If your developer fails to deliver vacant possession to you within the time stated in a contract of sale, can your developer apply for an extension of time to the Controller of Housing (“the Controller”) to extend the completion date? Is the Controller empowered to determine such issues?

The Court held that:

1. The Controller did not have the power to modify a contract of sale. Only the Minister of Urban Wellbeing, Housing, and Local Government (“the Minister“) can decide vice versa; and
2. Regulations 11 and 12 in the Housing Development (Control and Licensing) Regulations 1989 (“the Regulation“) is considered ultra vires and is not applicable in the eyes of the law.

This was determined in the recent Federal Court case of Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and Other Appeals [2020] 1 CLJ 162. This article will briefly dissect the issue in this case.

Brief Facts

BHL Construction Sdn Bhd, the developer for Sri Istana Condominium, entered into multiple sales and purchase agreements with multiple individuals (including Ang Ming Lee) for the purchase of their condominium units. It was agreed in the Sale and Purchase Agreement (“SPA”) and pursuant to Schedule H of the Regulation that:

1. BHL Construction will deliver vacant possession of the units within 36 months from the date of the signing of the SPAs to the purchaser of the condominium units; and
2. BHL is liable to pay the purchasers liquidated ascertained damages if it fails to deliver the units within 36 months.

As the deadline to deliver the units inched closer towards the end of 36 months, BHL Construction applied to the Controller of Housing for an extension of 12 months to complete the condominium. This application for extension of time was rejected by the Controller.

BHL Construction then appealed the Controller’s decision to the Minister. The appeal was purportedly allowed, albeit tainted by the allegation that a representative of the Controller allowed the impugned appeal instead of the Minister. Aggrieved by the decision, the purchasers filed an application for judicial review against the Minister, Controller and BHL Construction.

The Contention

The case was then heard before the Federal Court. The contentions were:

1. whether the Controller has the power to waive or modify any provision in a contract of sale pursuant to the regulations; and
2. whether the Minister, in accordance with section 24 of the Housing Development (Control and Licensing) Act 1966 (“the Act“), is allowed to delegate the power to waive or modify a contract of sale to other authorities such as the Controller.

The Federal Court’s decision

The Federal Court sided with the purchasers of the condominium. In coming to its decision, the Court noted that:

1. Section 24 of the Act allows the Minister to govern the rules, terms, and conditions of the contract of sale between a purchaser and developer. However, the Minister cannot then sub-delegate or empower the Controller to waive or modify the rules, terms, and conditions of the contract of sale between a purchaser and developer;
2. The Court held that the power of delegation must only be exercised by the authority (in this case, the Minister) whom the power is conferred upon, even where it causes administrative inconvenience unless it can be inferred by the wording of the statute that the power was intended to be delegable. This applies especially in situations where the element of trust exists;
3. In this case, the legislation was created to ensure that a house buyer is protected from unscrupulous developers. Based on the wording of the Act, the Parliament has entrusted the Minister to safeguard the interests of a purchaser, i.e. there is no indication in the Act to say that such duty to safeguard the interests of the purchasers may be delegated to any other body;
4. While section 5 of the Delegation of Powers Act 1956 allows a Minister to delegate his power or duty to some other authority, the delegation must be gazetted (in this case, the delegation was never gazetted);
5. The power to regulate under section 24 of the Act does not include the power to delegate;
6. Even assuming the power to regulate includes the power to delegate and that the delegation was gazetted, if the Minister has delegated his power to the Controller to make decisions under regulation 11(3) of the Regulation, there should not be an appeal process from the decision of the Controller to the Minister because it would be akin to an appeal to the Minister against his own decision; and
7. Assuming that the Minister is allowed to delegate and the delegation was gazetted, the Regulations made by the Minister must achieve the intention of the Parliament in relation to the creation of the Act, i.e. to protect the interests of the purchasers and not the interest of the developers. The Minister is clearly not protecting the interest of the Purchaser when it allows the Controller to modify the terms of the Schedule H to grant an extension of time to BHL Construction.

**Important Update**

The recent Federal Court decision of Ang Ming Lee & Ors and Other v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor And Other Appeals [2020] 1 MLJ 281 states that, amongst others:

1. A developer must deliver vacant possession of a property to the purchaser within the stipulated timeline as prescribed in schedule H, i.e. 36 months from the signing of the SPA; and
2. A developer cannot apply for an extension of time with the Controller of Housing to extend the completion time to 54 months.