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JOURNAL OF VALUATION AND PROPERTY SERVICES

Volume 16

Remedies of Specific Performance for Land Contracts: Legal Development• NorAsiahMohamad&SharifahZubaidahSyedAbdulKader

A Model for Effective and Efficient Dispute Resolution Process for Strata Scheme Disputes in Peninsular Malaysia• FaizalKamarudin

The Impact of the Global Financial Crisis on Publis Listed Property Development Companies of Malaysia, Singapore, Indonesia and Thailand• AbdulRashidAbdulAziz,ChanToongKhuan,LeongBoonTik,NurhafizahYaakob,

AbdullahiUmarAhmed,OlanrewajuAbdullateef

How Malaysian Construction Industry Performs in The International Productivity Comparison• ChiaFahChoy

Determinants of Condominium Prices in Shah Alam• LamTattSoon,SweeJingTang,KennJhunKam,BoonTikLeong

Announcement

Notes to Contributors

NationalInstituteofValuation(INSPEN)ValuationandPropertyServicesDepartment(JPPH)MinistryofFinanceMalaysia

Journal of Valuation and Property Services Vol. 16

Patron ObjectiveSrHjNordinDaharomDirectorGeneralValuationandPropertyServicesDepartmentMinistryofFinanceMalaysia

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JOURNAL OF VALUATION AND PROPERTY SERVICES VOLUME 16

CONTENTS PAGE

Remedies of Specific Performance for Land Contracts: Legal Development• NorAsiahMohamad&SharifahZubaidahSyedAbdulKader

1-11

A Model for Effective and Efficient Dispute Resolution Process for Strata Scheme Disputes in Peninsular Malaysia• FaizalKamarudin

13-28

The Impact of The Global Financial Crisis on Publis Listed Property Development Companies of Malaysia, Singapore, Indonesia and Thailand• AbdulRashidAbdulAziz,ChanToongKhuan,LeongBoonTik,NurhafizahYaakob,

AbdullahiUmarAhmed,OlanrewajuAbdullateef

How Malaysian Construction Industry Performs in The International Productivity Comparison• ChiaFahChoy

Determinants of Condominium Prices in Shah Alam• LamTattSoon,SweeJingTang,KennJhunKam,LeongBoonTik

29-50

51-62

63-71

Announcement

Notes to Contributors


REFEREE PANEL

Sr Dr Yasmin AdnanDepartmentofEstateManagementFacultyofBuiltEnvironmentUniversityMalayaMalaysia

Dr Hasniyati HamzahDepartmentofEstateManagementFacultyofBuiltEnvironmentUniversityMalayaMalaysia

Associate Professor Dr Hera AntoniadesSchoolofBuiltEnvironmentUniversityofTechnologySydneyAustralia

Professor Dr Graeme Newell SchoolofEconomicsandFinanceUniversityofWesternSydneyAustralia

Dr Jasmine Lim Lay ChengUniversityofUlsterJordanstownCampusNorthernIrelandUnitedKingdom

Professor Sr Dr Abdul Rashid Abdul AzizSchoolofHousing,BuildingandPlanningUSM11800Penang,MalaysiaMalaysia

Associate Professor Dr Chyi Lin LeeSchoolofEconomicsandFinanceUniversityofWesternSydneyAustralia

Associate Professor Dr Abdul Jalil bin OmarDepartmentofPropertyManagementFacultyofTechnologyManagementandBusinessUniversityTunHusseinOnnMalaysia

Dr Khadijah Ariffin DepartmentofPropertyManagementFacultyofTechnologyManagementandBusinessUniversityTunHusseinOnnMalaysia


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REMEDIES OF SPECIFIC PERFORMANCE FOR LAND CONTRACTS:LEGAL DEVELOPMENT

*Nor Asiah Mohamad & Sharifah Zubaidah Syed Abdul Kader CivilLawDepartmentAhmadIbrahimKulliyyahofLawsInternationalIslamicUniversityMalaysiaGombak,Selangor

*CorrespondingauthorEmail:[email protected]

Abstract

Thispaperdiscussesthereliefofspecificperformance(SP)anddealswithtypesandnatureofcontractsthat may be ordered by the court to be specifically performed and those that cannot be specificallyperformed.Specifically,thispaperanalysesthecircumstancesinwhichthecourtsdecidetograntSPandnottograntSPfor landcontract.Underthe lawtheremedyofSPisdiscretionary,andsuchdiscretionistobeexercisedaccordingtowellestablishedprinciples.Employingdoctrinallegalresearch,thisstudyanalysestherelevantprovisionsundertheSpecificReliefAct1950andidentifieshowthecourtsappliedtheprovisionstocaselawsthusdevelopingaprecedentonSPforimmoveableproperty.It isfoundoutthattherighttosueforspecificperformanceinequityisquitedistinctfromacauseofactionatcommonlaw. Specificperformanceisgrantedwhentherearecircumstancesjustifyingit. ThegrantofSPisalwayssubjecttoconditions.SPissaidtobethebestremedyforbreachofcontractfor immoveableproperty.Forexample,landisnormallydeemedbythelawtohaveaspecialvalue,thelossofwhichmaynotbeadequatelymeasuredorcompensatedbydamagesormoney (S11(2)of theAct)unlessanduntil thecontraryisperformed.Alltheabovemustbereadsubjecttosection20ofthesameActthatprovidesforcircumstanceswhereSPcannotbegranted.

Keywords:Specific performance, land contract, Specific Relief Act 1950, damages


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1. INTRODUCTION

Whenavendorfailstoperformhispartofcontractrelatingtoland,thepurchasermaychoosetoforcehimtocontinueperforminghiscontractoragreewiththecircumstanceofthevendorandoptsforaremedytocompensatehislosses.Itisthedutyofthelawyertodeterminewhethertheproposedremediesstructurewouldproduceaviableremedyforhisclient.Thus,specificperformance(SP)isatypeofanequitableremedywherethecourtordersthepartiesinbreachtoactuallyperformthecontract.Therearetwooptionseither,remediesunderthelawinmonetaryformorremediesunderequitysuchasSP.SPisgovernedbysections11to29oftheSpecificReliefAct1950(SRA1950)andmustbereadwithotherlawssuchastheContractsAct1950,theNationalLandCode1965andtheRulesofCourt2012,theCompaniesAct1965andtheArbitrationAct2005.Despitethewell-establishedprincipleswithpreferenceforequity,courtshave invariousoccassionsgivepreferencetoawarddamagestoanaggrievedpurchaser.ThismayariseinsituationwhereeitherthepurchaserdoesnotfavourSPorbecausethevendorwasunabletocompletehispartofthecontract.

2. RESEARCH METHODOLOGY

Thisstudyemploysadoctrinalandqualitativelegalresearchwhichinvolvesanalysisofthesecondaryandprimarysourcesof laws.Thismethod involvesanalysisof the relevantprovisionsunder theSpecificReliefAct1950,thecaselawaswellastheequitableprinciples.

3. WHY SP IS A PREFERENCE?

SPofcontractswasfoundedonthewantofadequateremedyatlawbyEnglishCourtofChancery.

4. SP AND CONTRACT OF LAND

TheSRA1950hasclearlyprovided thatunlessanduntil thecontrary isproved, thecourt shallpresumethatthebreachofacontracttotransferimmovablepropertycannotbeadequatelyrelievedby compensation inmoney, and that thebreachof a contract to transfermovableproperty canbe thus relieved(Section 11 (1)(2). Following this, the court has developed alternative remediesforbreachof landcontract i.e. through thepaymentofdamagesor thecombinationofSPanddamages.

5. RESULT AND DISCUSSION

5.1 THE APPLICATION OF THE LEGAL PRINCIPLES ON SP

ThecauseofactionforSParisesduetobreachofcontractandtheplaintiffneedstopayforSPordamages.


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Apart from the statute, the cases also provide for various judicial guidelines on SP. Forinstance,theremedyforspecificperformanceasprovidedinthe SpecificReliefAct1950 isentirelydiscretionary(Sekemas,1989).SPisalsoidealtoenforceanagreement,whetherinwritingornot,forthesaleandpurchaseofaproperty(BankofTokyo,1991).SPwasalsoheldtobeeffectiveinorderingthedeliveryofastratatitle(SyedAzman,1992).

In explaining the problem revolving around SP and emphasizing the importance of theSpecificReliefAct1950(SRA)relatingtoSP,AndrewPhangcommented:“However,bytheirverynature, theprovisionsof theSpecificReliefActgo into farmorespecificdetailsandwouldobviouslybetheinitialaswellasprimaryfocusforanyapplicationofthelawrelatingspecificperformanceintheMalaysiancontext.Itshouldalsobenotedthattheillustrationsto the variousprovisionsareextremelyhelpful inelucidating theoperationof the variousprovisions,butcannot,owingtoconstraintofspace,besetouthere”(Phang,1994).

SPisanequitablereliefgrantedbythecourtinfavourofaplaintiff,tobeenforcedagainstthedefendantorhisrepresentativetoperformwhathehadagreedtodobycontract.ThereliefofSPisonlyallowedwhenthereisnootherreliefwhichwillmeetthecircumstancesofthecase.ThecourtwillonlygrantSPinsteadofdamageswhenitcanbythatmeansensurecompletejustice.

Section11spellsoutcircumstancesforSPwherethecourtmustprima faciebesatisfiedthat the circumstances as below are present andmandatory for the grant of SP:Thecircumstancesare:i. Wheretheactagreedtobedoneisofatrust;ii. WhereSPisgenerallydeniedwheremonetarycompensationissatisfactory;;

iii. When there isnostandard toascertainactualdamage for thenonperformanceoftheact;

iv. Whenitisprobablethatpecuniarycompensationcannotbegotforthenonperformanceoftheact.

Theaboveprovisionhowevermustbereadwithsection20orsection21(2)(a)or(b)oftheSRA1950dealingwithcircumstanceswherecourtcandeclineSP.Itistobenotedthattheexerciseofthediscretionisalwaysgovernedbyfixedrulesandprinciples(Caeser,1984).

5.2 PRESUMPTION THAT COMPENSATION IS NOT AN ADEQUATE REMEDY FOR CASES INVOLVING IMMOVEABLE PROPERTY

Section11(2)raisesapresumptionthatcompensationisnotadequateincasesofthetransferofimmoveableproperty.Nevertheless,thedefendantmayrebutthepresumption.Onthispoint,itisimportantthatthedefendantraisesareasonablegroundsuchashardshiporproducesevidencetorebutthepresumption(Loh,1982).Thedegreeofthepresumptioncannotbesoughttoberebuttedbymerelymakingsubmissionsonprinciplesoflaw(Yang,2000).ThepresumptioncanbesaidtohavebeenrebuttedforareasonwhichdoesnotallowtheSPtobeenforced(Ho,1987).InMars Equity Sdn Bhd v Tis Ata Ashar Sdn Bhd (2005)1CLJ513,thejudgeexplainedthatsection55(oftheMalaysianContractAct1950)isofcourseofgeneralapplicationwhen itspeaksof thepromisorhaving topaycompensation to thepromisee.But,whethercompensationissufficientinagivencasedependsonthesubject


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matterofthecontract.Hefurtheremphasisedthatinthecasewherethesubjectmatterisland,abreachofacontractrelatingto land isrebuttablypresumedtobe irremediablebymonetarycompensation.,thustheappropriateremedywastheSP.

