (a right to nullify the said agreements and request for the return of the money paid and costs (indemnity and restitution)), especially khiyar al-’ayb, in the said agreements.

Similarly, there is no term and condition in the said agreements allowing purchasers to exercise inspection and examination of the completed units to ascertain its fitness and compliance with the terms and conditions of the sale and purchase agreement and the law, before the taking of vacant possession of the purported housing units.

Be that as it may, there are terms and conditions in the said agreements, in regard to the undertaking and covenant by the vendor developer to rectify any defective work, pay corresponding reduction in the purchase price or damages, and to pay late delivery damages. These obligations are provided in:

1) Clause 13 for Schedules G, H, I and J in respect of ‘materials and workmanship to conform to description’;

2) Clause 22 (Schedule G), clause 25 (Schedule H), clause 22 (Schedule I) and clause 25 in respect of ‘Time for delivery of vacant possession’; and,

3) Clause 25 (Schedule G), clause 29 (Schedule H), clause 25 (Schedule I) and clause 29 (Schedule J) in respect of ‘Defect liability period’.

Thus, to a certain degree, it is submitted that, with the above terms, the said agreements have generally complied with Islamic Law, to the effect of protecting the rights of purchasers, despite the absence of khiyar.

Notwithstanding the above, the right of khiyar is guaranteed under Islamic Law given to the contracting parties. This is based on a Hadith of the Prophet (PBUH), reported by Habban bin Munqidh and for avoiding possible commission of gharar. Thus, in this respect, it is opined that the said agreements have not complied with the requirement of the Hadith, for there is an absence of the term of khiyar, especially in the event the project undertaken is abandoned and on the occurrence of other exorbitant risks/fraud (gharar al-fahish) to the housing units purchased by the buyers. This is in line with the Hadith of the Prophet (PBUH) — ‘Those who act not in accordance with our requirement, the act is rejected and those who invent a new thing into our religion, he too is rejected’.

It may be argued that, it is allowed not to provide terms for a right of khiyar in the sale and purchase agreement, so long as there is no possibility for the commission of gharar, thus warranting the legality of the said agreements, according to Islamic Law. In abandoned housing projects and other consequential exorbitant losses, emanating from housing abandonment or otherwise, suffered by purchasers in housing transactions there is actual occurrence of gharar and the gharar is exorbitant (gharar al-fahish), resulting in the said agreements being void on part of the government and the vendor developer, as there is no provision for protection against the occurrence of abandonment and the ensuing grievances. In addition, even if there were terms of khiyar incorporated into the said agreements, despite the existence of a compensatory clause for any defective work becoming apparent within 18 months or 24 months, as the case may be, of the delivery of the vacant possession, these rights are of no use on the ground that the purchasers might not be able to get back the purchase monies paid or the developers fail to carry out the necessary rehabilitation as they have no monetary provision and might have run away escaping from further liability.

Further it is opined, liquidated damages and repairing of the completed building are only applicable if there is only immaterial/minor risk or fraud or defect (gharar al-yasir), not warranting the invocation of the right to exercise khiyar and that the purchasers agree to proceed with the contract, such as the failure of the vendor developer to complete the house on time as promised i.e delay in delivering the vacant possession on the date as promised or certain minor defective substandard works due to poor workmanships undertaken by the developers.

As submitted by the author earlier on, there are certain quarters arguing that the absence of khiyar will not vitiate the legality of the said agreements on the ground of maslahah al-mursalah, istihsan and ‘urf, even though pursuant to the primary legal texts (Quran and Sunnah), the said agreements are considered to be void. The author would like to emphasize that the applications of maslahah al-mursalah, istihsan and ‘urf are only applicable when there is hardship (darurah) to the people and the applications are only ad-hoc and temporary, not permanent. To allow these modes (maslahah al-mursalah, istihsan and ‘urf) of Islamic jurisprudence is to undo the full application and enforcement of the primary legal texts on khiyar and this may warrant the failure to comply fully with the requirements of the primary legal texts (Quran and Sunnah) and cause lackadaisical attitude among the people to comply, seriously, the original shariah legal requirements. This will not be the intention of the Shariah.

