The Computation Of Vacant Possession When Payment Is Made By Cheque

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In PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Ors and Other Appeals [2021] 2 CLJ 441, the Federal Court held that vacant possession delivery date is to be computed from the date of booking fee.

What would be the case where the booking fee was paid in the form of a cheque, which was not banked in by the Developer? The recent Court of Appeal in B.U. Development Sdn Bhd v Adeline Tan Kean Sim [2025] CLJU 637 discusses this issue.  

Facts

The purchaser gave the developer a cheque dated 14.2.2016 as part of the initial part payment for property (Booking Fee). However, the developer did not bank in the said cheque. As time passed, the said cheque lapsed and the developer requested 2 more cheques from the purchaser, which were issued on 2.7.2016 and 11.2.2017.

On 3.4.2017, the sale and purchase agreement was executed based on the standard Schedule H of the Housing Development (Control & Licensing) Regulations 1989. An extension of time for 442 days was granted by the Ministry of Housing and Local Government for the Developer to complete construction of the property and to deliver vacant possession to the purchaser. 

Vacant possession of the property was delivered on 31.5.2022. Dissatisfied with the delay, the purchaser filed a complaint with the Homebuyers Tribunal alleging that the developer had delivered vacant possession of the property beyond the completion period of 48 months and sought for liquidated ascertained damages (LAD) pursuant to the terms of the agreement.

The Purchaser’s Claim

The purchaser claimed that the time period to calculate the vacant possession delivery date should start from the date when the first cheque for the Booking Fee was paid, i.e. 14.2.2016. As such, the vacant possession have been delivered within 48 months plus the 442 days of extension granted by the Ministry of Housing and Local Government – which falls on 2.5.2021. However, actual vacant possession was only delivered on 31.5.2022.

The Developer’s Claim

The developer claimed that there was no delay in delivering vacant possession as the time period for vacant possession only started from the date of the agreement. Although cheques (and replacement cheques) were given by the purchaser as part payment of the purchase price, the cheques were not banked in. According to the developer, the last day for delivery of vacant possession fell on 18.6.2022 and as  vacant possession was delivered on 31.5.2022, there was no delay by the developer.

Decision Of The Court Of Appeal

Both the Homebuyers’ Tribunal and the High Court agreed with the purchaser’s contention that time for delivery of vacant possession commenced from the date when the Booking Fee was paid, although the cheques were not banked in by the developer.

The developer appealed against the decisions of the Homebuyers’ Tribunal and the High Court.

The Court of Appeal found that by virtue of stare decisis, they were bound by the decision of the Federal Court in PJD Regency, where it was held that the vacant possession delivery date is to be computed from the date the booking fee was paid. The court observed:  

“In our judgment, the legislative intent was that the initial payment of monies, in the form of a deposit, is sufficient to constitute an intention to enter into a contract, given that the agreement would have to be signed at the same time… Having bound themselves to a bargain by collecting the booking fee and procuring a signed pro forma and top of it being responsible for drafting the final formal agreement, the developers have thereby put the purchasers in a disadvantageous position. The problem this poses is that the developers may abuse the opportunity to put whichever date they wish with a view to extend the date to deliver vacant possession”.

The developer contended that the payment for the Booking Fee had not been collected or received by them as the cheques were not banked in at the material times. However, the court rejected the developer’s argument for the following reasons:

1.               The execution of the contract to purchase, payment of cheque for the Booking Fee and the subsequent execution of the agreement were inextricably connected and should all be read together as it was designed to benefit the developer through pre-selling of the property and to obtain financial security in the event the purchaser reneged her intent to purchase the property;

2.               Although the cheques were not banked in by the developer, the purchaser was tied as she cannot utilise the amount drawn in her bank account for other purposes. It was clear that the developer had continuously secured itself in the sale of the property to the purchaser; and

3.               The agreement was a contract made pursuant to the Housing Development Act (Control and Licensing) Act 1966, which has been recognised in many occasions as a social legislation to protect the weaker party, the purchaser.

The Court of Appeal dismissed the appeal by the developer.

Comments

This decision solidifies the landmark decision in PJD Regency that the date of payment of booking fees, regardless of whether the sale and purchase agreement (SPA) had been signed, is the commencement date for the purpose of calculating vacant possession delivery date and LAD.

With this latest Court of Appeal decision, housing developers face more challenges in balancing between securing enough sales to commence signing of the SPA and commencing construction to ensure timely delivery of vacant possession of the properties.

It is hoped that in light of the recent string of court decisions relating to housing development, the Housing Development (Control and Licensing) Act 1966 together with the subsidiary legislations are updated to reflect the pronouncements made by the courts. This would provide greater clarity to both developers and buyers.

18 June 2025