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This is Part I of a 2-article series. In this article, we examine the Federal Court decision in Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other Appeals. In Part II, we will be discussing recent legal developments subsequent to the said Federal Court decision.
Introduction
An opportunity presents itself to the Federal Court in the case of Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other Appeals to determine questions of law that not only affect the relationship between a developer and its purchaser(s), but also, in relation to a Minister's power to delegate its statutory powers.
Facts of the case
In the instant appeal of the Ang Ming Lee case, a group of purchasers signed the sales and purchase agreements (“SPAs”) with the developer to purchase condominium units in a new project. The SPAs followed the statutorily prescribed contract of sales under Schedule H of the Housing Development (Control and Licensing) Regulations 1989 (“the Regulations”) whereby the purchasers are allowed to claim for liquidated ascertained damages (“LAD”) if the developer fails to hand over vacant possession within 36 months. The crux of this appeal revolves around the letter signed by a person on behalf of the housing controller to grant the developer, an extension of time of 12 months to deliver vacant possession to the purchasers (“the Decision”).
The High Court decided in favour of the purchasers and allowed their judicial review application. In reaching its decision, the High Court held that the housing controller has no powers to waive or modify the terms and conditions of the contract of sales under Schedule H, powers which are delegated to the Minister. Further, the High Court found that the Housing Development (Controlling and Licensing) Act, 1966 (“the Act”) was a piece of social legislation intended to protect the interest of the purchasers.
Although the Court of Appeal decided in favour of the purchasers, the Court of Appeal ruled that reg. 11(3) of the Regulations which purportedly delegated the Minister’s powers to regulate and modify the statutorily prescribed contract of sales was not ultra vires given that the Minister has powers to delegate the said powers to the housing controller under s. 24(2) of the Act. The Court of Appeal held that the Decision was nullified on the premises that, among others, the purchasers were not given an opportunity to be heard before it was made.
Both purchasers and developer were given leave to appeal to the Federal Court.
The Purchaser’s Leave Questions
Leave was granted to the Purchasers on the following questions of law and the Federal Court’s answers are as follows:
whether the Housing Controller has the power to waive or modify any provision in the Schedule H Contract of Sale as prescribed by the Minister under the Act, to which the Court answers in negative;
whether s. 24 of the Act confers power on the Minister to make regulations for the purpose to delegate the power to waive or modify the Schedule H Contract of Sale to the Housing Controller, to which the Court answers in negative; and
whether reg. 11(3) of the Regulations is ultra vires, to which the Court answers in the affirmative.
The Developer’s Leave Question
In view that the Decision was not granted by the Minister, the Federal Court declined to answer the questions of law posed by the developer as follows:
whether the letter granting an extension of time after an appeal pursuant to reg. 12 of the Regulations must be signed personally by the Minister and whether the Minister could delegate his duties (signing of the letter granting the extension of time) to an officer in the Ministry of Urban, Wellbeing, Housing and Local Government of Malaysia; and
whether the Minister, having taken into consideration the interest of the purchaser, is obliged to afford the purchasers a hearing prior to the Minister granting the extension of time albeit there is no such provision or requirement in the Act or Regulations.
The Federal Court’s consideration
Among others, the Federal Court considered the following in reaching its decision:
whether the Minister has properly delegated his powers through the s. 5 of the Delegations of Powers Act, 1956 and / or the Act;
the intention of the Parliament and the nature of the Act; and
whether the delegation of powers under reg. 11(3) of the Regulations and the Decision by the controller went against the intention of the Parliament.
Whether the Minister has properly delegated its powers to regulate to the controller
In reaching its decision, the Federal Court examined whether by empowering the controller through reg. 11(3), has there been an act of sub-delegation by the Minister to the controller which is ultra vires of the Act.
Delegation of powers pursuant to s. 5 Delegation of Powers Act, 1956
The Federal Court took cognisance of s. 5 of the Delegations of Powers Act, 1956 which allows the Minister to delegate his powers or duties to any persons. However, the Federal Court noted that such delegations under s. 5 of the Delegations of Powers Act, 1956 must be made through notifications in the gazette. In the instant case, as there was no such notification published in the gazette, there was no delegation of powers by the Minister to any other person under the Act pursuant to the Delegation of Powers Act.
Delegation of powers pursuant to the Act
The Federal Court took into consideration that the Act is a social legislation designed to protect house buyers. Hence, the interest of the purchasers shall be the paramount consideration against the developer.
"24 Powers to make regulations
Subject to this section, the Minister may make regulations for the purpose of carrying into effect the provisions of this Act.
In particular and without prejudice to the generality of the foregoing power, the regulation may—
…
…
prescribe the form of contents which shall be used by a licensed housing developer, his agent, nominee or purchaser both as a condition of the grant of a license under this Act or otherwise;
…
regulate and prohibit the conditions and terms of any contract between a licensed housing developer, his agent or nominee and his purchaser;"
The Federal Court held that the Minister is entrusted or empowered by the Act to regulate the terms and conditions of the contract of sale between the purchasers and developer. However, the power to regulate does not include the power to delegate. Hence, the Minister by delegating the said power to regulate to the controller through reg. 11(3) may be construed as having exceeded what was the intention of the Parliament.
Intention of the Parliament
The Federal Court took into consideration that the Act is a social legislation designed to protect house buyers. Hence, the interest of the purchasers shall be the paramount consideration against the developer.
Further, the Federal Court stated that through the Act, the Parliament has entrusted the Minister with the duty of safeguarding the interests of the purchasers. Therefore, the regulations made by the Minister must achieve the objective of protecting the interests of the purchasers and not the interests of the developer.
In this regard, the Federal Court found that there was no indication in the Act, in terms of language, scope or object, which permits the delegation of such duty to safeguard the interest of the purchasers by the Minister to some other authority.
Reg. 11(3) of the Regulations and / or the Decision against the intention of Parliament
It can be seen from the above, that the powers to regulate were not delegated through s. 5 of the Delegation of Powers Act or the Act. Further, by delegating the power through reg. 11(3) to modify the prescribed terms and conditions of the contract of sale, it is now the controller who has the powers to regulate the terms and conditions of a contract of sale.
It was submitted for the developer that the purchaser would suffer greater hardship if the project is not completed. The Federal Court dismissed the submission, and held that failure to obtain the extension of time by the developer to deliver vacant possession does not mean that the developer will fail to complete the project. The extension of time only determines the payment of the LAD.
On the other hand, by granting the extension of time to the developer and modifying the prescribed terms and conditions, the controller in effect has denied the rights of the purchaser to claim for LAD. The Federal Court succinctly held that such modification and granting of an extension of time, clearly does not safeguard the interests of the purchasers but only that of the developer. This clearly militates against the intention of the Parliament. Further, reg. 11(3) clearly does not comply with the description of the Regulations which is designed to protect the interests of the purchasers.
Conclusion
From the above, the Federal Court held that the controller has no power to modify or waive any provision under Schedule H contract of sale because s. 24 of the Act does not confer any powers to the Minister to delegate the said powers. In this regard, reg. 11(3) of the Regulations is, therefore, ultra vires of the Act.
Further, the Federal Court reinforced the notion that the Housing Development (Controlling and Licensing) Act, 1966 was enacted primarily to protect the rights and interests of home buyers against developers. In Part II of this article series, we will be examining recent developments in relation to the Federal Court case of Ang Ming Lee.
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