The author does not see any hardship if various khiyar were to be incorporated into the said agreements. On the other hand, this term (khiyar) will augment and beautify the said agreements and will achieve social justice and equity (including preserving the rights of the public purchasers against any housing catastrophes such as abandoned housing projects, its consequential losses, serious poor workmanship and other exorbitant risks and defects in housing buildings and other housing woes). In the wider sense adequate terms capable of protecting the rights of consumer purchasers, will increase the public confidence in the legal system, housing law, housing industry in Malaysia and the machinery of the Government. Further, the vendor developer on the other hand will become more responsible by the existence of khiyar terms in the said agreements (for example, to be careful not to abandon the projects and comply fully with the terms and conditions in the said agreements). This suggestion also complies with the mode of sadd al-zara’ in Islamic jurisprudence to prevent the occurrences of gharar (risk), ghabn (fraud) and other losses to purchasers.

It is opined the following should be considered for amending the said agreements in order to be in line with the requirements of Islamic Law, insofar as the right of khiyar is concerned:

1) A right of khiyar arises when the project falls under the definition of abandoned housing unit. It is opined, when housing project is abandoned, exorbitant defect or gharar al-fahish occurs. Right of khiyar should be given to the purchasers (i.e get back all the moneys paid and compensation for losses suffered—restitution and indemnity);

2) However, the right of khiyar does not arise if the delivery of the houses is delayed and it does not fall under the definition of abandoned housing unit or the losses and damage to the purchasers are insignificant, being only gharar al-yasir. In this respect, the purchasers are only entitled to late delivery damages (as statutory or equitable compensation). This is because the delay to deliver the houses is only a light/slight defect (al-yasir);

3) Abandoned housing unit is an exorbitant defect, thus, purchasers of abandoned housing projects have two (2) choices: a) right of khiyar (cancellation of the contract, entitle to refund of all the moneys paid and compensation from the developer for the losses or injuries suffered); or, b) proceed with the contract, provided the housing development insurance, which is imposed on all housing developers can be used to finance the cost of rehabilitation of the abandoned units until their duly completion;

4) In the case of defective workmanship or defect houses in the houses occupied by purchasers found and discovered during the defect liability period, if the defective workmanship or defective house is fahish (exorbitant), the purchasers also have two (2) choices: a) can claim khiyar; or, b) proceed with the contract provided the developer uses housing development insurance to repair the exorbitant defect – defective workmanship or defective house (al-fahish).

In the author’s view, in consequence of the possibility of invocation of the right of khiyar by the aggrieved purchasers above, the vendor developers may guard themselves against the losses caused by the cancellation of the contract with the insurance coverage that they might have held. Likewise, if the purchaser holds insurance against any defective works and losses emanating from the housing transaction, the insurance can cover the losses that he suffers. Possession of insurance is allowed under Islamic law provided this is done based on mutual trade and commerce and be free from unlawful transaction such as riba, corruption, maysir, gharar and from unlawful substances for example wine, blood etc.

Case law

There is a case law relating to the abandoned housing project. In this case, the court allowed the application of the aggrieved purchaser to nullify the agreement entered into with the vendor developer when the project carried out by the vendor developer was abandoned. This case is Diong Tieow Hong & Anor v Amalan Tepat Sdn Bhd [2008] 3 MLJ 411 (High Court at Kuala Lumpur). In this case, the court held that, the aggrieved purchasers to an abandoned housing project is entitled to a recession of the sale and purchase agreement with the defaulting abandoned developer as the developer had abandoned the project. Secondly, the purchasers also are entitled to get late delivery damages calculated from the promised date of delivery of vacant possession until the date of the recession of the agreement. The purchasers also succeeded in obtaining the return of all payment they made to the developer. However, the purchaser in abandoned housing project must serve notice of termination on the defaulting abandoned developer and the land proprietor in a joint venture housing project to entitle him to compensation even though the blame and fault were well proven fell on the vendor’s shoulder. This is illustrated in Zulkepli bin Mohamad Zain & Ors v BCM Development Sdn. Bhd. [2010] MLJU 1165 (High Court of Malaya at Johor Bahru). In this case, a purchaser to an abandoned housing project failed to serve notice of termination of the agreement on the developer and the proprietor of the land (if there was a joint venture). The court held that, if any of these parties (the developer and the proprietor) is not served with the notice of termination, the purported termination will not be recognized under the law. This is because serving of notice on one party alone renders the notice defective and incompetent pursuant to sections 6(a), 67 and 77 of the Contracts Act 1960. Following this failure, the purchaser is not entitled to any compensation and damages from the defaulting abandoned housing developer, even though the developer had breached the terms and conditions of the agreements, by abandoning the project.

