Brief Facts

The appellant is the owner of a unit in a property development known as “Sentral Residences” which was purchased from the respondent company who is the developer of the project. A Sale and Purchase Agreement (“SPA”) was entered into on 18 July 2012.

Under the Housing Development (Control and Licensing) Regulations 1989 (“Regulations 1989”), specifically in relation to Schedule H of the Regulations 1989, the respondent as the developer is required to deliver vacant possession of the parcels and to complete the common facilities of the residential development within 36 months. Failure by the developer will entitle the purchasers to LAD.

Some 18 months prior to the execution of the SPA, the respondent has obtained an extension of time (“EOT”) to complete the project. This EOT was granted by the Housing Controller of the Ministry of Urban Wellbeing, Housing & Local Government under Regulation 11(3) of the Regulations 1989, to an extended period of 54 months. This was also reflected in Clauses 25 and 27 of the SPA. The vacant possession was delivered on 8 February 2017.

Three years after vacant possession was delivered, the appellant filed a suit to claim for LAD. The appellant alleged that the delivery of vacant possession should have been 17 July 2015, which is the original completion date (based on the original completion period of 36 months).   

The appellant applied for a summary judgment. However, the application was rejected by the High Court and the appellant’s suit was struck out. The appellant thus filed an appeal.

Court of Appeal’s Findings 

1. 1. Taking into account the Federal Court’s decision in Ang Ming Lee v Menteri Kesejahteraan Bandar, Perumahan & Kerajaan Tempatan [2020] 1 CLJ 162, the Court of Appeal held that the EOT obtained by the respondent is void.

2. 2. Regulations 1989, which was made pursuant to the Housing Development (Control and Licensing) Act 1966 (“HDA 1966”), is a social legislation designed to protect the house buyers, the interests of the purchasers shall be the paramount consideration against the developer.

3. 3. Regulation 11(3) of the Regulations 1989 which confers the Housing Controller (here being the respondent developer) the powers to waive or modify any provisions in the statutory contract in Schedule H to the Regulations is indeed ultra vires to its enabling legislation, HDA 1966. The respondent thus has no power to waive or modify the 36-months period stipulated in the SPA.

4. 4. Moreover, where two different interpretations of the statute are possible, it is the one which favours the interest of the community over the interest of the individual that will be preferred.

5. 5. Despite the fact that the application for extension of time was applied prior to the entry of the SPA, the Housing Controller still cannot amend the statutory contract. It is wholly inconsequential whether the extension was obtained before or after the execution of the SPA. 

6. 6. Further, the Court has also made the following findings:

1. 1. a) Estoppel – The respondent alleged that certain LAD was paid to the appellant, and a letter was signed to waive any further claims against the respondent. Thus, appellant was therefore estopped from bringing an action for LAD again. However, the court held that an ultra vires act cannot be legitimised through estoppel, waiver or agreement between the parties. Estoppel, as an equitable principle, cannot defeat clear statutory provisions of law.

1. 1. b) Limitation – For a claim of LAD, the cause of action accrues on the date the purchaser accepted delivery of vacant possession, and not on date of the execution of SPA. In fact, no LAD would arise at such early stage as one could not ascertain LAD before delivery of vacant possession. Thus, pursuant to section 6(1)(a) of the Limitation Act 1953, the appellant’s action was not barred by limitation.

1. 1. c) Mode of commencement – A writ action is a correct mode to commence proceedings in determining the validity of extension of time.

1. 1. d) The effect of Ang Ming Lee – The ruling in Ang Ming Lee shall have a retrospective effect. The same approach shall be adopted, as long as the verdict on fresh interpretation of the law does not contain any declaration of it having a prospective effect.

Comments

7. 7. The court’s interpretation on Regulation 11(3) was more in favour to protect the interest of the public in general, in which house purchaser’s interest are safeguarded. Moreover, the intention of the Parliament is well-executed and applied.

8. 8. The same approach was also adopted by the Federal Court in Innab Salil & Ors v Verve Suites Mont Kiara Management Corporation [2020] 10 CLJ 285, which held that both Strata Management Act 2013 and HDA 1966 are social legislations as well. A statute is categorised as a social legislation if its main purpose was to benefit, ease, facilitate the affairs, or to protect a certain group of people.

9. 9. This interpretation was applied by the Court of Appeal in the case of UE E&C Sanjia (M) Sdn Bhd v Lee Jeng Yuh & Anor and another appeal [2021] 6 MLJ 864, where the court was already in the view that whether the approval for EOT is obtained before or after execution of SPA is irrelevant, as housing controller has no power whatsoever to waive and modify the terms and conditions of the scheduled agreement in the first place.

10. 10. Hence, developers shall be aware that an EOT in the delivery of vacant possession is not valid despite being validly granted by relevant authorities. It is pertinent for housing developers to strictly comply with the period of delivery for vacant possession as stipulated under the Regulations.

This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.

About the Authors
Pan Yan Teng
Senior Associate
Civil Litigation, Construction & Energy, Dispute Resolution
Harold & Lam Partnership
yanteng@hlplawyers.com

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Pang Yi Qing
Pupil-in-Chambers
Harold & Lam Partnership