Itisgenerallybelievedthatsection11(1)and(2)SRAisclear.Nevertheless,itmustbereadwithSection55oftheSRA1950whichprovidesthegeneralremediesforbreachofcontract.

5.3 CIRCUMSTANCES WHERE COURTS MAY NOT GRANT SP

InCity Investment Sdn Bhd v Koperasi Serbaguna Ceupacs Tanggungan Bhd [1985] 1 MLJ 245 thecourtamongothersviewedthatsection15dealswithdivisiblecontracts;areferencewasmadetotheopinionofLordSumnerinwhichhisLordshipsaidthats.16(IndianSRA1877)afforded theonlygroundonwhich theCourtcouldhelphim.Tomake thissectionapplicableithadtobeshownthattherewasapartofthecontract,towit,thatrelatingtoplotAwhich(a)‘takenbyitselfcouldandoughttobespecificallyperformed’,and(b)’stoodonaseparateandindependentfooting’fromtheotherpartof thecontract,whichadmittedlycouldnotbeperformed.TheirLordshipswereintheviewthatbeforeaCourtcanexercisethepowergivenbys.16itmusthavebeforeitsomematerialstendingtoestablishthesepropositions,andcannotapplythesectiononameresurmisethat,ifopportunityweregivenforfurtherinquiry,suchmaterialmightbeforth-comingandpossiblymightbefoundtobesufficient;andthatthewordsofthesection,wideastheyare,donotauthorizetheCourttotakeactionotherwisethanjudicially,andinparticulardonotpermitittomakeforthepartiesor to enforce upon thema contract,which in substance they havenot alreadymade forthemselves.

AgainthecourtinthesamecaseheldthatthecourtmayrefuseSPonthefirstagreementtobuildortogetapprovalforlicensebutthatisnotthereasonforthecourtnottoawarddamagesforbreachofcontract.Similarly,asregardtothesecondagreementtobuildafewbungalowlots,thecourthadgrantedSPforthelotsthathavenotbeenaffectedbyproblemsofterrain.

5.4 COMPENSATION OR DAMAGES IN ADDITION TO SP

Section18oftheSRA1950dealswiththepowerofthecourttoawardcompensationordecreeSPinTanAhChimandSonsSdnBhdvOoiBeeTatandAnor(1993)3MLJ633.Sub-section (1) provides for the right of a party suing forSP to ask for compensation inadditiontoorinsubstitutionforSPandsub-section(2)dealswiththepowerofthecourttoawardcompensationwhenitdecidesSPcannotbegranted.Sub-section(3)contemplatesasituationinwhichbothSPandcompensation,respectively,oughttobegrantedandawardedbecauseSPisfoundnottobetheadequateremedybutalwayssubjecttothediscretionofthecourtwhichrulesinordertogivejusticetothecase(Rasiah,1985).

Anotherissuepertainstotheuseoftheterm‘compensation’or‘damages’.TherearemanysituationswheretheSRA1950andthecourtsdealingwithprovisions inSRA1950usedtheword“compensationanddamages”synonymouslyoralternately.Itisobservedfromthe


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ContractsAct1950,theword“compensation”isusedthroughouttheprovisions.Thus,theuseof“compensation”coversawiderscopeascomparedtotheword“damages”undertheEnglishlaw.ItincludeseverypecuniaryremedyundertheContractAct1950(Tan,1993).Inthesecases,thecourthadawardedcompensationbutthepartiesappealedondamages.Thusthereisuncertaintytobothtermswhetheritcanbeusedsynonymouslyorbothhaveadifferentmeaning.

Theuseof‘compensation’underthisprovisionseemstobeconsistentandcorrect.Ingeneral,theword“compensation”mustbehighlightedandusedbyjudgeswithunderstandingofitsmeaningandapplication.TheSupremeCourtinCity Investmentcommentedons18(4)oftheSRA1950concerningthemethodofassessingdamages.Thecourtwasintheopinionthatthematterislefttothediscretionofthetrialjudge.Intheparticularcase,sincethemethodhasnotbeenshowntobewronginprinciplehisawardmuststand.

Whiletheprovisionuses“compensation”thejudgeusedtheword“damages”.Canthetwotermsbesynonymouslyused?Perhaps,anylawstudentwouldanswerinnegativeform.

Areadingofthewholeprovisionseemstoindicatethat“apersonsuingforSP”(S18(1)isexclusivelyreferstotheplaintiff.Similarlythereisnocaselawthatshowsthescopecoversanyotherpersonotherthantheplaintiffthus;weproposethatthewords“anyotherpersons”isreplacedwith“plaintiff”.

5.5 WHAT IF SP IS A PRE-AGREED STIPULATED REMEDY?

Ifthereisanystipulationrelatingtomoneyinanyagreement,thecourthavedecidedthatsuch stipulation shall not bar a court to decree SP (Nithyananathan, 1998). Similarly, astipulationofasumofmoneytobepaidasdamagesforbreachofcontractisnotabartoaclaimforSP.ThispointwasmadeclearbythePrivyCouncilinZaibun Sa Syed Ahmad v Loh Koon Moy[1982]2MLJ92.Inthiscase,therespondentssoughtSPofacontractforthesaleoflandagainsttheappellant.Thelearnedjudgedecidedinfavouroftherespondentsbutfoundthattherewasanoralagreementenablingtherespondentstopaydamagesforbreach.HethereforegavedamagesinfavouroftherespondentswhoagainappealedtotheFederalCourtseekingSPofthecontract.TheFederalCourtheldthattherespondentswereentitledtoSP.TheappellantthenappealedtothePrivyCouncil.Indismissingtheappeal,thePrivyCouncilheld,inter alia,thatthefactthattherewasanalternativeclaimfordamages,inanactionbythepurchaserforSPofacontractforthesaleofland,couldnotbeafactrelevanttotheexerciseofthediscretionbythelearnedjudgeandtheFederalCourtwasentitledtoexerciseitsdiscretionandwascorrectinreversingthedecisionofthejudgeandorderingSP.JonesandGoodhartonSpecificPerformancestatedthatthemerefactthatacontractcontainsa liquidateddamagesclause,oraclauseofasimilarnature, isnotgenerallyanadmissionthatdamagesareanadequateremedyorthatonepartyhasanoptiontopayorperform(Sekamas,1989).Exceptionally,thecourtmayreachtheoppositeconclusionandgivejudgementthatSPwillnonethelessbegrantedifitistheappropriateremedy.

Inprinciple,therefore,thecourthasadiscretiontoorderSPanddecreedamagesinfavourofaparty.InKow Lup Plow & Ors v. Lee Soh Hua[1982]CLJ499,thecourthadorderedthedefendanttopaydamagesapartfromSPinapurchaser’sactionforSPinrespectofa


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contractforthesaleandpurchaseoflandatapriceofRM700,000whichtheplaintiffhadintendedtodevelop.ThecourtalsoorderedthedefendanttopayRM50,000damagesforwrongfulterminationofthecontractaftertakingintoconsiderationthatitwaswelloverfiveyearssincethedefendantbrokethecontract,thusbringingtheplaintiffsdevelopmentprojecttoastandstillforseveralyears.InInterstate M & E Sdn Bhd & 2 Ors v. Foresight Trading Sdn Bhd & 2 ors [2007]1LNS220, AbdulMalik IshakJ.grantedbothSPandcompensatorydamages.

Section20oftheSRAprovidesfor typesofcontractswhichcannotbespecificallyenforcedsuchasacontractforthenon-performanceofwhichcompensationinmoneyisanadequatereliefandthecircumstanceswhereSPshallnotbeconsideredbythecourt.Assuch,thissectionmustbereadtogetherwithsection11andsection21ofthesameAct.Thereare7circumstanceswhereSPshallnotbegranted:i. Where non performance of a contract can be adequately relieved with money

(Sekamas,1993);ii. A contract which runs into minutes details, or contract that depend on personal

qualificationorvolitionoftheparties(Dayang Nor Faizah bte Awang Dowty v Bintang Sei Sdn Bhd&Ors[2004]2MLJ39);orcourtcannotenforceSPofitsmaterialtermsorcontractwhichcourtcannotfinditsreasonablecertainty;

iii. Acontractwhichinitsnaturerevocable;iv. Acontractmadebytrusteeinexcessofpowerorinbreachoftrust;v. Acontractbycompanyorcorporation,promoter,whichisinexcessofitspowers;vi. Acontracttheperformanceofwhichcarriescontinuousdutieswhichismorethan3

years(Howard,1742);vii. Acontractwhichmaterialpartofthesubjectmatter,beforeithasbeenmade,ceased

toexist.

ThoughintheabovesituationsthecourtcannotorderSP,itdoesnotprohibitthecourtfromawardingdamagesifbreachofcontractoccurs.Itmustbereadtogetherwithsections11,19and21oftheSRA1950.

In Sale and Purchase of Real Property (1984), Visu Sinnadurai observes that specificperformance is a discretionary remedy and over the years the courts have spelt out thecircumstancesunderwhich the reliefmaynotbegranted.Theseequitableprinciplesarereflectedinsections20and21oftheSpecificReliefAct1950.Section20(1)(a)providesthatacontractwillnotbespecificallyenforcedifthenon-performanceof itcanbeadequatelyrelievedbycompensationinmoney.AsProfessorSinnaduraicorrectlypointedoutatp436,thisprovisionhastobereadwithsomereservationsindealingwithcontractsforthesaleandpurchaseofproperty.Section11(2)clearlysaysthatthereisapresumptionthatincontractsforthesaleofimmovablepropertymonetarycompensationcannotbeanadequateremedy.Itwasfurthershownthats20(1)(a)isofgeneralapplicationwhiles11(2)dealsspecificallywithcontractsforthesaleofland.Itisthereforerightthats11(2)willprevailincasesinvolvingcontracts dealingwith sale andpurchase of property.He further said these two sectionsprovidethatitisforthedefendanttoestablishthattheplaintiffwouldbeadequatelyrelievedbyanawardfordamagesandthatspecificperformanceshouldnotbegranted.Thisburdenofproofonthedefendantisaheavyoneandifhefailstosatisfythecourtoftheadequacyofdamages,thecourtwillgenerallygranttherelieftotheplaintiffunlessthereareotherspecialgroundsagainstgrantingit.


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SPwillnotbegrantedif thecourtcannotenforcethematerialtermsofthecontract.Forexample,ifthefactsshowthatthecourtwillnotabletosupervisetheworkrequired,orthecontractorcannotcompletetheconstructionofahouse,thusnoorderofSPwillbegranted(Mohammad bin Baee v Pembangunan Farlim Sdn Bhd[1988]3MLJ211).

Section20oftheSRAfurtherprovidesforifthecourthasdecidednottoenforceSPbasedonthisprovisionthenwoulditbepossibleforthecourttoallowinjunctiontopreventbreachof the agreement? Itwasheld in several cases that if a contract is such that cannot bespecifically enforced thus, injunctioncannotbegranted (Puncak Niaga Holding Bhd v NS Water Sdn Bhd & Ors [2004]5MLJ430;Marble Terrazo Industries Sdn Bhd v Anggaran Enterprise Sdn Bhd & Ors [1991]1MLJ253).Itisproposedthattheillustrationtosection20(1)(b)tobere-arrangedtoreflecttheflowofthesub-sections.