Thus, bearing on the above case law, it is a high time and appropriate for the government to incorporate right of khiyar into the said agreements, in case the project undertaken by the vendor is abandoned. This is to protect the inherent right of the purchasers in abandoned housing and the purchaser would not to be burdened with the technical legal requirement as seen in Zulkepli bin Mohamad Zain.

RECENT DEVELOPMENT ON MEASURES TO DEAL WITH ABANDONED HOUSING PROJECTS

Recently the Malaysian government has announced certain measures to deal with the problems of abandoned housing projects. This includes the proposed amendments to Act 118. The proposed amendment is this–any housing developers who have abandoned their abandoned housing projects will be subject to a criminal penalty. This will come into effect with the enforcement of the new amendment to Act 118 that all licensed housing developers who failed to complete a housing project or have caused the abandonment of the project shall be deemed to have committed a criminal offence. Upon conviction, such a developer is liable to a fine of not less than RM250,000.00 and not more than RM500,000.00 or to be jailed up to three years, or both. This is provided under a new section in Clause 9 of the Housing Development (Control and Licensing) (Amendment) Bill 2011. Apart from that, Clause 5 of the bill, which is aimed at replacing Section 8A of Act 118, will also give the buyer the rights to terminate the sale and purchase agreement if the developer refused to continue implementing the project after six months from the date of the agreement. Furthermore Clause 3 of the Bill, which is aimed at amending Section 6 of Act 118, states that the deposit to obtain housing development licence to be increased from RM200,000 to three per cent of the estimated cost of the project. This is to ensure that only developers who have sufficient financial ability will be allowed to implement housing projects. Clause 8 of the Bill, which is aimed at amending section 16AD of Act 118 to increase the minimum penalty of RM10,000.00 for non-compliance of tribunal award to a maximum of RM50,000.00. On the other hand, clause 6 is aimed at amending sub-section 16N (1) of Act 118 to give more power for the tribunal to hear claims on a sale and purchase agreement involving unlicensed housing developer. The proposed clause 10, however, aimed at amending section 24 of Act 118 to increase the maximum fines for any violations of the law to RM50,000.00 from RM20,000 previously.

The author commends the above move by the government. However, the above approach in making the abandoned housing developers criminals only serve as a penal measures and not preventive. The best method to arrest the occurrences of abandoned housing projects in Malaysia is by way of introducing the full build then sell concept of housing delivery. The above penal provisions may not be effectual if the enforcement and implementation of the law is weak due to insufficient professional staff, inadequate administrative logistics, insufficient legal and technical knowledge of the staff and inefficient administration of the housing regulatory bodies. Thus, the problems of abandoned housing projects still cannot be totally eliminated.

In another new development involving abandoned housing projects are the initiatives adopted by PEMUDAH. According to PEMUDAH, in order to deal with the problems of abandoned housing project, government should adopt Build-Then-Sell Concept (BTS) in the Malaysian housing industry. Nonetheless BTS has not been defined by PEMUDAH. However, the question is whether this BTS is a “full build then sell” or a “quasi build then sell” concept? If it is a “full build then sell”, i.e the developer is required to duly complete the construction of the houses and only upon the receipt of CF or CCC, will the developer sell the houses, then this proposed BTS is the most appropriate measures to deal with the problems of abandoned housing projects. This method will totally eliminate the problems of abandoned housing projects. On the other hand, if BTS means a “quasi build then sell”, or a “10-90 concept”, i.e the purchaser only needs to pay 10% of the purchase price on the signing of the sale and purchase agreement and the 90% purchase price will only be paid to the developer on the duly completion of the houses, the author is still doubtful and skeptical as to whether this concept can eliminate the occurrences of abandoned housing projects altogether? This is because there is no guarantee that during the course of development using this concept (quasi build then sell or 10-90 concept), the developer will not abandon the project.

PEMUDAH also proposed Home Completion Insurance or Guarantee Scheme to face the problems of abandoned housing projects. In the opinion of the author this is a very good suggestion as this means can settle the problem of insufficiency of fund on part of the defaulting developer and facilitate the rehabilitation by white knights. Nonetheless the details of this proposal are yet to be worked out. It is hopeful that this proposal and its details can be workable and sufficient to deal with the problems of abandoned housing projects satisfactorily.

PEMUDAH in their final proposal also proposed that the schedule of payment for the respective agreements (Schedules G, H, I and J) should be amended. The proposal also aims to ensure that the title and the vacant possession can be made simultaneously.

