PUTRAJAYA: The Federal Court today ruled that the Controller of Housing does not have the power to grant extension of time (EOT) to housing developers.
This means that without the EOT, the housing developer will have to deliver vacant possession within the prescribed statutory period failing which the developer will have to compensate house buyers in liquidated ascertained damages (LAD). The LAD is 10% per annum of the purchase price and is a form of compensation provided in the statutory contract of sale.
The Federal Court’s decision was delivered by Chief Justice Tan Sri Tengku Maimun Tuan Mat, leading a panel consisting of Chief Justice of Malaya Tan Sri Azahar Mohamed, Federal Court judges Tan Sri Idrus Harun and Datuk Nallini Pathmanathan.
Maimun held that Regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 was ultra vires the Housing Development (Control and Licensing) Act 1966, meaning that the Controller of Housing does not have the power to waive or modify the prescribed statutory contract of sale.
She added that the argument that the then Urban Wellbeing, Housing & Local Government Minister had delegated his power to the controller to grant an EOT decision cannot be sustained as it would make Regulation 12 (decision of controller is subject to appeal to minister) to be superfluous and redundant.
The decision threw light on the appeal by over 100 aggrieved unit buyers of Kondominium Sri Istana against the ruling of the Court of Appeal in March 2018, following the judicial review in February 2017.
It was also held that the letter granting the EOT (to the developer of Kondominum Sri Istana) was signed by N. Jayaselan (now National Housing Department director-general) on behalf of the controller and not the minister. There was no evidence that the minister made the decision or that Jayaselan was conveying the decision of the minister.
“The letter (signed by Jayaselan) was not a valid letter granting EOT,” Maimun said in her judgement, explaining that it is necessary that Jayaselan signed the letter on behalf of the minister or the letter conveyed the decision of the minister.
To recap, the class action was commenced in 2016 by the buyers of the condominium units in challenging the EOT which denied the rights of the house buyers to seek LAD compensation by reason of the delay in delivery of vacant possession. There was a one-year delay in the delivery of vacant possession of the property but the developer claimed that an EOT of 12 months was validly granted.
The buyers then filed a judicial review application in July 2016, challenging Regulation 11(3) and the EOT issued in November 2015.
In March 2018, the Court of Appeal ruled that Regulation 11(3) of the Housing Development Regulation Act 1989 was not ultra vires or against the Housing Development Act (Control and Licensing) Act 1966, overturning a High Court decision in February 2017 that the EOT was invalid.
The National House Buyers Association volunteer lawyers, including lead lawyer Datuk Andy Wong and 12 other lawyers, worked on the case on a pro bono (no legal fees) basis, taking the case up as public interest litigation.
In the first seven months of 2019, there were 46 EOT issuances out of 61 EOT applications, while in 2018, there were 96 EOT issuances out of 119 EOT applications.