Section21providesforcourtdiscretionastodecreeingSPwhichis discretionary.Thecourtisnotboundtograntanysuchreliefmerelybecauseitislawfultodoso;butthediscretionof the court is not arbitrary but sound and reasonable, guided by judicial principles andcapableofcorrectionbyacourtofappeal.Thecourtmayproperlyexercisediscretionnottodecreespecificperformanceincaseswherethecircumstancesunderwhichthecontractismadearesuchastogivetheplaintiffanunfairadvantageoverthedefendant,thoughtheremaybenofraudormisrepresentationontheplaintiff’spart.TheillustrationgivenisincaseswhereA contractstoselltoBtheinterestofCincertainstock-in-trade.Itisstipulatedthatthesaleshallstandgood,eventhoughitshouldturnoutthatC’sinterestisworthnothing.Infact,thevalueofC’sinterestdependsontheresultofcertainpartnership-accounts,onwhichheisheavilyindebttohispartners.ThisindebtednessisknowntoA,butnottoB.SpecificperformanceofthecontractshouldberefusedtoAorwhereAcontractstosell,andBcontractstobuy,certainland.Toprotectthelandfromfloods,itisnecessaryforitsownertomaintainanexpensiveembankment.B doesnotknowofthiscircumstance,andA concealsitfromhim.SpecificperformanceofthecontractshouldberefusedtoA.

Acasetoshowhowtoproperlyexercisediscretiontodecreespecificperformanceiswheretheplaintiffhasdonesubstantialactsorsufferedlossesinconsequenceofacontractcapableofspecificperformance. Forexample,whereAsellslandtoarailwaycompany,whocontractstoexecutecertainworksforhisconvenience.Thecompanytakesthelandandusesitfortheirrailway.SpecificperformanceofthecontracttoexecutetheworksshouldbegrantedbythecourtinfavourofA.

InGanam d/o Rajamany v Somoo s/o Sinnah (1984)2MLJ290FC),thecourtheldthatthepowerofthecourt indecreeingSPisadiscretionaryone.Thediscretionofthecourtandthe jurisdiction todecreeSP isnotarbitrarybutsoundandreasonable,guidedby judicialprinciplesandcapableofcorrectionbythecourtofappeal.Unders21(2)(b),thecourtsmayrefusetograntthereliefofSPtotheplaintiffifthegrantingofitwouldinvolvesomehardshipson thedefendantwhichhedidnot foresee. Eachcasemustbedecidedon itsmeritsasfacts vary from one case to another. In RM Venkatachalam Chettiar v NKR Arunasalam Chettiar ([1953]MLJ234).ThomsonJ.ashethenwas,heldthatnogreathardshipwouldbecausedtothevendor’srepresentativetocompletethetransactionevenifitwouldincursomeunanticipatedexpenditure.InOsman Abu Bakar v Saiyed Noor Saiyed Mohamed [1952]MLJ


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37,SPwasgranted.Thecourtrejectedtheargumentthathardshipwouldbecausedtothebeneficiariesifsuchanorderwasgranted.Theappellantin Patel v Ali (1984]1AllER978)wassuccessfulinherappealagainstanorderofSPongroundofhardship.Inthatcase,therewasadelayofmorethanfouryears.Thecourtwasintheopinionthatitwouldbejusttoleaveplaintiffstotheirremedyindamages.InJohnson v Agnew ([1979]1AllER883), theHouseofLordsvariedtheorderoftheCourtofAppealholdingthatifavendorobtainedanorderforSPanditbecameimpossibletoenforceit,hethenhadtherighttoaskthecourttodischargetheorderandterminatethecontract.Onsuchanapplicationhecouldbeawardeddamagesatcommon law forbreachofcontract since thecontractwasnot rescindedab initio butremainedinexistenceuntilitwasterminatedbythecourt.InSekemas Sdn Bhd v Lian Seng Co Sdn Bhd theSupremeCourtagreedwiththetrialjudge’sopinionthatthehardshiphadbeenbroughtbytheappellanthimselfwhenhedecidedtoembarkonthisexpensiveventurewithouthavingsecuredadequatefinance.Inthiscase,theSPdecreedbythetrialjudgewasretainedbytheappealcourt.

6. PERSONAL BARS TO THE RELIEF

SPSpecificperformanceofacontractcannotbeenforcedinfavourofaperson:(a) whocouldnotrecovercompensationforitsbreach;or(b) apersonwhohasbecomeincapableofperforming;orwhoviolates,anyessentialtermofthe

contractthatonhispartremainstobeperformed;(c) who has already chosen his remedy and obtained satisfaction for the alleged breach of

contract;(d) apersonwho,previouslytothecontract,hadnoticedthatasettlementofthesubjectmatter

thereof(thoughnotfoundedonanyvaluableconsideration)hadbeenmadeandwastheninforce(S.23oftheSRA).

TheSRA1950hasprovidedmany illustrations to theaboveprovision.Forexample, ifA, in thecharacterofactingasanagentforB,entersintoanagreementwithCtobuyC’shouse.A isinrealityactingnotasagentforBbutonhisownaccount.A cannotenforceSPofthiscontract(S23(a),Illustration).

AlthoughSRA1950 follows theprovisionof the repealed IndianSpecificReliefAct1877 (ISRA)wherethereisnoexpressstatementthattheavermentofreadinessandwillingnessisnecessary(asitisinIndiaandEngland),thedevelopmentofthecasesasregardstosection23(b)seemstofallinlinewiththesetwojurisdictions.

InCaltex Oil (Malaya) Ltd v Ho Lai Yoek & Anor(1964]MLJ76,MMI Industries Sdn Bhd v Let Hin Industries Sdn Bhd[2010]1CLJ 36;[2009]1LNS890,thecourtheldthatwheretheplaintiffwereready andwilling to complete at all times and the purported repudiation of the contract by thevendorshadnotbeenacceptedbythem,theywillbeentitledtoSP.InGanam d/o Rajamany v Somoo s/o Sinnah (1984)2MLJ290(FC)).InasuitforSP,apartytreatedandwasrequiredbythecourttotreatthecontractasstillsubsisting.Hehadinthatsuittoallege,andifthefactwastraversed,hewasrequiredtoproveacontinuousreadinessandwillingness,fromthedateofthecontracttothetimeofthehearing,toperformthecontractonhispart.Failuretomakegoodthatavermentbroughtwithittheinevitabledismissalofhissuit.


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Section25oftheSRA1950highlights“fraud”asagroundonthebasisofwhichSPmayberefused.Specificperformanceisdependentonacompleteanddefinitecontract.Thus,acontractcannotbespecificallyenforced if it is suffering from illegality,uncertainty, fraud,undue influence,mistake,misrepresentation or lack of consent.A contract which lacks in any of the three essentials ofproposal,acceptanceorconsiderationisalsonotenforceable.Similarly,variedandvaguecontractswherethemeaningmaynotbeascertainedcannotbeenforced.

AstheSRA1950wasmodeledupontherepealedIndianSpecificReliefAct1877,thecasesfromIndiaarerelevantforjudicialreferencewiththeexceptionthatthedoctrineofequitablenoticeisirrelevantas it isagainst thespiritand theprovisionsof theNationalLandCode1965. Inotherwords,SPcannotbeenforcedagainstanytransfereewhocanprovethatheisapartyingoodfaithandhasnonoticeoftheoriginalcontract.Section26(2)isbasedonthedecisioninTiladkhari Lal and Aor v Khedan Lal & Ors (AIR1921)whichwasalsoadoptedinvariousotherMalaysiancaseswhichisAikMing(m)SdnBhdandOrsvChangChingChuenandOrs(1995)2MLJ770;KeefGevald FrancisNoel John vMohdNoorAbdullah andOrs [(1995)MLJ193]. If the subsequenttransfereehasgivennoconsiderationand isamerevolunteer,hehasno rightagainst thefirstpromisee(Banrjee,1996).

7. CONCLUSION

SPprinciplesandrulesasembodiedinSs11-28oftheSRA1950seemtoworkwellinthesystem.Although theSRA1950prescribes that SP is the best remedy for breach of land contract, thecourtshave,inmanyoccassionsdifferwithreasons,dependingonthecircusmtancesofthecases.Flexibilityintrendsissometimesnecessarytomeetthecontemporarydevelopmentsrelatingtosaleofrealestatesaswellastoensurejusticetotheparties.Furthermore,theimportanceofprovidingappropriateremediesistimelyinmeetingglobalchanges.

ACKNOWLEDGEMENT

WewishtorecordourappreciationtotheResearchManagementCentre,InternationalIslamicUniversityMalaysia(IIUM).TheresearchprojectwascarriedoutwiththeallocationofbudgetunderEndowmentA,IIUMResearchGrant.


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BIBLIOGRAPHY

Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen & Ors [1995]2MLJ770;Keet Gerald Francis Noel John v Mohd Noor Abdullah &Ors [1995]1MLJ193)

Bank of Tokyo Ltd v. Mohd Zaini bin Arshad (Maria Pragasam, Intervenor)[1991]2CLJ989;[1991]2CLJ(Rep)341,Chong Hoong & Anor v. Wong Yuen Sang[1975]1LNS13;[1976]1MLJ282;Chan Kin & Anor v. Chareen Realty Development Sdn Bhd[1988]1LNS166;[1989]1MLJ62;Masalam Sdn Bhd v. Ngah bin Embong & Anor[1998]2CLJ817(CA).

Caesar Lamare v. Thomas Dixon [1873]6LRHL414,atp.423.Ganam Rajamany v. Somoo Sinniah[1984]2CLJ268; [1984]1CLJ (Rep)123,FC;Loo Choo Teng & Anor v. Cheok Swee Lee & Ors and Another Appeal[2000]2CLJ389,CA

Ho Ah Kim & Ors v Paya Trubong estate Sdn Bhd [1987]1MLJ143

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Loh Koon Moy v Zaibunisa bintiSyedAhmad[1982]CLJ457

Marble Terrazo Industries Sdn Bhd v. Anggaran Enterprose Sdn Bhd & Ors[1991]1MLJ353;Mohmamad bin Baee v Pembangunan Farlim Sdn Bhd[1988]3MLJ211

M Nithyananathan v Seong Bo Cheah[1998]2MLJ633(CA);IbrahimbinsaidinvHitambAli[1954]MLJ19

Phang,A,Cheshire, Fifoot and Furmston’s Law of Contract,(Butterworth:1994)

Rasiah Munusamy v Lim Tan & Sons Sdn Bhd[1985]2MLJ291(SC)

SatishChandraBanrjee(1996)Law of Specific Relief,10thEd,p.296.

Sekemas Sdn Bhd v. Lian Seng Co Sdn Bhd[1989]2CLJ155;[1989]1CLJ(Rep)154(SC);Yeong Ne Hong lwn. Bumida Engineering & Construction Sdn Bhd [1995]1LNS307)

Sekemas Sdn Bhd v Lian Seng Co Sdn Bhd[1989]2MLJ155);Tan Ah Chim & Sons Sdn Bhd v Ooi Bee Tat & Anor[1993]3MLJ633

Sinnadurai,Visu.1984.SaleandPurchaseofRealPropertyinMalaysia:Butterworth.