Other initiatives as proposed by PEMUDAH in order to curb the occurrences of abandoned housing projects are as follows:

1) Proposed the government to apply Build-Then-Sell (BTS) Concept by licensed developers which to be fully implemented by 2015 with the house buyer shariah compliance financing scheme; and

2) Proposed to the government that certain amendment to the of Housing Development (Control and Licensing) Act 1966 (Act 118) be made which included:

• Increase in deposit from RM200,000 to three per cent of total estimated physical development cost which also includes professional fees for the Housing Development Account (HDA);

• House buyers having the option to cancel their Sale and Purchase Agreement (SPA) in the event that the project does not take place within six months of the agreement being signed;

• Extending the House Buyers’ Claims Tribunal (TTPR) scope to enable house buyers to claim damages from unlicensed housing projects;

• Imposing a maximum penalty of RM50,000 from RM20,000 for any offence made by developers to any provision under the Act 118;

• Prosecute developers responsible for abandoned housing projects; and

• Definition of “Housing Developer” has been expanded to include Liquidators where their role is to revive abandoned projects should the developer companies go for liquidation.

The government is also planning to conduct a study to unravel the problems faced by the aggrieved purchasers who are victims in abandoned housing projects. According to the Housing and Local Government Minister, Datuk Seri Chor Chee Heung “A special committee will be formed to look into this issue and to find ways to assist them.” At present, he said, buyers who took housing loans from the government would have their loans cancelled if they became victims of abandoned projects. “They will be considered for another housing loan, or have their four per cent interest rate deferred,” he added.

Further the Minister said, MHLG has taken several initiatives to assist victims of abandoned housing projects. He said the initiatives included providing a verification letter to funding institutions that the projects have been abandoned and assist buyers to discuss how their loans could be resumed after rehabilitation works started. “Such loans would be subjected to the funding institution’s valuation and based on the merits of each case but if the buyer is not assisted, a complaint can be lodged with the ministry which would be referred to Bank Negara Malaysia (BNM)”, the Minister explained. Chor said MHLG has also proposed for a working paper to be presented to the National Economic Council in order for BNM to recommend ways to assist the victims of such projects if the funding institutions fail to give them due consideration. He added that the government and related parties in the industry were discussing holistic ways to best implement the build and sell system.

It is submitted that the proposal that the house buyer be given a right to cancel their sale and purchase agreement (SPA) if his housing project does not take place within 6 months of the agreement being signed if a good move and serve as a khiyar right to them. However, the requirement that this proposal is restricted to a period within 6 months of the agreement being signed is quite inappropriate. There are many housing projects which have become abandoned after 6 months of the signing of the sale and purchase agreement. In this situation (after 6 month of the signing the sale and purchase agreement), the purchaser has no right to cancel the agreement. Thus, this is unfair to the purchasers.

Secondly, none in the above proposals and initiatives mentioning about the need to amend the said agreements in order to render them becoming shariah compliant products, particularly involving the issue of khiyar and proposal for its incorporation into the said agreements and thus can provide better protection to purchasers in abandoned housing projects. Thus, this paper is timely and the author hopes that this writing will further enhance and enrich the existing government and PEMUDAH’s proposed measures and initiatives to tackle the problems of abandoned housing projects and its consequences in particular on the importance of improving the said agreements, including incorporating term of khiyar.

RECOMMENDATIONS AND CONCLUSION

To give better protection to the purchasers, the said agreements should incorporate khiyar terms (option) and damages (liquidated and un-liquidated) due to the abandonment of the housing unit and on the occurrences of exorbitant defective works. The khiyar is a composite of khiyar al-syart, khiyar al-ayb, khiyar al-rukyah and khiyar al-wasf. This khiyar (option) can specifically be invoked on the occurrences of these events i.e when the housing units purchased are abandoned, i.e falls under the definition of “abandoned housing unit” as defined by the Act 118. and the defective works are exorbitant. In respect of other minor defective works, the right of khiyar, it is proposed, would not be given. This is because these minor defective or substandard works done by the vendor developer and the losses of the purchasers should be covered and remedied by the housing developer’s housing development insurance coverage. For this matter to be applicable, Act 118 should be amended by imposing on the applicant housing developers to possess housing development insurance before housing developer’s licence can be granted to them.

