CASE UPDATE – ANG MING LEE and BLUDREAM CITY DEVELOPMENT SDN BHD

Background facts

The Developer, BHL Construction Sdn. Bhd. entered into a Sale and Purchase Agreement (“SPA”) with the Purchasers for the sale and purchase of Sri Istana Condominium units.

The SPA was made pursuant to Schedule H of the Housing Development (Control and Licensing) Regulations 1989 (“Regulations”) which provides that the delivery of vacant possession of the units was within 36 months from the date of signing the SPA.

The Developer applied to the Controller of Housing (“Controller”) for an extension of time for the delivery of Vacant Possession of the units to the Purchasers pursuant to Regulation 11(3) but the application was rejected by the Controller.

The Developer subsequently appealed against the Controller’s decision to the Minister of Urban Wellbeing, Housing and Local Government (“Ministry” or “Minister”) pursuant to Regulation 12.

The Ministry allowed the appeal and granted an extension of 12 months (giving the Developer 48 months) to deliver vacant possession of the units to the purchaser. However, the letter approving the Developer’s appeal for extension of time was signed by on behalf of the Controller (“the impugned letter”).

Aggrieved by the Ministry’s decision, the Purchasers filed an application for judicial review to seek among others: –

(i) an order to quash the decision of the Controller;

(ii) a declaration that:

the impugned letter was invalid and beyond the jurisdiction stipulated in the Housing Development (Control and Licensing) Act 1966 (“Act”);

Regulation 11 (3) of the Regulations was ultra vires the Act.

Before the High Court and Court of Appeal

The High Court allowed the Purchasers’ application, and the Developer filed an appeal. 

The Court of Appeal set aside the High Court’s decision and held that: –

Regulation 11(3) is NOT ultra vires the Act;

The order as contained in the Impugned Letter was made without jurisdiction as it appears in the Impugned Letter that the decision was that of the Controller and the Controller could not have made a decision on his own; and

Since the Purchasers were not given the opportunity to be heard, the decision on the extension of time was set aside as it was null and void.

Both the Developers and the Purchaser appealed to the Federal Court.

Before the Federal Court

The questions that came before the Federal Court for determination are: –

Whether the Controller had the power to waive or modify any provision in the Schedule H contract of sale as prescribed by the Minister under the Act;

Whether Section 24 of the Act confers the power to the Minister to make regulations for the purpose of delegating the power to waive or modify Schedule H contract of sale to the Controller and etc.;

Whether Regulation 11(3) of the Regulations was ultra vires the Act.

The Federal Court held that the Controller has no power to waive or modify any provision in the Schedule H contract of sale because Section 24 of the Act does not confer power on the Minister to make regulations for the purpose of delegating the power to waive or modify the Schedule H contract of sale to the Controller. The Federal Court also recognised that the Act is as a social legislation designed to protect the interests of house buyers and Parliament has entrusted the Minister to safeguard the interest of the Purchasers.

BLUDREAM CITY DEVELOPMENT SDN BHD V KONG THYE & ORS AND OTHER APPEALS [2022] 2 CLJ 829, COURT OF APPEAL

Background facts

The Developer, Bludream City Development Sdn Bhd. entered a SPA with the Purchasers for the sale and purchase of units of service apartments in Sri Kembangan.

Throughout the Project, the Developer made the following applications for Extension of Time: –

Application for Extension of TimeDecision by the ControllerFurther actions carried out by the Developer/ Purchaser
1st Application- 6 months’ extension, i.e. from 36 months to 42 months (“1st Extension”)  GrantedNil
2nd Application-  17 months’ extension, i.e. from 42 months to 59 months (“2nd Extension”)  Granted an extension of 42 months to 52 months for the unsold units only.  The Developer appealed to the Ministry. The Minister agreed to amend Schedule H to the Act to extend the completion date. The Minister then granted an extension of 17 months (i.e. from 42 months to 59 months) to the Developer to complete the project.   Aggrieved by the Minister’s decision, the Purchasers filed an application for judicial review to challenge the Minister’s decision.

Before the High Court

The High Court allowed the applications for judicial review on the ground that Regulation 11(3) of the Regulations was ultra vires the Act as held in the Federal Court’s decision of Ang Ming Lee.

The High Court went on to invalidate the first extension even though there was no challenge against the same.

The High Court also granted a declaration that the Purchasers were entitled to their LAD claims based on the 36-month time period under Schedule H of the Regulations.

The Developer appealed to the Court of Appeal.   

Before the Court of Appeal

The issues before the Court of Appeal are: –

Whether the Minister’s decision was valid considering the decision in Ang Ming Lee?

Whether the Minister’s decision ought to be set aside for procedural impropriety in that there was a breach of natural justice when the Purchasers were not heard;

Whether the Minister’s decision ought to be set aside on grounds of irrationality; and

Whether the Court ought to interfere with the Minister’s decision.   

The Court of Appeal held as follows: –

 In Ang Ming Lee’s case, the decision to extend time to complete the units was made by the Controller and not the Minister. Here, it is the Minister that made the decision to extend time for the 2nd extension of 17 months and that decision was in a letter signed by the Minister to the Developer. Factual matrix of both cases are different. A holistic reading of Ang Ming Lee must mean that Regulation 11 (3) is ultra vires to the extent that it provided the Controller with the power to waive and modify the SPA in the Schedules to the Regulations. 

There was no express requirement of a right to be heard that must be given to the Purchasers. The Minister in discharging his duty would have to act fairly and take the interest of the Purchasers into consideration as he was entrusted under the Act to safeguard their rights. However, there was no need to hear the Purchasers individually or independently.

This was not a case where the developer was trying to take advantage of the Purchasers but in reality, where but for the extension of time and the resourcefulness of the developer, this project might well not have been completed, to the detriment of all. This was a case of a genuine need for the extension of time corresponding to the period of delay caused by the Stop Work Order which was not through any fault of the Developer.

Conclusion

The Court of Appeal in Bludream has clarified that the Minister has the power to modify the Schedule H Contract. The Federal Court’s decision in Ang Ming Lee only decided that the Minister could not delegate his power to the Controller to grant extension of time to the Developers for completing the project. 

Additionally, Bludream seems to be a decision that reflects some judicial activism. The Court has performed a balancing act between the interest of the Purchasers and the hardship suffered by the Developer in order to uphold the principle of fairness, reasonableness, and proportionality.

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