Syed Azman bin Syed Mohamed v. Lian Seng (KL) Construction Co Sdn Bhd[1992]4CLJ2194;[1992]3CLJ(Rep)625.


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Tan Ah Chim & Sons Sdn Bhd v Ooi Bee Tat & Anor[1993]3MLJ633

Tan Ah Chim and Sons (damages); Tan Sri Khoo Teck Puat & anor v Plenitude Holdings Sdn Bhd.

Yong Kon Fatt & Anor v Hock Seng Construction Sdn Bhd & Anor [2000] 5 MLJ 551(HC:ClementSkinnerJC)


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A MODEL FOR EFFECTIVE AND EFFICIENT DISPUTE RESOLUTION PROCESS FOR STRATA SCHEME DISPUTES IN

PENINSULAR MALAYSIA

Faizal KamarudinNationalInstituteofPublicAdministration(INTAN)BukitKiara,KualaLumpur,MalaysiaEmail:[email protected]

Abstract

ThecurrentdisputeresolutionprocessesforstrataschemedisputesinPeninsularMalaysiaarebuiltonthecentralityofadjudicativeapproachbytheStrataManagementTribunal.Whilstaquasi-judicialadjudicativebodyliketheTribunalofferssimpler,quickerandcheaperdisputeresolutionprocessescomparedtothecourts, itsorientationmaynot produce thequality outcomesdesired for strataschemedisputeresolutionprocessessuchasparties’satisfaction,improvementintheparties’relationships,changesinbehaviourandenhancementofpeople’swell-being.Oneof the reasons forthepotential lowqualityoutcomes is thatadjudicative approaches in traditionaladversarial legalsystems normally limit theirattention to a narrowview of the dispute without addressing theunderlyingissuesorproblems.Asaresult,therelationshipsbetweentheindividualsinvolvedmaydeterioratefurtheranditmaybecomeevenmoredifficultforthemtoworktogethereffectively.Takingintoconsiderationthecurrentlegalframeworkforresolving disputes instrataschemes inPeninsularMalaysia,thispaperpositsthatdisputeresolutionapproachesforstrataschemedisputesshouldnotbelimitedtoaddressingthelegalrightsandinterestsofindividuals.Theymustalsoconsiderother importanthumanistic factors suchasneighbourrelationshipsandasenseofcommunity.Moreimportantly,theseapproachesmustprovidesupportfortheconceptofself-governanceinthestratatitlessystem.Thispaperproposesacomprehensive,integrated,therapeuticandhumanisticdisputeresolutionmodelthatmaybecomeanewdisputeresolutionmodelforstrataschemedisputesinPeninsularMalaysia.

Keywords:dispute resolution, strata schemes disputes, adjudicative approach, therapeutic


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1. INTRODUCTION

Livinginhigh-riseresidentialbuildingsisdifferentfromlivingintraditionalfreestandinghomes.Inthetraditionalneighbourhood,housesareseparatedwithclearphysicalboundariesandtheresidentsenjoyfreedomandprivacywithintheirownproperty.Residentsinstrataschemes,however,haveto share the common facilities and spaces in the buildings with other residents.The universalconcept of common property in strata schemesmakes all proprietors as“tenants in common”sharingproportionalsharesinthecommonproperty.Theproprietorsarejointlyresponsibleforthemaintenanceandupkeepoftheircommonproperty.

Oneoftheuniquefeaturesofthestratatitlesystemsisthat it imposesuponallunitownerstheimportanttaskofgoverningtheirownstratascheme.Forthepurposeofgoverningan individualstratascheme,astatutorymanagementbodyiscreatedwhereallunitownersautomaticallybecomemembers.Inordertoensuresmoothdaytodayoperationsandadministrationofthemanagementbody,acouncilorcommitteememberiselectedfromamongtheparcelowners.However,thecouncilisnotthesolepartyresponsibleforthemanagementandmaintenanceofthestratadevelopment.Themechanismofself-managementinstratatitlesystemoperatesontheprinciplesofcollectiveresponsibilityandliabilityinvolvingallparcelownersofthestratacommunity.

Theconceptofself-governanceinstratatitleschemescombiningtheelementsofself-management,self-regulationandself-resolutiongivesbroadpowersandauthoritytothemanagementcorporationtomanageandmaintainthecommonproperty,regulatetheconductofownersandoccupiersandevenmakeanefforttoresolveanydisagreement,misunderstandingordisputesinvolvingtheunitowners, occupiers or the stakeholders.These broad powers and authoritymay inevitably causedissension and disputes among interested parties in strata schemes. Unreasonable rules andprocedures,arbitrarydecisions,selectiveenforcementofrulesandunrulybehaviourofproprietorsandoccupiersareexamplesof thechallengesconfronting theself-governanceconcept instratatitlesystem.

AccordingtoChristensenandWallace(2006),stratatitlelivingbyitsverynatureleadstoahigherincidence of neighbour disputes.The physical and legal features of strata living combinedwithoccupationalstressandotherdaily lifeissuescreateasituationwhichisripefordisagreements,disputesorconflictsinvolvingmembersinthestrataschemes.Sincemembersofthestrataschememayhavetogoonlivingsidebyside,meetingeachothereveryday,improperornegativereactionto thedisputesmayaffect neighbour relationsandpeaceful enjoyment of theneighbourhood.According toWilliamsonandAdams (1987), in such situation, residentsmay take awithdrawalapproachorapathywhichinthelongrunwillcauseproblemstotheconceptofself-managementbyneglectingtheirdutiesandresponsibilitiesasproprietorsinthestrataschemes.

TheGovernment ofMalaysia has recently enacted the StrataManagementAct 2013 (Act 757)(SMA).TheenactmentoftheSMAhasimprovedmanyaspectsofgovernanceofstrataschemespreviously providedby theStrataTitlesAct1985 (STA) and theBuildingandCommonProperty(MaintenanceandManagement)Act2007 (BCPMMA).Oneof the important improvements thathavebeenmadeistheestablishmentoftheStrataManagementTribunal(Tribunal)toadjudicatedisputes in strata schemes.While improvements made in the SMA could potentially increaseefficiency in thegovernanceof thestrataschemes, thispaperargues that thescopeofdisputeresolution processes under the SMA is still limited to enforcement and short-term adjudicationsolutions.Despiteprovidingadisputeresolutionmechanismthatissimpler,fasterandmoreflexiblethancourtprocesses,adjudicationthatisbasedsolelyonthefactsofthecase,statutoryprovisionsandcaseprecedentsmaypotentiallyproduceadverseeffectsondisputingparties.Furthermore,


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theunderlyingissuesofthelegalproblemwillcontinuetobeunresolved,affectinginter-personalrelationships,people’swell-beingandtheconceptofself-governanceinthestrataschemes.Thispaper argues that, instead of having adjudication as the single-gateway in resolving the stratascheme disputes, the Government ofMalaysia should adopt a dispute resolutionmodel that iscomprehensive,integrated,therapeuticandhumanistic.

2. LITERATURE REVIEW

Therehasbeensignificantgrowthinacademicinterestinthedevelopmentofhigh-risebuildingsandstratacommunitiesparticularlyincommonlawjurisdictionssuchasinAustralia,theUnitedStates,CanadaandevenMalaysia.However, the volumeofacademic research in thisarea is relativelysmallresultinginsignificantgapsintheregulatoryframework,forexampleondisputeresolutionmechanismsinstrataschemes.

NorAsiah andAzlinor (2013) for example analyse various alternative dispute resolution (ADR)processes that would be appropriate for settlement of dispute in strata schemes in PeninsularMalaysiacomparedtolitigationincourt.TheyalsoanalysetherecentestablishmentofaTribunalbytheStrataManagementAct2013(SMA).AccordingtoNorAsiahandAzlinor(2013),thedecisiontointroduceaStrataManagementTribunalbythegovernmentmustbeapplaudedsincetheobjectiveofdisputeresolutioninstrataschemesistocreatepeaceandharmonyamongtheresidents.

InAustralia, Leshinsky et al. (2012) have carried out a research project on disputes in ownerscorporations(OC)intheStateofVictoria.TheresearchrevealsthatdisputesinOCsbasicallyrelatetobreachofinternalrules,behaviorincommonareas,issuesregardingamountandcollectionoffeesandcontractualtermswiththemanagersanddevelopers.Ondisputeresolution,theresearchfindsthatinmostcases,theOCcommitteesprefertoadoptinformalconflictengagementandinsomecasesdisputeavoidance.

Inanotherarticlerelatedtothesameresearchabove,DouglasandLeshinsky (2012)arguethattheOwnersCorporationAct2006(Vic)providesmanyoptionsfordisputesinownerscorporationtoberesolvedearlierwithoutthepartiesgoingtolitigationintheTribunal.AccordingtoDouglasandLeshinsky(2012),thethree-tierdisputeresolutionsystemintheActconsistsofaninternaldisputeresolutionschemewhichmayincludemediationandconciliationprocess(firsttier),formalprocessinvolvingmediationorconciliationprocessesprovidedbytheConsumerAffairsemployee(secondtier)andadjudicationprocessbytheVictorianCivilandAdministrativeTribunal(VCAT)(thirdtier).ResearchbyLeshinskyetal.(2012);DouglasandLeshinsky(2012)areimportantastheyinformtheimportanceofearlydisputesresolutionprocessestobeconductedinternally.

IntheStateofQueensland,Australia,Toohey(2011)havebeenpioneeringwaysofencouragingtheapplicationoftherapeuticjurisprudenceindisputeresolutionprocessesinhigh-risedevelopmentssuch as community titles or strata titles schemes. According to Toohey (2009), therapeuticjurisprudencecanbeappliedincommunitytitlesdisputeresolutionprocessesinordertopromotepositive behavioural change for example investigation process carried out by adjudicator inadjudicationprocessundertheBodycorporateandCommunityManagementAct(Qld)1997.

Throughinvestigationprocess,theadjudicatormayidentifytherootcausefortheproblemswhichmaynotappear in thedocumentsfiled.Furthermore, through thisprocess, theadjudicatormayalsohavetheopportunitytoletthepartiesassesstheeffectsofthewholeepisodeontheirwell-being.TheworkdonebyToohey(2009)isimportantbecauseitestablishestheneedsfordisputeresolution process in community titles schemes to facilitate behavioural change amongst the


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disputants.Promotingnecessarybehaviouralchangeusingatherapeuticjurisprudenceapproachwouldcontributesignificantlytotheoverallqualityofdisputeresolutioninhigh-riseschemes.

Adams and Williamson (1986) have carried out empirical research on dispute resolution incondominiumsintheStateofFlorida,UnitedStates.Themainobjectiveoftheirstudywastoexplorethe various mechanisms through which condominium-related disputes could be resolved. Oneof their key findings is that there is great potential for theAlternativeDisputeResolution (ADR)mechanismstobeimplementedtoresolveconflictwithinthecondominiumsystem.Thefindingsfromresearch inAustraliaand theUnitedStatesmentionedabovearesignificant tosupport theargumentofthispaperthatnon-adversarialprocessessuchasmediationandconciliationhavethepotentialtobeincludedinthedisputeresolutionmodelforstrataschemedisputesinPeninsularMalaysia(WilliamsonandAdams,R.J.,1987).