The author proposes the statutory definition of “abandoned housing project” be incorporated into Act 118. It is suggested that the following statutory definition of “abandoned housing unit” to be inserted into section 3 of Act 118 are as follows:

Addition to section 3, of Act 118:

‘Abandoned Housing Unit’ means any housing development unit where the developer fails to complete it within one year after the request notice to complete has been served by the Controller to the said developer or in respect of the incapable developer, after the expiry of the period within which a developer shall have to complete the construction of the unit either in 24 or 36 months, as the case may be, in accordance with regulations made controlling the rehabilitation of abandoned housing projects.’

‘Incapable Developer’ means any developer who is in the opinion of the Controller, on whatever reasons, is not able to duly complete or carry out the construction of the purported housing unit during the period within which a developer shall have to complete the construction of the unit either in 24 or 36 months, as the case may be.’

For the purpose of rehabilitating abandoned housing projects, it is proposed that once a problematic housing unit falls under the statutory definition of “abandoned housing unit”, the Minister of Housing and Local Government should order that such a unit be rehabilitated immediately.

From the above suggestions, the following term is proposed to be incorporated in the said agreements respecting the right of khiyar (option) and damages (liquidated and un-liquidated) due to the abandonment and exorbitant defective works. It is proposed new clauses 22B (1) for Schedules G, clause 25B (1) for Schedules H), clause 26B (1) for Schedule I, clause 25B(1) of Schedule J be introduced to incorporate term of khiyar (option), viz:

‘In the event the construction of the said property/building is terminated or abandoned and falls under the definition of ‘abandoned housing unit’ defined under Act 118 and the occurrence of exorbitant defective works, the purchaser shall have a right of option to rescind the agreement with the vendor and entitled to recover back all moneys paid and liquidated and un-liquidated damages for the damage and losses suffered and costs incurred due to the abandonment and exorbitant defective works from the vendor’

By incorporating the above khiyar term in the said agreements, it is the author’s view that the said agreements will be more protective to purchasers in the event of abandonment of their housing projects and on the occurrences of exorbitant defective works.

ISU PENGGUBALAN UNDANG-UNDANG MENGGANTIKAN AKTA KESELAMATAN DALAM NEGARI TAHUN 1960, AKTA-AKTA PENGISYTIHARAN DARURAT, AKTA BUANG NEGERI 1959 (SEMAKAN 1972) DAN AKTA KEDIAMAN TERHAD 1933 – Bahagian Dua

Disebabkan suatu pengumuman rasmi telah dibuat oleh Perdana Menteri baru-baru ini mengenai pemansuhan ISA dan akta-akta berkaitan, pada pandangan penulis, undang-undang yang akan digubal dan akan menggantikan ISA dan akta-akta ini memberi prioriti ke atas aspek keselamatan negara. Di samping itu, undang-undang itu juga perlu mempunyai elemen-elemen yang mendukung nilai-nilai dan hak-hak asasi manusia (human rights) dan penghormatan terhadap hak-hak ini. Antara hak-hak asasi manusia tersebut adalah:

 1) Hak untuk hidup;

2) Hak untuk bebas daripada deraan;

3) Hak untuk bebas daripada perhambaan;

4) Hak untuk mendapatkan perbicaraan adil;

5) Hak kebebasan bersuara;

6) Hak kebebasan fikiran, kesedaran dan beragama; dan,

7) Hak untuk berdebat.

Undang-undang baru yang dicadangkan ini hendaklah mendefinisikan secara objektif apakah itu ’aktiviti-aktiviti yang mengancam dan menggugat keselamatan negara’. Sekiranya perlu suatu jadual yang jelas hendaklah disediakan di dalam undang-undang itu nanti mengenai aktiviti-aktiviti ini. Pada pandangan penulis terdapat pelbagai jenis aktiviti rakyat seharian boleh jatuh ke dalam maksud dan definisi ’mengancam dan menggugat keselamatan negara’. Ini termasuk aktiviti berpersatuan, aktiviti berteraskan agama dan bukan agama, aktiviti perniagaan, aktiviti politik dan bukan politik dan sebagainya, sekiranya sampai ke tahap atau darjah tertentu boleh juga dianggap sebagai menggugat dan mengancam keselamatan negara. Namun begitu, bagaimana kita hendak mengetahui dan menentukan sesuatu aktiviti itu sudah mencapai darjah tertentu dan lantas terjatuh ke dalam maksud undang-undang ’mengancam dan menggugat keselamatan negara’ dan/atau ’perlakuan keganasan (violence and terrorism acts)? Penulis berharap undang-undang baru yang bakal menggantikan ISA dan akta-akta berkaitan boleh menjawab persoalan-persoalan ini.

