Court of Appeal
Following the release of the Court of Appeal's judgment in the Alvin Leong case,(1) which reversed the decision of the High Court(2) (for further details, see "Alvin Leong saga: housing developers breathe sigh of relief"), this article aims to analyse the findings and implications of this landmark decision on the housing industry in Malaysia.
Alvin Leong and other purchasers entered into statutory sale and purchase agreements (SPAs) for several service apartments (the parcels). Prior to entering into the SPAs, the developer obtained an extension to deliver vacant possession (VP) of the parcels for six months from the Controller of Housing (the Controller). Thus, the SPAs promised that VP would be delivered within 42 months (instead of 36 months as provided under Schedule H) from the date of the SPAs (the first extension).
Subsequently, the developer sought a further 17-month extension from the Controller to extend the time for delivery of VP to 59 months (due to a 17-month stop work order). The Controller partially allowed the developer's request to a period of 54 months.
Dissatisfied, the developer appealed to the Minister of Urban Wellbeing, Housing and Local Government (the Minister),(3) who allowed the developer's appeal and extended the deadline to deliver VP to 59 months (the second extension). The letter communicating the decision of the second extension was signed by the Minister himself. Dissatisfied with the decision of the Minister, the purchasers filed judicial review applications seeking to, among other things, quash the decision of the Minister (ie, the second extension).
The High Court allowed the purchasers' judicial review applications and quashed the decision of the Minister.
In setting aside the decision of the High Court and holding that the decision of the Minister was valid, the Court of Appeal held as follows.
No issue with first extension
This first extension was granted on 10 March 2013. The Court of Appeal rejected the purchasers' submission that they had been unaware of the first extension. The purchasers did not file a leave for judicial review within the time frame provided under the Rules of Court 2012, did not apply for an extension of time to file a judicial review application nor did the purchasers amend their existing judicial review applications even when prompted by the High Court. The High Court judge had erred in bringing the first extension into play of his own accord when none of the purchasers took issue with the first extension.
Ang Ming Lee case distinguished
The Federal Court in the Ang Ming Lee case did not hold that the Minister has no power to "vary and modify" the terms of the statutory SPA. The Federal Court simply decided that the Controller could not grant an extension of time because the Minister was not empowered to delegate his powers to regulate the terms and conditions of a statutory SPA to the Controller. In the Ang Ming Lee case, the decision to extend time to deliver VP was made by the Controller. In the present case, the second extension was made by the Minister himself.
Minister's power to grant extension of time
While the Federal Court in the Ang Ming Lee case held that regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 (HDR) was ultra vires, the Minister is still seized with power to "waive and modify" the time period to deliver VP under section 24(2)(e) of the Housing Development (Control and Licensing) Act 1966 (HDA).
Second extension does not suffer from procedural impropriety
The crux of the purchasers' argument in this respect was that they had not been given the rights to be heard. There is no express requirement in the HDA or HDR for the rights to be heard. As such, it is important that the Minister acts fairly and takes into consideration the interests of the purchasers. The Court of Appeal held that the Minister had discharged the said duty.
Second extension should not be set aside for irrationality
Parliament in all its wisdom granted flexibility to the Minister to extend time of completion in appropriate circumstances. The Court of Appeal took into consideration the housing and construction industry, commercial realities and possible ramifications should the second extension were not granted (ie, whether the developer would suffer liquidation and the liquidator would have to deal with subcontractors, suppliers, purchasers and bankers). Should a rescue contractor have come along, the purchasers may have had to have paid an enhanced purchase price to complete the project. Further, considering that the stop work order had been issued by no fault of the developer, the second extension could not be said to be irrational.
The decision of the Court of Appeal is definitely a welcomed one. The Court appreciated the provisions of law, the nuances to a precedent and commercial realities. It evinces the unenviable task that judges so often find themselves in – that of balancing the rights of conflicting parties while bearing commercial realities in mind. This decision would serve to encourage housing developers that while the HDA and HDR are pieces of social legislations, housing developers are not left without redress.
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) Bludream City Development Sdn Bhd v Kong Thye & Ors and other appeals  2 MLJ 241.
(2) Alvin Leong Wai Kuan & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan and other applications  10 MLJ 689.
(3) Regulation 12 of the HDR allows any person aggrieved by the decision of the controller to appeal to the Minister.