3. METHODOLOGY

Themethodologyemployedinthispaperislargelydoctrinalandtheoretical.EmpiricalresearchfromMalaysia,AustraliaandtheUnitedStateshasbeenusedtosupporttheargumentsinthispaperontheconceptofgoodneighborrelations,asenseofcommunityandnatureandeffectsofdisputesin strata schemes.The ideas andproposals presentedparticularly on the linkagesbetween theprinciplesoftherapeuticjurisprudenceandtheprinciplesofself-governanceinstrataschemeareoriginalandhaveyettobetestedempiricallyintheMalaysianalternativedisputeresolutionfield.

4. DISPUTE RESOLUTION MODEL FOR STRATA SCHEMES IN PENINSULAR MALAYSIA

Thispaperproposesafive-componentdisputeresolutionmodelforstrataschemesdisputesinPeninsularMalaysiatosupporttheexistingadjudicativeapproachprovidedbytheTribunal.Theobjectivesofthismodelarenotonlytoachieveeffectivenessandefficiencyindisputeresolutionforstrataschemedisputes,butmostimportantly,toaddressthestressfulnatureofneighbourhooddisputesandplaceaprimaryemphasisonthewell-beingofthedisputingpartiesandthemembersofthestrataschemes.Thefirstcomponentofthismodelconsistsofaninternaldisputeresolutionprocessforstrataschemedisputes.Thisisfollowedbythesecondcomponentofthemodelwhichprovidesforaconciliationprocessbyagovernmentagencyorbody,preferablytheCommissionerofBuildings(COB).ThethirdcomponentofthemodelinvolvesanadjudicationprocessbytheTribunal.Thefourthcomponentdealswithcourtlitigationwhilethefinalcomponentofthismodelinvolvesapost-disputeresolutionprocess.Thismodelhastwodistinctivecharacteristics.First,themodelproposescreativesolutionsinstrataschemedisputesthatnotonlyaddressthelegalissuesofthedisputingpartiesbutextendtootherhumanfunctionssuchasvalues,morals,needs,relationshipsandparties’interests.Secondly,thismodelseekstooptimisetheoutcomesofdisputeresolutionforstrataschemestohumanwell-beingsuchasemotions,psychologicalfunctioningandrelationships.

Theobjectivesofthemodelcanbesummarisedasfollows:

i. Toproducetherapeuticoutcomesbyencouragingpositivecommunicationbetweenindividualsinastratacommunity;

ii. Topreventlegalrisksandfuturedisputesthroughtheeducativefunctionoftheprocesses;iii. Topromotepositiveinterpersonalandindividualchange;iv. Topreserveneighbourrelationsinthestratacommunity;


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v. Tooptimisepeople’spsychologicalandemotionalwell-being;vi. Toestablishprocessefficiency.

Thedetailsofthecomponentsofthismodelisexaminedinthenextsection.

5. FIVE COMPONENTS OF DISPUTE RESOLUTION MODEL FOR STRATA SCHEMES

5.1 First Component- Internal Dispute Resolution Processes

Stratalivinghasbeendescribedasanintensifiedandhighlyregulatedformoflivingthatmaybecomeantecedenttodisputesanddisagreements.Disputesinstrataschemesmayariseforvariousreasonsincluding:dissatisfactionwithaneighbour’sbehaviour,restrictiveby-laws,unprofessional conduct of themanagement staff and councilmembers and deterioratingqualityoflifeinthestrataschemes.Disputesinstrataschemesthatarenotresolvedspeedilyandallowedtoescalateintobiggerconflictsmayleadtostress,apathy,disunityandalowersense of community amongmembers of strata schemes.A dispute between neighboursinstrataschemesmayalsohavethepotentialto“leadtoafeelingofdisengagementandseparationfromthecommunityasawhole”(Douglas,Kathy,GoodmanandLeshinsky,2008).Thenegativeeffectsofdisputesinstrataschemesmayaffectrelationshipsandtheconceptof self-governance in the long run. Inorder toaddress theanticipatedoutcomeof stratascheme disputes, this paper argues that it is imperative for early intervention byway ofinternaldisputeresolutionprocessesbeintroducedinthestrataschemes.

Thereareanumberofbenefitsofearlyinterventioninresolvingstrataschemedisputes.First,earlyinterventionlimitshostilityandemotionaldamagetotheparties,particularlyneighbourswhoarelivingincloseproximityinthesamestratascheme.Secondly,internalprocessescanpreventminordisputesfromescalatingintobiggerconflicts.AccordingtoMollenandScott,E.(1999),ifdisputesinstrataschemesarenotresolvedearlier,thereisstrongpossibilitythatsuchdisputeswillescalateasfollows:

Thehostilitymayspiralevenhigherastheadversariesencountereachotherintheirfivefootbyfivefootelevator,intheirhallways,inthelobbyofthebuilding,intheirparkinglotsorattheircommonarearecreationalfacilities.Anoccupancyconflict,likeaninfectiousdisease,mayspreadthroughthecondoandco-opasfactionsevolve.Membersofthecommunitywilloftenrushtosupporttheirneighboursandfriends(Mollen,1999).

Sincemanyincidentsofdisputesinstrataschemesareduetothebehaviouralconductoftheparties incommonorprivateareas, it isarguedthat thedisputingpartiesshouldfirsttakethesteptotalktoeachotherabouttheissuesindisputeinafriendlyandpolitemanner.Furthermore,MarlerandGregory(2013)arguesthattheneedforpartiesindisputetoengagewitheachotherpositivelyandexpresstheiremotionsfreelyareimportantbecause,“inmanycases,people justwant tobeheardand tohave their thoughtsand feelingsvalidatedbyothers.”Earlyinterventionprovidesthedisputingpartieswithachancetocommunicateanddiscusstheirdisputesormisunderstandingsinformallyandinalesshostilemanner.

Thirdly,internalprocessespotentiallypreventboththeunderlyingcauseofdisputeandthedirectcauseofthedisputefromhavingnegativeeffectsonindividualsandcommunitythrougheducational approach. According to Beasley and Amy (2007), disputes involving parcelowners,committeemembersandbuildingmanagersnormallyrevolvearoundbreachesoftherulesandregulationswhiledisputesbetweenoccupiersaremoreaboutbehaviouraland


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lackofunderstandingontheconceptofcommunallivinginstrataschemes.Theopportunitytoengagewitheachotherduringtheinternaldisputeresolutionprocessesmayalsoeducatethe parties regarding the rules and regulations of the strata scheme and the concept ofcommunitylivinginthestratadevelopmentenvironment.

Fourthly, internaldisputeresolutionprocessesarean importantaspectofself-governancewheretheparcelproprietorsandthemanagementbodyareexpectedtoself-resolvedisputesoccurringinstrataschemestoavoidsuchdisputesfrombeingreferredtoformaladjudicativebodyforresolution.Self-resolutionsupportstheprincipleofself-determinationwhichisanimportantvalueinmediationsystems.AccordingtoCooper,DonnaandField(2008),self-determinationallowsthepartiestoactivelyanddirectlyparticipateinthecommunicationandnegotiationprocess, chooseandcontrol thenorms thatguide theirdecisionmaking,createtheirownoptionsforsettlementandhaveinputinthefinaldecision.Self-resolutionthatsubscribestothephilosophyofself-determinationmayalsoensureparties’satisfaction,ahighdegreeofcomplianceandpreventfuturedisputesfromoccurring.

There are many benefits that have been identified for self-resolution by way of internalprocessinstrataschemedisputes.Theoutcomesfromthesebenefitsarerelatedtopositive communication,educationaleffect,preservationof relationship,positivepersonaltransformation and psychological well-being. Internal dispute resolution processes havebecome so important thatmany common law jurisdictions have now sanctioned internaldispute resolution processes as necessary or evenmandatory before any formal disputeresolutionprocesstakesplace.IntheStateofQueensland,Australiaforexample,theinternalprocess ismademandatory under theBodyCorporate andCommunityManagementAct1997(BCCMA).

In Peninsular Malaysia, the statutes are silent with regard to internal dispute resolutionprocesses in strata schemes. However, the Rukun Tetangga Act 2012 (Act 751)(NeighbourhoodWatchAct)doesprovide foramediationprocess inresolvinganydisputeordifferenceamongst themembersof thecommunity.However, theprocess is voluntaryand isapplicable to thewidercommunityorneighbourhood.TheGovernmentofMalaysiahas also enacted aMediationAct 2012 (Act 749) to promote and encouragemediationasamethodofalternativedispute resolution that facilitate fair, speedyandcost-effectivesettlement of disputes.Since therearepositivedevelopments in communitymediation inMalaysia at themoment, this paper argues that themediation process can become themechanisminresolvingstrataschemedisputesinternally.Sinceinternaldisputeresolutionthroughmediationcanbecarriedoutinformally,thereisnoneedforanynewinstitutionorbodytobeestablishedtocarryouttheprocess.Italsodoesnotrequiretheservicesoflegalprofessionalswhichinturnmakesitcheaperincosts.

Basedontheadvantagesofferedbymediationinthecontextofinternaldisputeresolutionprocessinstrataschemes,thispaperarguesthatthebuildingmanagerandthecommitteemembermayplayan important role in the internalprocessandbecome thefirstcontactpoint if there isadisputebetweentheparcelproprietorsoroccupiersorevenbetweenaparcel proprietor and themanagement corporation. In order to implement this idea, it isimperativeforthestratamanagersandthecommitteememberstohaveadvancedskillsinmediation,negotiationandcreativeproblem-solvingtofacilitateinternaldisputeresolution.Perhaps, the government may impose a condition that the strata manager must attendprofessionaltrainingonvariousdisputeresolutiontechniquespriortoappointmentandsuchrequirementcanalsobeextendedtocommitteemembersuponelectiontothecommitteeofthemanagementcorporation.Insummary,aninternaldisputeresolutionprocessisaprocesswherebythedisputingparties


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needtostartcommunicatingdirectlywitheachotheroveradisputeordisagreement.Moreoftenthannot,themiscommunicationorratherlackofcommunicationbetweenthepartiesexacerbatesthedispute(Baum,2010).Inthisrespect,theinternalprocessallowsthemtointeractwithoneanothermorepositively.Thispaperarguesthatmediationprocessisthemostappropriateandeffectiveprocessforinternaldisputeresolutioninstratacontexts.Thispaperfurtherarguesthatleadershipinstrataschemesincludingthebuildingmanagermustencouragedisputingparties toresolvedisputesat theearliestpossiblestagetoavoid theunnecessaryescalationofconflict.Iftheinternaldisputeresolutionprocessthroughmediationfailstoresolvethedispute,thenthepartiesshouldbeadvisedtomakeanothernon-adversarialattemptthroughconciliationprocess.TheconciliationprocessbytheCommissionerofBuildings(COB)isthesecondcomponentofthisproposedmodel.ThenextsectionelaboratesonconciliationprocessbytheCOB.

5.2 Second Component – Conciliation By The COB

Conciliationisinmanywayssimilartomediation.Fromapracticalpointofview,conciliationprocesses involve relatively informal discussion and negotiation sessions betweenthedisputingparties.Theprocessisassistedorfacilitatedbyathirdparty.Theroleofaconciliatorinadisputeisnormallytoidentifytheissuesindisputebut,similartoamediator,aconciliatorispreventedfromdeterminingthoseissues.However,aconciliatordoeshaveamoreinterventionistrolethanthemediator.Thisisbecausetheywillprovideinformationandofferoptionsbasedontheirknowledgeoftherelevantlaw,andalsoofhowaTribunaloraCourtmaydecideaparticularmatter(SourdinandTania,2012).