Sehubungan dengan itu, cadangan bahawa perlakuan-perlakuan keganasan (violence and terrorism acts) memerlukan akta berasingan sebagaimana yang terpakai di United Kingdom, dialu-alukan. Akta ini dikatakan hanya memerlukan kebenaran Menteri Dalam Negeri (KDN) untuk menentukan bahawa seseorang yang dipercayai melakukan kegiatan keganasan (violence and terrorism acts) akan ditahan untuk tempoh tertentu. Tidak seperti ISA di mana apa sahaja aktiviti yang dianggap sebagai ’mengancam dan menggugat keselamatan negara’ akan dikenakan tahanan (detention), undang-undang dan akta baru yang dicadangkan mengenai keganasan ini, pada hemat penulis, perlu lebih spesifik dan bersifat objektif. Akta baru ini perlu mendefinisikan apakah itu ’perlakuan keganasan’ secara objektif and hendaklah juga tertakluk kepada pemeriksaan Mahkamah dan mendukung hak-hak asasi manusia. Dalam hal ini, praktik dan amalan terbaik (best practices) di kalangan negara-negara yang berjaya dalam menangani isu keganasan seperti Amerika Syarikat, United Kingdom, Perancis, India dan Australia perlu dibuat agar akta ini bersifat terkini dan menepati standard antarabangsa.

Bagi mengelakkan penyalahgunaan kuasa oleh pihak polis dan Menteri Dalam Negeri, penulis berpendapat perlu diwujudkan suatu majlis perundingan dan penasihat dalam menentukan sama ada seseorang itu terlibat di dalam kegiatan keganasan (violence and terrorism acts). Majlis ini perlu terdiri daripada pakar keselamatan, pakar undang-undang, pakar sosiologi, pakar kemasyarakatan, ahli politik dan pakar-pakar lain yang sesuai-manfaat. Apa-apa keputusan perlu dibuat secara muwafakat melalui mesyuarat-mesyuarat. Keahlian, kuasa, fungsi dan tanggungjawab ahli-ahli majlis ini juga perlu dijelaskan di dalam akta baru ini. Majlis ini yang akan menasihati Menteri Dalam Negeri dan polis mengenai tindakan yang sesuai dan patut terhadap pihak-pihak yang dipercayai terlibat dalam perlakuan keganasan (violence and terrorism acts). Nasihat mereka, penulis syorkan, akan mengikat Menteri dan pihak polis.

Di samping itu, undang-undang/akta baru ini hendaklah mempunyai peruntukan-peruntukan yang boleh mengimbangi kepentingan menjaga keselamatan negara dan kepentingan melindungi hak-hak asasi manusia. Ia juga hendaklah menetapkan suatu darjah dan keadaan di mana hak-hak asasi manusia itu boleh dikompromi dan tidak akan dilindungi secara se-objektif dan sebaik mungkin. Ini menjadikan undang-undang itu jelas dan ’fitnah’, ’tohmahan’ atau ’persepsi prejudis’ bahawa kerajaan mengharuskan hak-hak asasi manusia dicabuli bagi menjaga keselamatan dapat dikurangkan dan jika boleh, tiada. Dalam hal ini, Malaysia mungkin menjadi pelopor dan juara dalam melaksanakan idealisme ini, mengatasi negara-negara maju yang lain yang sering menepuk dada bahawa mereka adalah jaguh pembela hak-hak asasi manusia.

Dalam merealiasasikan hasrat murni di atas, ingin penulis tekankan bahawa, Malaysia jangan sesekali terperangkap dengan dakyah-dakyah daripada luar, lebih-lebih lagi daripada negara-negara barat, bahawa Malaysia tidak mengamalkan keluhuran hak asasi manusia. Dakyah-dakyah ini sebahagiannya tidak berpijak pada bumi yang nyata yang hanya berpaksikan prejudis dan berat sebelah serta berupa tuduhan-tuduhan liar tanpa bukti bagi memburukkan imej Malaysia. Bak kata pepatah ’sekadar mungkin ada makhluk yang menahan jerat di pergentingan dan merasakan pekungnya perlu ditutup kerana ada agenda tersembunyi’.

