A New Challenge for Housing Developers?

On 26^th November 2019, the Federal Court in the case of Ang Min Lee v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & 5 other appeals, issued a decision that will have an important bearing on the relationship between a housing developer and its purchasers of housing accommodation where the sale and purchase agreement is regulated by the Housing Development (Control and Licensing) Regulations 1989 (the “Regulations”).

In a nutshell, the relevant facts are that:

• the developer of the Sri Istana Condominium had applied to the Controller of Housing (“the Controller”) for an extension of time for the delivery of vacant possession of the units to the purchasers, the application being made pursuant to regulation 11(3) of the Regulations;

• the Controller rejected the application whereupon, pursuant to regulation 12 of the Regulations, the developer appealed to the Minister of Urban Wellbeing, Housing and Local Government (“the Minister”);

• by a letter dated 17.11.2015, the Minister purported to grant an extension of 12 months to the developer;

• the purchasers then filed an application to the High Court for judicial review against the Minister, the Controller and the developer.

After a series of hearings and appeals, the Federal Court laid down the law as follows:

• the Housing Development (Control and Licensing) Act 1966 (“the Act”) is a piece of social legislation intended to protect the interests of the purchasers;

• there is nothing in the Act that allows the duty of the Minister to safeguard the interests of the purchasers to be delegated to some other authority (such as the Controller);

• accordingly, the Controller has no power to waive or modify the prescribed contract of sale under regulation 11(3) of the Regulations, and regulation 11(3), which purported to give the Controller the power to waive or modify the provisions of the statutorily prescribed sale and purchase agreement (the Schedule H contract), is ultra vires the Act.

Comments

The Federal Court decision above does not deal with whether (and if so, how) a modification of a Schedule H contract can be lawfully made, whether on a unilateral application by a developer or a modification that is made with the consent of the purchaser.

Further, it is not clear how the decision affects all other projects where extensions of time have hitherto been granted to the developers by the Controller, in particular whether the purchasers may now pursue a claim for damages for late delivery. 

It remains to be seen how housing developers will now respond to this landmark decision.  Be that as it may, prompt decisive action would probably need to be taken to resolve the unanswered questions.

Contributed by:
Ng Sai Yeang (Partner)
(T): 603 – 2632 9877
(E): nsy@rdl.com.my

Wong Chee Chien (Associate)
(T): 603 – 2632 9930
(E): cheechien@rdl.com.my