The Controller of Housing and The Power to Modify SPA

What happens if your house is not build on time? Can your developer apply for an extension of time to the Controller of Housing to extend the completion date? Is the Controller of Housing empowered to determine such an issue? To find out more, let us look at the Federal Court case of Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and Other Appeals. 

Brief facts of the case

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. Pursuant to the SPA

1. BHL Construction is to 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. 

Realizing that the condominium will not be completed by the end of 36 months, BHL Construction applied to the Controller of Housing for an extension of 12 months to complete the condominium.  The application was duly rejected by the Controller.

Not wanting to back down, BHL Construction appealed the decision to the Minister of Urban Wellbeing, Housing, and Local Government. Long story short, it was alleged that an individual on behalf of the Controller and not the Minister allowed the appeal. Aggrieved by the decision, the purchasers filed an application for judicial review against the Minister, Controller and BHL Construction. 

The parties contention

The case was fought all the way up to the Federal Court. One of the contentions (amongst many others) was, based on what transpired above, whether the Controller has the power to waive or modify any provision in a contract of sale pursuant to the regulations/ whether (based on section 24 of the Housing Development (Control and Licensing) Act ) the Minister is allowed to delegate the power to waive or modify a contract of sale to some other authority (in this instance, the Controller). 

The Federal Court’s decision

The 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 empowers the Controller to waive or modify the rules, terms, and conditions of the contract of sale between a purchaser and developer;
2. The court noted that such power must only be exercised by the authority (in this case, the Minister) whom the power is conferred upon, even where it causes administrative inconvenience.
3. The power can only be delegated to others only and only if it can be inferred by the wording of the statute that the power was intended to be delegable; 
4. 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 and no one else 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 some other authority;
5. While section 5 of the Delegation of Powers Act 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);
6. The power to regulate under section 24 of the Act does not include the power to delegate;
7. 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 a decision, the initial decision of the Controller to the Minister is not appealable because it would be akin to an appeal to the Minister against his own decision; and
8. 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. 

In conclusion, the court held that the Controller did not have the power to modify a contract of sale i.e. the Minister is expected to apply his own mind to the matter.

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