This Decision Considers The Entitlement Of A Developer To An Extension Of Time Pursuant To The Housing Development (Control And Licensing) Act 1966
Despite their best intentions to deliver property on time, developers can experience delays due to events beyond their control. The Housing Development (Control and Licensing) Act 1966 (HDA) allows for developers to apply for extensions of time should such situations arise. For a period of time, it would appear that these extensions of time were quite easy to obtain. However, this changed after our Federal Court in Ang Min Lee decided that the power to grant the extension of time was non-delegable, and only the Minister of Urban Wellbeing, Housing and Local Government (Minister) has the power to grant an extension of time.
Resulting from Ang Min Lee, the end purchasers in a housing project developed by Bludream City Development Sdn Bhd (“Bludream City”) challenged the validity of the extension of time granted to Bludream City by the Housing Controller of Urban Wellbeing, Housing and Local Government (“Controller”). The end purchasers sought liquidated ascertained damages (LAD) damages for late delivery against Bludream City.
The two main complaints by the end purchasers are (i) the grant of the extension of time was not made by the Minister, and (ii) even when the Minister grants the extension of time, this discretion was not properly exercised.
The Court of Appeal disagreed with the end purchasers and decided that (1) the Minister has the powers to validly grant an extension of time as a result of the appeal against the Controller’s decision and (2) the extension of time was properly granted because the Minister had considered all the relevant circumstances including the fact that the delay was not caused by Bludream City.
A. Facts in Bludream City
Bludream City entered into Sales and Purchase Agreements (SPA) with end-purchasers to deliver vacant possession within 42 months. Whilst carrying out the construction works, Bludream City was issued with a stop work order by the local authority due to cracks found at a school adjacent to the development site. Investigations were carried out at the adjacent school. It appears that that the cracks were caused by a dewatering problem. The stop work order was in force for 17 months.
As a result of the stop work order, Bludream City applied to the Controller seeking a 17-month extension of time to deliver vacant possession. The Controller granted an extension of time of 12 months. Bludream City appealed against this decision to the Minister. The Minister allowed Bludream City’s appeal and extended the time period to deliver vacant possession to 59 months (i.e. an extension of 17 months).
B. Decisions of the High Court and the Court of Appeal in Bludream City
The end purchasers commenced legal proceedings contending that the Minister’s decision to grant the extension of 17 months is void. The High Court agreed with the end purchasers and quashed the extension of time granted by the Minister pursuant to Ang Ming Lee The High Court further on its own accord ruled that the 42-month period in the SPA, which includes a 6-month extension granted by the Controller prior to the signing of the SPA, is void for breaching the statutorily prescribed period of 36-month provided in Schedule H of Housing Development (Control And Licensing) Regulations 1989 (HDR).
The High Court found that the end purchasers were entitled to liquidated damages which was to be calculated from the expiry of 36 months period prescribed in Schedule H of the HDR. This High Court decision in Bludream City was reversed by the Court of Appeal.
The Court of Appeal was of the view that the High Court was wrong to unilaterally decide that the 42-month period was in breach of the HDR as it was not raised by the end purchasers. Further, the end purchasers are also out of time to challenge the 6-month extension granted by the Controller.
With regard to the 19-month extension of time granted by the Minister, the Court of Appeal held that the Minister had the powers to validly grant an extension of time as a result of the appeal against the Controller’s decision. Further, the extension of time was properly granted because the Minister had considered all the relevant circumstances including the fact the delay was not caused by Bludream City. Without the extension of time, the project by Bludream City would most likely have been abandoned. Additionally, the Court of Appeal found that the end purchasers would not suffer any losses due to the extension of time because under the developer interest bearing scheme (DIBS), Bludream City will bear the loan interest on behalf of the end purchasers during the extended period.
In our view, the Court of Appeal’s decision makes it clear that the parliament has vested the Minister with the necessary powers to grant an extension of time. Be that as it may, any such extension granted by the Minister is subject to judicial review and it must be fair, rational, proportionate, legal and in accordance with the rules of natural justice. The Court of Appeal further held that based on the facts of this case, it could not be said that the decision of the Minister was illegal, in breach of natural justice, irrational or disproportionate.
Decision in Bludream City is consistent with Ang Ming Lee
The Court of Appeal decision in Bludream City is consistent with the views in Ang Ming Lee as the extension of time was granted by the Minister. Thus, the issue of delegation of power to the Controller which has been declared as ultra vires of the HDA, does not arise in Bludream City.
C. No leave granted by the Federal Court
On 4th January 2023, the Federal Court dismissed the end purchasers’ application for leave to appeal against the Court of Appeal’s decision. Thus, the Court of Appeal’s decision represents the current position in Malaysia which is:
- The Minister has the power to modify the sale and purchase agreement as prescribed under Schedule H of the HDR. The Court of Appeal emphasised that such power must be exercised by the Minister only.
- Even if the application for an extension of time was first made to the Controller, the Minister can still validly grant an extension of time on appeal against the Controller’s decision.
- There was no express requirement of a right to be heard that must be given to the end purchasers. What is important is that the Minister must act fairly and is entitled to proceed on the assumption that the purchasers would not agree to any extension of time. The Minister in discharging his duty, would have to take into consideration the interest of the purchasers as he is entrusted under the HDA to safeguard the rights of the purchasers.
 Alvin Leong Wai Kuan & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals  10 MLJ 689
 Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals  1 MLJ 281
 Bludream City Development Sdn Bhd v Kong Thye & Ors and other appeals  2 MLJ 241
Sanjay Mohan, Wong Li-Wei, Tan Jia Shen