Malaysian Federal Court rules Controller of Housing had no right to grant extension of time to developers
22 January 2020
Ang Ming Lee & 34 Ors (Perayu) v Menteri Kesejahteraan Bandar, Perumahan Dan Kerajaan Tempatan [2019] 6 MLRA 494
On 26 November 2019, the Federal Court ruled that the Controller of Housing (“Controller”) had no right to grant extension of time (“EOT”) to developers to complete their property development projects.
In Ang Ming Lee & 34 Ors (Perayu) v Menteri Kesejahteraan Bandar, Perumahan Dan Kerajaan Tempatan, BHL Construction Sdn Bhd (“Developer”) had entered into various Sale and Purchase Agreements (“SPAs”) with the purchasers of units in the Sri Istana Condominium. The SPAs were made in the prescribed form for contract of sale under Schedule H of the Housing Development (Control and Licensing) Regulations 1989 (“Regulations”). Paragraph 25(2) of Schedule H of the Regulations provides that if a Developer fails to deliver vacant possession within 36 months from the date of signing of the SPA, the Developer will be liable to pay liquidated damages (“LAD”) to the purchasers for late delivery.
Before the expiry of the 36-month period, the Developer applied for an EOT to the Controller. This was rejected. Dissatisfied, the Developer lodged an appeal to the Minister of Urban Wellbeing, Housing and Local Government (“Minister”) for the same EOT. The appeal was allowed but the letter granting the EOT of 12 months to the Developer did not appear to have been made by, or on behalf of, the Minister. Instead, the letter was signed by an officer on behalf of the Controller. As a result of the EOT being granted, the purchasers were unable to claim for LAD as provided for under the SPAs. The purchasers filed an application for judicial review against the Minister, the Controller and the Developer.
The Federal Court found that the Controller does not have the power to waive or modify any provision in the statutorily prescribed contract of sale under Schedule H. The court also found that Regulation 11(3) of the Regulations, conferring power on the Controller to waive and modify the provisions of the SPAs, is ultra vires the Housing Development (Control and Licensing) Act 1966 (“Act”).
The Federal Court held that:
- by modifying the prescribed terms and conditions and granting the EOT to the Developer, the Controller had denied the purchasers’ right to claim for LAD as provided for in the SPA;
- the modification and granting of the EOT did not appear to protect the purchasers but rather the Developer, and this was contrary to the intention of Parliament;
- the argument by the Developer’s counsel that the Minister had delegated his power to the Controller to make a decision on the EOT could not be sustained;
- section 24 of the Act does not confer power on the Minister to empower the Controller to waive or modify the provisions of the contract of sale as prescribed in Schedule H;
- it is not open to the Federal Court to read into section 24 of the Act an implied power enabling the Minister to do so. As such, the Controller has no power to waive or modify any provision in the Schedule H contract of sale;
- the letter was not a valid letter granting an EOT as the letter was signed by an officer on behalf of the Controller and not on behalf of the Minister; and
- there was an absence of the Minister’s affidavit to explain the discrepancy and to state that the Minister had indeed decided to allow the Developer’s appeal for the EOT.