Court of Appeal
It is safe to say that the covid-19 pandemic has had a negative effect on housing developers in Malaysia. Not only have they been forced to manage the uncertainty and unprecedented difficulty caused by the virus, but recent court decisions have also seemingly added to their problems.
In its 2020 decision in Ang Ming Lee,(1) the Federal Court held that the controller of housing is not empowered to grant a time extension for the delivery of vacant possession (for further details please see "Apex court finds controller of housing's powers to waive or modify provisions of statutory contract invalid"). In early 2021, the Federal Court held in PJD Regency Sdn Bhd(2) that the date for the calculation of liquidated damages begins from the date of payment of the booking fee, not the date of the sale and purchase agreement.
However, all is not lost. In a 29 July 2021 decision, the Court of Appeal held that, among other things, while the controller is not empowered grant a time extension, this does not mean that the minister of urban wellbeing, housing and local government cannot utilise this power.
Alvin Leong and other purchasers (purchasers) entered into Schedule H statutory sale and purchase agreements (SPAs) for several service apartments (parcels) with the developer. The SPAs provided that vacant possession of the parcels would be delivered to the purchasers within 42 calendar months from the date of the SPAs.(3)
The developer sought a further extension from the controller to extend the time for delivery of vacant possession to 59 months. The controller partially allowed the developer's request, allowing a period of 54 months. Dissatisfied with the controller's decision, the developer appealed to the minister of urban wellbeing, housing and local government,(4) who allowed the developer's appeal.
Dissatisfied with the minister's decision, the purchasers filed judicial review applications seeking, among other things, to quash the said decision.
The high court(5) allowed the purchasers' judicial review applications and quashed the minister's decision. The judge's decision included that:
- he was bound by the Ang Ming Lee decision – namely, that regulation 11(3) of the HDR (which delegates the minister's power to grant time extensions to the controller) was invalid and is ultra vires the Housing Development (Control and Licensing) Act (HDA) 1966. Accordingly, the controller could not invoke regulation 11(3) of the HDR to waive or modify the 36-month statutorily prescribed time for delivery of vacant possession;
- nothing in the HDR empowered the minister to extend the time for delivery of vacant possession. As such, there was no lawful basis for the minister to make such a decision; and
- assuming that the minister had the power to grant the time extension, the purchasers should have been accorded a right to be heard before the minister made his decision.
The Court of Appeal held that while the controller does not have the power to grant a time extension, the same cannot be said about the minister. Section 24 of the HDA is broad enough to bestow the minister with this power.
The Court, through Justice Lee Swee Seng's decision in Loh Tina,(6) has alluded to the proposition that the power to grant a time extension may fall within the minister's power.
This is an interesting decision that has potentially important repercussions for housing developers. The Court of Appeal's grounds of judgment in the Alvin Leong saga are worth discussing in depth.
For further information on this topic please contact Bahari Yeow Tien Hong or Alex Choo Wen Chun at Gan Partnership by telephone (+603 7931 7060) or email ([email protected] or [email protected]). The Gan Partnership website can be accessed at www.ganlaw.my.
(1) Ang Ming Lee v Menteri Kesejahteraan Bandar and other appeals  1 MLJ 281.
(2) PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah and other appeals  2 MLJ 60. For further details, please see "Housing developers beware – Federal Court upholds Faber Union" and "Housing developers beware – aftermath of PJD".
(3) Clause 25 of Schedule H provides that vacant possession will be delivered within 36 months from the date of the SPA. The reason for the discrepancy in this case was that the housing developer had priorly requested an extension.
(4) Regulation 12 of the Housing Development (Control and Licensing) Regulations (HDR) 1989 allows any person aggrieved by the decision of the controller to appeal to the minister.
(5) Alvin Leong Wai Kuan v Menteri Kesejahteraan Bandar  10 MLJ 689.
(6) Loh Tina v Kemuning Setia Sdn Bhd and another appeal  6 MLJ 191.