Pada pandangan penulis, ya, Malaysia perlu melaksanakan hak asasi manusia tetapi pelaksanaannya itu juga tertakluk kepada kepentingan keselamatan negara, batas-batas budaya, nilai-nilai nusa bangsa, titik-titik sejarah dan paling penting adalah prinsip-prinsip dalam perlembagaan Malaysia itu sendiri. Jangan sampai, kita terlalu beriya-iya hendak memansuhkan ISA dan akta-akta berkaitan serta menggubalkan undang-undang baru yang kononnya dapat menjaga hak asasi manusia, namun undang-undang dan akta-akta baru ini sebenarnya mengundang malapetaka dan menggugat keselamatan negara, tidak melihat kepentingan bangsa, agama, nilai budaya, nilai masyarakat Malaysia dan perlembagaan itu sendiri, secara holistik.

Ingin penulis suarakan di sini, pihak barat selalu mendendangkan ’hak asasi manusia’ iaitu kebebasan manusia. Namun begitu, bagaimana pula dengan hak-hak Tuhan (God’s Rights’)? Adakah mereka memikirkan perkara ini? Sebagai negara Islam, Malaysia juga perlu sedar hak-hak Tuhan (God’s Rights) juga bukan hanya hak-hak asasi manusia menurut kaca mata barat semata-mata. Di dalam menjalankan kehidupan harian, bukan setakat hak-hak asasi manusia itu penting, hak-hak Tuhan itu kalau tidak lebih penting, sama pentingnya dengan hak-hak asasi manusia dan sekiranya boleh diseimbangkan. Dengan perkataan lain, undang-undang/akta-akta baru itu bukan setakat menekankan hak asasi manusia sebagaimana yang dicanangkan oleh negara barat, tetapi ia hendaklah merupakan sintesis dan hybrid gabungan nilai tempatan, nilai agama, nilai budaya, nilai sejarah dan elemen-elemen keperlembagaan Malaysia.

ISU PENGGUBALAN UNDANG-UNDANG MENGGANTIKAN AKTA KESELAMATAN DALAM NEGERI TAHUN 1960 (ISA), AKTA-AKTA PENGISYTIHARAN DARURAT, AKTA BUANG NEGERI 1959 (SEMAKAN 1972) DAN AKTA KEDIAMAN TERHAD 1933 – Bahagian Satu

Sebagaimana yang kita telah ketahui baru-baru ini Perdana Menteri Dato’ Seri Mohd Najib Tun Abdul Razak telah mengisytiharkan bahawa kerajaan akan memansuhkan Akta Keselamatan Dalam Negeri 1960 (Internal Security Act 1960) (selepas ini disebut ‘ISA’), Akta-akta Pengisytiharan Darurat, Akta Buang Negeri 1959 (Semakan 1972) (Banishment Act 1959 (revised 1972) dan Akta Kediaman Terhad 1933 (Restricted Residence Act 1933) (selepas ini akta-akta ini selain ISA disebut sebagai ’akta-akta berkaitan’). Antara alasan mengapa ISA dan akta-akta berkaitan itu perlu dimansuhkan adalah berikut:

1) Negara telah mencapai kualiti pembangunan yang memberangsangkan;

2) Rakyat rata-rata telah berpelajaran dan mendapat pendidikan;

3) Sistem perundangan yang mendokong aspek hak-hak asasi manusia.

Sekiranya akta-akta ini yang disifatkan oleh sesetengah pihak sebagai draconian dan arbitrary ini dimansuhkan, Malaysia boleh dianggap sebagai jaguh yang jauh terkehadapan dalam menangani isu-isu hak asasi manusia dan lebih bersifat demokratik berparlimen, melebihi standard sesetengah negara maju yang lain seperti United Kingdom (UK) dan Amerika Syarikat.

Namun begitu, kekuatiran dan kegusaran pada hemat penulis adalah sekiranya ISA dan akta-akta berkaitan ini dimansuhkan, keselamatan negara berkemungkinan mudah tergugat. Undang-undang sedia ada seperti Kanun Keseksaan berkemungkinan tidak berupaya untuk menangani isu-isu keselamatan dan mungkin ’lambat’ untuk secara berkesan menangkis segala gejala-gejala yang memudaratkan keselamatan negara dan rakyat awam. Suara-suara yang membangkitkan usul supaya ISA dihapuskan mungkin tidak berpijak pada bumi yang nyata. Mereka berkemungkinan hanya bersuara agar kerajaan menghapuskan ISA atas dasar kepentingan politik dan sekadar menangguk di air yang keruh. Ditakuti juga terdapat kumpulan-kumpulan yang berniat jahat bagi menimbulkan huru-hara terhadap keselamatan negara akan mula beroperasi serta mengatur langkah-langkah bagi menjalankan dakyah-dakyah kotor, perancangan-perancangan ganas dan operasi-operasi jahat mereka bagi menggugat keselamatan negara lantaran ISA dan akta-akta berkaitan dimansuhkan.