Therearemanybenefitsofconciliationasadisputeresolutionmechanism,particularlyfor strata scheme disputes. As a non-adversarial process, the conciliation reduces thenegativepsychologicaleffects thatareassociatedwithadversarialprocessessuchas theTribunal or the Courts. Further, unlike the adjudicative processwhich could be rigid andprocedural,aconciliationprocessisconductedinaninformalsettingwherethepartiesareencouragedtodiscussthedisputehonestlyandopenlyandtogenerateoptionsforpotentialsolutions. More importantly, the discussion and admissionsmade during the conciliationprocessareconsideredconfidentialandgenerallycannotbeusedagainsttheotherpartyintheadjudicationprocesses(BodyCorporateAct,1997).

Similartointernalprocess,conciliationcanbeusedtoresolvedisputesquicklyastheprocessisconductedinformallyandisnotsubjectedtoanylegalprocedures.Normally,aconciliationprocesscanbecompletedinjustthreehours(CommonGround,2011).Thequickresolutionofdisputescancontributesignificantlytoreducingstressamongthedisputantsanditcanalsocontributetofurthersupportingthepsychologicalwell-beingoftheparties.Moreimportantly,thepartieswouldthenhavemoreopportunitiestofocusonreconciliationandrebuildingtheinterpersonalneighbourrelationshipthathavebeendamagedbythedisputes(ShumanandDaniel,1992).Anotheradvantageorbenefitsofconciliationisitprovidesusefulinformationregardingtheoperationsoflawandtheconceptofstrataliving.Whileaconciliationprocessdoes not and should not amount to formal legal advice to the parties, a conciliatorwhopossessessoundknowledgeofthelawandprocedurescanplayasignificantroleinassistingthepartiestodesignworkablesolutionsforthepartieswithinstratalegalframework(Stolle,1997-1998).


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Aconciliationprocessthatinvolvespositiveinteractionsandexchangeofviewsmaypromotebetterunderstandingofeachparty’spositionandallowthemtoletgotheirpre-occupationwiththeirownindividualconcerns.Asignificantbenefitarisingfromimprovedcommunicationis the development of good relations between the partieswho are neighbours and livingtogetherinastratascheme.Jointproblem-solvingapproacheslikemediationorconciliationcan improve long-term relations because the partiesmay attain better understanding ofeach other and acquire the relevant experience and skills in managing future disputes.Sincedisputesinstrataschemesinvolvepeoplehavingongoingrelations,itisarguedthatconciliationisaprocessthatcanreducethedamagetotheparties’relationshipaswellaspreserve,maintain,restoreorcreategoodinterpersonalrelationships.Otheradvantagesorbenefitsofconciliationarehighcompliancetothesettlementagreementthathavebeenenteredbythedisputingpartiesduetothefairnessoftheprocess,andconciliationgeneratespartieshighsatisfactionduetotheabilityofthepartiestocontroltheprocessandtoachieveself-determinationandself-transcendence.

Despite of themany advantages conciliation process can offer to resolve strata schemedisputes,TheStateofQueensland inAustralia is theonlycommon law jurisdictionwhichprovides comprehensive statutory provisions on conciliation processes and procedures(Faizal,2011).TheconciliationprocessesinQueenslandareconductedbytheOfficeoftheCommissionerforBodyCorporateandCommunityManagement(Corporateoffice,2016).InMalaysia,thereisnoprovisiononconciliationintheSMAorinanyotherstatutesrelatedtostrataschemedisputes.However, thispaperarguesthat theCOBis themostappropriatepartytoplayaroleinprovidingconciliationprocessestodisputingpartiesinstrataschemes.TheenactmentoftheSMAresultedinthepowersanddutiesoftheCOBbeingincreased.However, the increasedpowersanddutiesof theCOBprovided in theSMAonly relate toenforcementofthelawandnotresolutionofdisputesoreducativerole.Conciliationprocessthathaseducationalelementsregardingrulesandregulationsinastratasystemmayhelpthedisputingpartiesfromamongthemembersofthestrataschemestofurtherunderstandthe responsibilities and the liabilities of the management corporation, council members,proprietorsandoccupiersaswellastheprinciplesofstrataliving.Ifconciliationprocessfailstoresolvethedisputesinstrataschemes,theCOBshouldthenadvisethepartiestoreferthedisputetotheTribunalforadjudication.AnadjudicationprocessbytheTribunalthereforebecomes the thirdcomponent in thisproposedmodelanddiscussionof theprocesses ishighlightedinthenextsection.

5.3 Third Component – Adjudication By The Tribunal

The adjudication process to be implemented by the Tribunal is considered a significantcomponentofthismodelsincetheTribunalhasalreadybeenestablishedformallybytheSMA.Eventhoughthismodelisproposinganon-adversarialapproachinresolvingstrataschemedisputes,itdoesnotmeanthatanyadversarialadjudicativeprocessesshouldbeexcludedfromthismodel.Instead,thispaperacknowledgesthattherearemanyadvantagesattachedtotheTribunalasaquasi-judicialadjudicativebodyinresolvingstratadisputesefficiently.Forexample,theTribunaloffersacheaperandquickerdisputeresolutioncomparedtolitigationincourt.Section117(1)oftheSMAprovidesthattheTribunalshallmakeafindingwithin60daysfromthedatethefirsthearingcommences.AnotheradvantageoftheTribunalconcernsthepowerithastoconductproceedingsusingsimplifiedrulesandprocedurescomparedtotherigidproceduralformalitiesthathavetobeappliedbythecourts(StrataManagementAct,2013).ThesimplificationoftheprocedureswillalsohelptheTribunaltoassesstheapplicationandissueanawardonthemeritsofthematterratherthanontechnicalproceduralaspectsofcourtproceedings.


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ThefactthattheSMAdoesnotallowanypartytoberepresentedbyanAdvocateandSolicitorunlessitinvolvescomplexissuesoflawminimisesthecostsforadjudicationbytheTribunal(StrataManagementAct,2013).

Despite the advantages of a Tribunal adjudication process compared to court litigation,adjudication by the Tribunal still retains an adversarial approach to resolving disputes.Adjudicationbyaquasi-judicialbodynormallyprovidesthesameresultaslitigationincourtswhereonepartyisdeclaredawinnerandanotheristheloser.Unlikeothernon-adversarialprocesseslikethemediationandconciliation,decisionsorordersbytheTribunalareimposeduponthepartiesandhavebindingeffects.AppealtoahigherauthoritysuchasthecourtisnotallowedundertheSMAunlessonpointsof laworwhenthereisaseriousirregularity(StrataManagementAct,2013).Thisapproachofimposingordersonpartiesbasedonthemeritsofthecaseandundertheguidanceofexistinglegalprinciplesminimisestheopportunityforthepartiestoachieveself-determinationinadjudicationprocesses.

WhilsttheTribunalstillretainsmanytraditionaladversarialelementsofadjudicativeprocesses,there are ample opportunities for it to apply therapeutic approaches in resolving stratadisputesundertheSMA.First,itcanadoptaproblem-solvingapproachinstrataschemes.Section112of theSMAprovides that theTribunalmayassist theparties tonegotiateanagreedsettlementinrelationtothematter.SincetheSMAissilenceontheproceduresfornegotiationprocessto takeplace, thispaperarguesthat theTribunalmaytakeacreativeproblem-solving approach to assist the parties in negotiation process. The first creativeproblem-solving approach that canbe applied by theTribunal is for theChairmanof theTribunal toengagewith thedisputantactively.Theobjective is toobtainmore informationaboutthedisputeandthebackgroundofthedisputants.Throughthisprocess,theChairmanof theTribunalmaynotonlyunderstand thecontentious issueathandbut isalsoable toidentify the underlying issues thatmay have become the root cause for the dispute (DeVilliers,2011).

Secondly,thispaperproposesthattheTribunalcanapplyacreativeproblem-solvingapproachduringtheadjudicativeprocessby takingamore inquisitorial role.TheTribunalshouldbeencouragedtoseekmoreinformationbasedontheevidencepresentedbythepartiesoreventoconductitsowninvestigation.Theinquisitorialapproachmayprovidetheopportunitiesfortheadjudicatortoprobetherealissuesandtounderstandthewholesituationthatleadstothedispute.ThispaperfurtherarguesthattheneedfortheTribunaltoplayamoreinquisitorialroleisjustifiedsincetheSMAdoesnotallowforlegalrepresentationunlessthematterindispute involves complex legal issue and one partymay be greatly prejudiced if a legalrepresentativeisnotallowedtoarguethecaseonhisbehalf.AccordingtoDeVilliers(2011),when thepartiesareself-represented, theChairmanof theTribunalmustadjudicatewithempathyandplayacreativeroleinassistingthepartiestoresolvethedisputesthemselvesratherthansimplyimposingadecisiononthem.

Thirdly,theTribunalmustexerciseitspowerbeyondstrictlegalrights,individualrights,dutiesandliabilitiesinordertoensuretheordergivenisforthewell-beingofthepartiesaswellasthestratacommunity.SuchapproachbytheTribunalwouldcontributepositivelytowardspromotingrelationships,moraldevelopmentandthewell-beingofthedisputants.SuchapproachisalsoconsistentwiththestatutoryprovisionsintheSMA.Section117(4)oftheSMAprovidesthat:


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Inmakinganorderunderthesubsection(3),theTribunalshallhaveregardto:

(a) TherelevantprovisionsofthisAct;or(b) Theinterestofallparcelownersorproprietorsintheuseandenjoymentoftheir

parcelsorthecommonpropertyorthelimitedcommonproperty.

Finally,theTribunalmayhelptoeducatethedisputingpartiesontherulesandregulationsofstratatitlesystemaswellastheconceptofstratalivingbyprovidingreasonsforitsdecisionoraward(StrataManagementAct,2013).

There aremany benefits for writing reasoned decisions, for example, such an approachgivesthepartiesasenseoffairnessbecausetheyweremadeawareofthereasonsfortheirvictoryorloss.Italsogivestheopportunityfortheadjudicatortoexplainthelawandestablishprecedents.Moreimportantly,writingreasoneddecisionsmaycreatetherapeuticeffectsforthedisputingparties.AccordingtoToohey(2009),“inwritingtheirreasonsfordecision,theadjudicatorhastheopportunity torefer inarespectfulwayto theparties’allegationsandsubmissionsandtoavoidunproductivecastigationoftheparties.”

Inconclusion,whileadjudicativeapproachesbytheTribunal,asproposedinthismodel,arestill verymuch influenced by traditional adversarial approaches, theTribunalmay in factprovidebetterefficiencythancourtprocessesintermsoftime,proceduresandcosts.CertainproceduresoftheTribunal,asprovidedintheSMAmayalsoprovideopportunitiesfortheTribunaltoapplytherapeuticapproachfortheparties ingivingdecisionsandawards.Thetherapeuticorientationofthetribunalasproposedinthismodelwillbenefittheparties,stratacommunityandthesocietyatlargeintermsofthepsychologicalfunctioningofthepartiesandtheirfuturerelationships.Thenextsectiondiscussescourtlitigationandappealasthefourthcomponentofthismodel.