Justeru, pada hemat penulis, pemansuhan ISA dan akta-akta berkaitan adalah tidak tepat. ISA dan akta-akta berkaitan tersebut adalah senjata terbaik bagi menangani isu-isu keselamatan negara secara berkesan. Apa yang perlu adalah meminda beberapa peruntukan yang terdapat di dalam ISA dan akta-akta berkaitan yang dilihat boleh memberi ruang kepada penyalahgunaan kuasa oleh pihak eksekutif dan polis. Pada pandangan penulis, definisi ’menggugat/mengancam keselematan negara’ (threat to national security) perlu diperhalusi dengan menyenaraikan aktiviti-aktiviti yang didefinisikan sebagai ‘menggugat/mengancam keselamatan negara’. Selain itu aspek tenaga manusia, aspek pengurusan dan pelaksanaan undang-undang keselamatan, aspek logistik pentadbiran dalam melaksanakan undang-undang, aspek kecukupan tenaga manusia yang berdisiplin, terlatih dan berdedikasi dan aspek penyeragaman dan koordinasi antara agensi-agensi dan badan-badan yang melaksanakan fungsi dan kuasa menjaga keselamatan perlu juga diperhalusi, dirombak, diperbaiki dan diberikan nilai tambah, agar benar-benar cekap dan efisien dalam melaksanakan tugas menjaga keselamatan negara sehingga memungkinkan keselamatan negara sentiasa terpelihara dan hak-hak asasi manusia terus dihormati. Selain itu, dalam menjalankan keputusan, Menteri Dalam Negeri hendaklah mendapatkan nasihat daripada majlis penasihat yang terdiri daripada pakar-pakar tertentu sebelum keputusan boleh dibuat untuk mengenakan tahanan ISA terhadap seseorang.

Sebenarnya, ISA ini telah diluluskan oleh Parlimen pada tahun 1960 dahulu untuk menangkis dan menangani ancaman komunis (communist insurgency). Namun pada tahun-tahun terkemudian, ISA digunakan untuk menangkap mereka yang terlibat di dalam aktiviti-aktiviti politik, persatuan dan organisasi-organisasi bukan kerajaan bagi menyalurkan kefahaman mereka kepada orang ramai tentang idealisme mereka agar kerajaan tunduk dan menerima apa yang mereka hajati. Secara tidak langsung tindakan bersuara mereka di persada tanah air dan antarabangsa yang dipercayai boleh dan telah membangkitkan suatu gelombang gerakan awam untuk menyokong gagasan dan wawasan mereka sama ada secara fizikal atau secara perdebatan mulut, media dan siber yang boleh pada anggapan pihak polis dan eksekutif menimbulkan ’ancaman dan ugutan terhadap keselamatan negara’ (instigations, provocations and tensions). Contoh yang jelas adalah peristiwa 13 Mei 1969 (melibatkan persengketaan kaum), penyebaran ajaran-ajaran sesat (melibatkan kefahaman agama Islam yang salah), pergerakan al-Arqam (melibatkan kefahaman agama Islam yang salah), penahanan Mohd. Ezam Mohd Noor (melibatkan isu dan politik Anwar Ibrahim) dan peristiwa Memali (melibatkan gerakan politik dan bersenjata).

Mereka-mereka yang dianggap terlibat dalam aktiviti-aktiviti di atas disumbatkan ke dalam tahanan penjara selama beberapa tempoh bagi meredakan ’kehangatan’ dan ’revolusi’ yang mereka pelopori dan agar keadaan persekitaran hasil daripada aktiviti-aktiviti mereka menjadi lebih tenteram dan terkawal. Di dalam penjara, menurut rekod dan maklumat, terdapat tahanan-tahanan yang telah di brainwashed oleh pihak polis dan penjara bagi menyedarkan mereka atau memaksa mereka supaya memberhentikan aktiviti-aktiviti yang dianggapkan sebagai ’menggugat/mengancam keselamatan negara’ sebelum ini. Ada juga di kalangan mereka yang dikenakan deraan secara mental dan fizikal yang telah menyebabkan kecacatan dan ilat lahir dan batin kekal, trauma mental, disisih masyarakat dek stigma ISA dan keruntuhan rumah tangga.