5.4 Fourth Component – Court Litigation

InPeninsularMalaysia,theSMAprovidesspecificprocessesfordisputeresolutionforstrataschemes involving theTribunal.However, theSMAdoesnotpreventanyonefromseekingsettlement or remedy from the court of competent jurisdiction inmatters involving strataschemesdisputes.TheSMAevenallowsapartytoTribunalproceedingstoapplytotheHighCourt challenging a decision by theTribunal on the ground of serious irregularity (StrataManagementAct,2013).

While thestrata legislation inPeninsularMalaysiaallowsanypersontobringanaction incourttoresolveadisputearisingfromstrataschemes,thispaperarguesthatsuchactionshouldbeanoptionoflastresortorbeavoidedtotallyifpossible.Thisisbecausedisputeresolutionintraditionaladversarialcourtsystemonlyprovidestemporarysolutionsintermsofdamages,remedy,compensationorinjunction.Furthermore,courtlitigationinanadversarialmodel normally restricted itself to establishing the facts, weighing the evidence,applyingrelevantlegalprinciples,selectinglegalauthoritiesandmakingdecisionsbasedonthebestargumentandavailableevidence(SpillerandPeter,1999).Theendresultofthismethodisnotasolutiontothewholeproblemastheissuesunderlyingthelegalproblemsarenotresolved,butcontinuetosimmer(SammonsandKathryn,2008-2009).Accordingto Lippman (2007), court litigation involving people in relationships such as neighboursservesno-one’sinterest.Suchanapproachisachievingverylittle,makinglittledifferencetodisputingpartiesorthecommunity.


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Basedontheaboveobservationregardingthecourtlitigationandthenegativeimpactsithasinresolvingstrataschemedisputes,thispaperarguesthattheadversarialcourtprocessesforstratashouldconsideratransformativeapproachtolitigation,similartowhathasbeenproposedtotheTribunal inthethirdcomponentof thismodel. Insteadof just focusingonreducing court dockets, the courts should embrace a creative problem-solving approachthatnot onlyaddresses the legal issuesbutalsogivesattention to theunderlyingsocial,psychological or economicproblemsof thedisputingparties. Judges in suchcasesmay,insteadofmerelybeinganarbiter,takeacollaborativeandactiveroleintheproceedings.According to Kaye (2004),“problem-solving courts are courts.They strive to ensure dueprocess, to engage in neutral fact-finding, and to dispense fair and impartial justice.”Aproblem-solvingcourtintroducesanewconstructiveapproachtoprocessingcaseswiththeobjectiveofresolvingproblemsratherthanadjudicatingcases.

AccordingtoSammon(2008),theproblem-solvingcourtshaveseveraldistinctivefeatures.First,problem-solvingcourtsareoutcomebasedratherthanfocusingontraditionalcourtapproachessuchasprocessesandprecedents;secondly,problem-solvingcourtsencourageactive interaction between judges and litigants; thirdly, problem-solving courts are notlimited to restrictive sanctionsprescribedby the law; fourthly, problem-solvingcourtsarecreativeandinnovativeinutilisingcommunityserviceandothersocialservicesasalternativesanctionsandfinally,problem-solvingcourtsdonotonlyimposesentencingandsanctions,butarealsoactivelyinvolvedinmonitoringandensuringcompliancebyoffendersparticularlywherecommunitybasedsanctionsareapplied.Blaggarguesthatproblem-solvingcourtsdonotaimtoresolvecomplexlegalissues,butratheraremoreconcernedwithcomplexsocialproblemswhichcannotbeeffectivelydealtwithbythestandardisedandmechanisticfocusoflegalnormsaloneSammons(2008).

Today, court systems particularly in the United States, United Kingdom and Australiahave undergone significant change, shifting their orientations from traditional adversarialapproachestoproblem-solvingapproaches,employingacollaborativeprocessthatfocuseson therapeutic outcome (Blagg, 2008). Instead of viewing themselves as arbiters, judgesin problem-solving courts consciously view themselves as therapeutic agents, applyingtherapeuticfunctionsintheirdealingswiththedisputingparties.AccordingtoJudgeLippman(2007),“problem-solvingcourtisaboutmodifyingcourtprocessestofitthetrendsthataredrivingcaseloadactivity.Itisaboutcourtsputtingtheindividualfrontandcenter,fashioningindividualised responses designed to change future behaviour (Daicoff & Susan, 2006).”Whilstproblem-solvingcourtsbeganasspecialisedcriminalcourtssuchasdrugtreatmentcourtsanddomesticviolencecourts, theyhavenowexpanded to includecommunityandhousingcourtssuchasthehousingcourtinNewYorkthatwascreatedtoresolvedisputesincondominiumsandco-operatives.

For the purpose of this model, a theoretical framework based on the conceptandprinciplesofproblem-solvingcourtsisproposedforformalcourtadjudicativedisputeresolutionforstrataschemes.Withtheobjectiveofcreatingpeacefulandharmoniousstrataneighbourhoodsthatwillthensupporttheconceptofself-governanceinstratatitlessysteminPeninsularMalaysia,thispaperproposesthatjudgesadministeringadjudicativeprocessesbasedontraditionaladversarialsystemshouldtakeatransformativeapproachinresolvingdisputesbyembracingaproblem-solvingcourtapproach.Aproblem-solvingcourtapproachinthecontextofresolvingstrataschemedisputesmeansthejudgesshouldgiveattentiontotheunderlyingsocial,psychologicaloreconomicproblemsofthedisputingpartiesratherthan justdeterminingthedisputesbasedontheexistingfacts,principlesof lawandcaseprecedents. Judges in problem-solving court approach could play an active role in the


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proceedingswith theobjectiveofproviding thedisputingparties freedomtoexpress theiremotions,validatetheirconcerns,achieveself-determinationandrestoretheirrelationshipasneighbours.

Inconclusion,problem-solvingcourtapproachespromotebetteroutcomesforthedisputantsintermsofsupportingachangeinbehaviourandenhancingtheparties’psychologicalwell-being.Problem-solvingcourtapproachesalsopromoteastrongerinternalcommitmentamongthedisputantstochangeforthebetter.Intermsofmodificationofcourtprocesses,aproblem-solvingcourtapproachdoesnotrequireanyfundamentalchangesinthetraditionalcourt structure, processes or procedures. Instead, problem-solving court approaches canenhance procedural justice for the partieswithin the existing structure by giving litigantsgreater voice, validation and respect than is currently achieved in the court system.AdjudicationbytheTribunalinthethirdcomponentandlitigationbythecourtinthefourthcomponentsarebasedonadversarialadjudicativeapproach.Nomatterhowtheprocessesareconducted,theexperienceandtheoutcomenormallyyieldsunsatisfyingresultsforthedisputantsandthecommunity.Insuchsituation,areconciliationprocessneedstofollow.Thenextsectionproposesapost-adversarialapproachemployingtransformativemediationasthefinalcomponentinthismodel.

5.5 Fifth Component – Post-Dispute Resolution Process

Themainissuesinstratalivingarenotaboutindividuallegalrightsandinterestsbutratherhow neighbours and stakeholders with different values and interests can work throughtheirdifferencesandstilllivetogetherinaharmoniousandpeacefulstrataneighbourhood.Dispute resolution among neighbours particularly through adjudication by the Tribunalor court litigationmaynot necessarily resolve thewhole episode of the conflict. Inmanysituations,adversarialapproachbytraditionalcourtsystemsmayonlyleadtothe“settlementofdisputes”andnotthe“resolutionofrelationships.”Asaresult,hostilitybetweenthepartiesmaycontinueandthereisstillapossibilitythatthewoundwillneverheal,thetrustwillneverberecoveredandtheenmitywillsilentlycontinue.Wherethisisthecase,thenegativeeffectsoroutcomesofthedisputeresolutionprocessforstrataschemedisputesmaycontributetocreatingacommunitywithentrenchedconflictanddeterioratingpersonalrelationshipsthusunderminingtheconceptofself-governance.

ResearchbyMienckeet. al. (1990) has shown that goodneighbour relations contributesignificantlytoahighersenseofcommunityandthesetwoimportantsocialconstructsmaycontributepositivelytothestrataneighbourhoodandtheconceptofself-governanceinstrata titlessystem.While theprevious fourcomponentsof thismodelproposevariousproblem-solvingapproachesinresolvingstrataschemedisputes,thismodelisnotcompletewithoutapost-disputeresolutionprocessbetweenthepartiesincontinuingrelationshipstofurtherhealthewounds,mendthefencesandrenewtherelationship.Theobjectiveofapost-disputeresolutionprocessistoallowanyunderlyingissuesinvolvingbehavioural,emotionalorrelationshipfactorsthatwerenotpubliclyhighlightedandaddressedduringtheinformalandformalprocessofresolvingdisputestobefurtherdeliberatedanddiscussedinaprivatereconciliationprocess.

Animportantquestionthatcanbeaskedaboutthefinalcomponentishowapost-disputeresolution can be implemented?Whatwill be themain driver that pushes the parties toundertake reconciliation process? Taking into consideration the objectives of this modelwhicharetopromotepositivecommunicationandaneducationalexperienceduringdispute


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resolutionprocesses,thispaperproposesfortheTribunalandtheCourtstoencouragethedisputingpartiesduringtheadjudicativeprocessestoparticipateinpost-adversarialmediationaspartofreconciliationprocess.TheChairmanoftheTribunalorajudgeinsuchcasesmayprovideinformationtothepartiesaboutthetangibleandintangiblebenefitsofreconciliationmediationonfuturerelationships,psychologicalwell-beingandeconomicincentives.

Themanagementcorporationandthebuildingmanagercanalsoplayanimportantroleinencouragingdisputingpartiestoresolveanyunderlyingissuespost-adjudication.Duetothedestructiveconflictinteractionsnormallyoccurduringadjudication,thepartiesmaynotbeabletocommunicatewitheachotherpositivelyorconstructivelypost-adjudication.AccordingtoFolger(2008),conflicttendstolessenpartiesabilitytoaccuratelyunderstandandassestheirsituations.Asaresult,theirrelationsasneighboursmayfurtherdeteriorateandthiswillaffectthestabilityofstrataneighbourhoodsinthelongterm.Inordertomaintainpeaceandpromotegoodneighbourrelationsamongmembersofstratacommunity,themanagementcorporation or the buildingmanager is encouraged to facilitate “transformation” in theparties’interactionbyapplyingtransformativemediationframeworkforexample.

6. CONCLUSION

Stratatitlesystemscreateauniqueformofcommunallivingbasedontheprincipleofself-governance.Thesuccessofthisconceptreliesstronglyongoodneighbourrelationsand a strong sense of community.These are the keys to strata schemes functioningwell and form the basis for a good neighbourhood.A good strata neighbourhood is onewhereneighbourshavemutualrespectforeachother,astrongsenseofbelonging,activelyparticipateinthecommunityanddemonstratein-groupsolidarityandunity.Alltheseelementsofagoodstrataneighbourhoodcontributesignificantlytopeople’shealthandpsychologicalwell-beingwhenlivinginastrataenvironment.

Disputesinstrataschememayoccurinrelationtoavarietyofissuesandcanbedamagingtoharmoniousstrataliving.AccordingtoLeshinskyetal (2012),“conflictbetweenneighbourscan be some of the most bitter and protracted types of disputes in our communities.”Traditional adversarial adjudicative approaches to dispute resolution have been shown tobeineffectiveinresolvingdisputesinvolvingrelationships,particularlyintermsofneighbourrelationsinstrataschemes(FullerandLon,1978).InordertoaddresstheinadequaciesinthecurrentdisputeresolutionmodelforstrataschemedisputesinPeninsularMalaysia,thispaperproposesamodelthatiscomprehensive,dynamicandresponsive.

Thismodelisproposednotonlytoachieveeffectivenessandefficiency,butmostimportantly,toproducesomeformoftherapeuticoutcomeforpeopleexperiencingdisputesinstratatitlecontexts through thepreservationofneighbour relationsandoptimisationofcommunity’swell-being.Thismodel consists of five components.The first component is centred on amediationprocess inan internaldispute resolutionsetting.Thesecondcomponentbuildsonthecentralityofconciliation,whichisanon-adversarialdisputeresolutionprocessinvolvingtheCOB.ThethirdcomponentidentifiestherapeuticopportunitiesinanadjudicativeprocessofferedbytheTribunal,whilethefourthcomponentsuggestsaproblem-solvingapproach for thecourtssystem in resolvingstrataschemedisputes.Thefifthandfinalcomponentproposesapost-disputeresolutionreconciliationprocess.Thesefive components of dispute resolution processes need to be read and understood as anintegratedwhole in order to construct a newdispute resolutionmodel for strata schemedisputesinPeninsularMalaysia.


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THE IMPACT OF THE GLOBAL FINANCIAL CRISIS ON PUBLIC LISTED PROPERTY DEVELOPMENT COMPANIES OF MALAYSIA, SINGAPORE, INDONESIA AND THAILAND

Abdul Rashid Abdul Aziz a*,Chan Toong Khuanb,Leong Boon Tikc,Nurhafizah Yaakoba,Abdullahi Umar Ahmedd,Olanrewaju Abdullateefe

*CorrespondingauthorEmail:[email protected]

aSchoolofHousingBuildingandPlanning,UniversitiSainsMalaysia,11800PenangbFacultyofArchitecture,BuildingandPlanning,UniversityofMelbourne,Victoria3010,AustraliacSchoolofArchitecture,Building&Design,Taylors’University,47500SubangJaya,SelangordCivilEngineeringDepartment,AlhosnUniversity,POBox38772,AbuDhabi,UnitedArabEmirateseFacultyofEngineeringandGreenTechnology,UniversitiTunkuAbdulRahman,Cheras,43000Kajang,Selangor

Abstract

TheGlobalFinancialCrisis(GFC)thatpeakedin2008issaidtobetheworsteconomiccrisissincetheGreatDepression.ThecontagionwastransmittedtoAsianeconomies indirectlythroughthecollapse inexports.AstudywasconductedtoexaminetheimpactoftheGFConpublic listedcompaniesandrealestate investmenttrusts(REITS)ofMalaysia,Singapore, IndonesiaandThailand.Thisarticleonlygivesfocusonpubliclistedcompanies.Thestudyperiodwas2004-2012inclusivelytoenablethedynamicsof the pre-GFC,GFC and post-GFC periods to exert their full impact on the sampled companies.Thecompanieswereselectedbasedonasetcriteria.PanelDataRegressionAnalysisrevealsthatSingaporean(measuredbyROAAandROAE)andThaicompanies(measuredbyROAE)wereaffectedbytheGFCin2008and2009respectively.Malaysiancompanies(measuredbyROAE)werenegativelyaffectedbythecessationofthemini-propertyboomin2005whereasIndonesiancompanies(measuredbyROAA)wereaffectedbythesharpdomesticinflationof2012.Acountry-by-countrymacro-analysiswasconductedtoprovideexplanationbehindtheseperformances.

Keywords:Corporate financial performance, domestic shocks, external shocks, government intervention


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1. INTRODUCTION

TheGlobalFinancialCrisis(GFC)withitsepicentreintheUShasbeenacknowledgedastheworsteconomic crisis since theGreatDepression of 1929-1939. It emanated from theUS investors’lossofconfidence in thevalueofsub-primemortgages inJuly2007,whichthenescalated intoaliquiditycrisis.BySeptember2008,thecrisisrapidlyreverberatedaroundtheworldwhenstockpricesinmanycountriesplungeddramatically.Thefull-blownsystemiccrisisinemergingcountriesdidnottakeplaceimmediatelyin2007,butinSeptember2008withtheLehmanBrothers’collapse(FrankandHesse,2009).Asianeconomieswereaffectedeventhoughtheirbusinesscyclesandthatofindustrialcountrieshavebeenobservedtobedecoupled(Kose,2008).ThecontagionwastransmittedtoAsianeconomiesindirectlythroughthecollapseinglobaldemandandworldtrade(LinandTreichel,2012).Singapore,MalaysiaandThailandsufferednegativegrowthratesin2009,thoughnotIndonesia(seeFigure1).

Figure 1:GDPgrowthofMalaysia,Singapore,IndonesiaandThailandSource:WorldBank.

Differentcountriesresponded indifferentways tomitigate thecontagion.MalaysiaandThailandincreasedtheirexpenditurewhereasIndonesiareliedontaxdeductionstostimulatetheeconomy(Sangsubhan&Basri,2012).Singaporeadoptedthe‘Keynesianlogic’(Chew,2011)andcomplicatedmonetarypolicy(Lee,2011).

MilunovichandTruck(2013)note:“Despitetheongoingdebateoncontagioninfinancialmarkets,thereisonlyasmallbodyofliteratureinvestigatingcontagionspecificallyforpropertyorrealestatemarkets.Thisisevenmoresurprising,sinceGFCoriginatedfromasubprimemortgagecrisisandwas,therefore,heavilyrelatedtorealestate.”

Hence a study was initiated to examine the extent to which the GFC impacted the financialperformanceofpubliclistedcompaniesandREITSofMalaysia,Singapore,IndonesiaandThailand.Becauseofspacelimitation,thispaperpresentsthefindingsoftheformer.Thelistedcompaniesof


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thesecompanieswereimpactedbytheGFC(seeFigure2).Theircombinedmarketcapitalisationin 2008 was US$568.442 billion, which was just over half (52%) from the previous year ofUS$1,086.891billion.Theselectedstudyperiodwas2004-2012inclusivelytoenablethedynamicsofthepre-GFC,GFCandpost-GFCeventstoproperlymanifestinthefinancialperformanceofthesecompanies.

Figure 2:Marketcapitalisationoflistedcompanies(currentUS$)ofthestudiedcountries.Source:WorldBank.

Theresearchobjectivewereasfollows:1. Todeterminewhetherthelowestpointsinthefinancialperformanceofpubliclistedproperty

developersofMalaysiaSingapore,ThailandandIndonesiacoincidedwiththeGFC.2. Toprovidepossibleexplanationsbehindtheemergenceoftheselowestpoints.

Singapore,ThailandandIndonesiawerechosenastheyareMalaysia’sclosestneighbors.Togetherthey, like therestofAsiahavebeenexperiencingcloserfinancialand trade linkages,aswellasincrease inbusinesscycleco-movements (GongandKim,2013). It isalwaysuseful toconducta cross-country comparative study to gauge howMalaysia fare in the face of external shockscomparativelytoothers,andtoprovideexplanationsforthephenomenon.(SinghandDhinga,2013)Becauseoffinancialandtimeconstraintsmoreneighbouringcountriescouldnotbeincluded.

2. THE GLOBAL FINANCIAL CRISIS

ThissectionsetsthescenebyprovidingsomedetailsabouttheGFC,inparticularwhattriggereditandhowitreverberatedaroundtheworld.ItendsbyhintingoftheEurozoneCrisis.


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Figure 3:GDPgrowthofselectedregionsoftheworld,2004-2012.Source:IMF

Except fora feweconomists, theGFCwas largelyunanticipated (LinandTreichel,2012).Since2000,theworldeconomyhadexperiencedstrongexpansion.Accompanyingit,wastheemergenceoflargecurrentaccountsurplusesinEastAsiaandEuropeandawideningcurrentaccountdeficitintheUS.ManyacceptthattheGFCbeganwiththecollapseofLehmanBrothersonSeptember14th,2008followingaccumulateddefaultsonmortgagesandderivativeproducts.Panicensued.It triggeredasignificantdecline incredit to theprivatesectorandasharprise in interest rates.ThecollapseoftheUSfinancialinstitutionsledtothecrashofequitymarkets,internationaltradeand international production around theworld.Advancedeconomies, including theUS, togetherwithdevelopingcountriesenteredintoarecession(seeFigure3).Simplyput,whatstartedasanassetbubble,explodedintoahousingandbankingcrisiswithacascadingeffectonconsumerandinvestmentdemand(Krugman,1998).

Intherun-uptotheGFC,creditexpansionsfueledrealestateboomsinmanydevelopedeconomiesincludingtheUS(Laeven,2010).WhentheGFCgrippedthesecountries,thehousingbubblecouldnotbesustained.Manyhouseholderscouldnotcopewiththerisinginterestratesandfallinghomevalues.Sharpcompressioninconsumerspendingcompoundedalreadydifficultsituationsintherealestate.Austria,Hungary,theUK,Iceland,IrelandandtheUSwereamongtheearliesttoexperiencehousepricedeclines(PaisandStock,2011).TheGFCdemonstratedthepowerful linksbetweenthehousingsector,financeandtheeconomy(Doling,2013).Figure4showstheglobalhousepriceindexpeakedjustbeforetheGFC.Bytheendof2012,ithadyettorecovertothepre-GFClevel.


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Figure 4:Globalhousepriceindex,2004-2012.Source:InternationalMonetaryFund(http://www.imf.org/external/research/housing/)

PaisandStork(2011)positthatoneofthechannelsthatcontributedmosttotheglobalspreadoftheGFCwascommonshockstoassetmarkets,especiallytherealestatemarkets. TherealestatesectorofdifferentcountriesexperienceddifferentlevelsofvulnerabilitytoGFC(Peto,2011).WhilethiswastrueforcountrieslikeSingaporewhichdisplayedthehighestextremedependenciestoreact togetherwith similar countries, it did not apply to countries likeMalaysia (KimandZhuo,2013).InsteadtheGFCwastransmittedtomanydevelopingcountriesthroughthecontractioninaggregatedemandcausedbythecollapseinexports,eitherdirectlyorindirectly,fromtheUS(ZainalandRasiah,2009).

TheUSFinancialCrisisCommissioncreatedtoinvestigatetherootcausesoftheGFCnotedthatthecrisiswasavoidable.Itsaid:“Despite theexpressedviewofmanyonWallStreetand inWashingtonthat thecrisiscouldnothavebeenforeseenoravoided,therewerewarningsigns.Thetragedywasthattheywereignoredordiscounted.Therewasanexplosioninriskysubprimelendingandsecuritisation,anunsuitableriseinhousingprices,widespreadreportsofegregiousandpredatorylendingpractices,dramaticincreasesinhouseholdmortgagedebt,andexponentialg

journal of valuation and property servicesirep.iium.edu.my/78678/1/sp in jvps vol 16 (1).pdf · •...

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