This article first appeared in Forum, The Edge Malaysia Weekly on August 15, 2022 - August 21, 2022

In the sphere of housing development disputes, no case has invited more discussion or interest than the Federal Court case of Ang Ming Lee. The court gave credence to the social legislation that is the Housing Development (Control and Licensing) Act 1996 (HAD) and its related regulations, where it decided that the interests of the purchasers shall be the paramount consideration against the developer.

In those cases, extensions of time in respect of the deadline of handover of housing properties by the Housing and Local Government Minister were declared null and void. The upshot of this is that the deadline of handover in respect of landed properties (24 months) and stratified properties (36 months) must be strictly observed.

Depending on which side of the fence one is on, this is either touted as a victory for homebuyers or a nightmare for housing developers. The former will get his or her house within the prescribed time frame. The latter, if it fails to deliver on time, would be exposed to liquidated assessed damages (LAD) for late delivery, given the lack of any such extension of time. This is perfectly sensible as a housing developer ought to be cognisant of its obligations and deliver its end of the bargain — particularly for projects undertaken post Ang Ming Lee, where a housing developer is aware of the strict observance of the relevant timelines. A deeper problem is this — in instances where a housing developer had previously obtained an extension of time and planned its project around the revised timeline, Ang Ming Lee now renders those extensions of time illusory. Is this proper?

This article discusses the impact of these decisions and attempts to suggest a middle path, with particular reference to a recent article in The Law Review 2022 titled “Tipping the scales of justice in favour of homebuyers: Has Justitia gone too far?” by Professor Dr Choong Yeow Choy, where discussions on Ang Ming Lee are concerned.

EdgeProp had previously published an article titled “Resurrection of EOT: Old wine in new bottles?” by Koh Kean Kang and Datuk Chang Kim Loong on July 7 this year. The article discusses attempts by the minister to rely on section 2(2) of the HDA to exempt any housing developer from the provisions of the HDA and, critically, that of the Scheduled Agreements under the HDA (which imposes the handover deadlines described above).

The authors discuss the exemptions that may be allowed under Section 2(2), citing examples such as the requisite 3% gross construction cost payable to the Ministry of Housing and Local Government. They thereafter conclude that Ang Ming Lee is of “universal application”, and essentially, how Section 2(2) of the HDA may be abused to sidestep Ang Ming Lee. The authors go a step further to assert that “it does not matter which provision of the HDA the minister uses to circumvent the Federal Court ruling [of Ang Ming Lee]”.

At the outset, we note that Section 2(2) of the HDA was not discussed in Ang Ming Lee. Likewise, the courts have not gone to the extent of riding roughshod over all of the other provisions under the HDA in espousing the legal principles set out in those cases.

We now examine the viability of this approach and this view further, by cross-referring to Choong’s article (adopted and discussed in this next section). In brief, by adopting the said authors’ wine analogy, we do not subscribe to the same type of wine being prescribed to all occasions, in the same bottle or otherwise. They do not necessarily pair well.

The decision in Ang Ming Lee makes clear that the controller has no power to grant an extension of time under Regulation 11(3) of the Housing Development Rules 1989 (HDR), which is ultra vires the HDA.

First, it is unsurprising that this issue weighs heavily on housing developers, particularly in situations where applications for an extension of time have been made to the controller (and where such applications were approved) prior to the Federal Court’s decision in Ang Ming Lee. With the extension of time struck down, housing developers are caught off guard and are now facing the prospect of paying LAD for late delivery of vacant possession. It is arguable that the principle of legitimate expectation may apply and operate in favour of housing developers, as they have been operating or conducting their businesses premised on the provisions of HDR (which they have to adhere to) being valid.

A corollary to the above issue arises as to whether Ang Ming Lee applies prospectively or retrospectively. Generally, the cases indicate that the courts are inclined to hold that Ang Ming Lee has retrospective effect. Given this, again, through no fault of the housing developer, it will suffer from an injustice through no wrongdoing on its part. A critical point to note is that the serious ramifications resulting from a retrospective application of Ang Ming Lee was not fully argued and presented to the court. If the Federal Court was apprised of the harsh consequences that would befall housing developers which relied on and complied with HDR, the Federal Court may have ruled that its decision is to only have prospective effect.

Secondly, a critical issue concerns situations where homebuyers have agreed to a variation of the sale and purchase agreements for an extension of time. These homebuyers are aware of the bargain they have entered into. It is thus arguably unconscionable for the homebuyers to later rely on Ang Ming Lee to then claim LAD. With a variation of the sale and purchase agreements, the homebuyers are arguably stopped from relying on Ang Ming Lee and/or elected to waive their rights to a LAD claim.

Thirdly, another takeaway from Ang Ming Lee could be that a housing developer that intends to commence, or is in the midst of undertaking a housing project knowing that it is unable to deliver vacant possession to homebuyers within the prescribed time under the scheduled contracts, should simply not apply to the controller for an extension of time. Instead, such an application could arguably be made to the minister.

Ang Ming Lee does not go to the extent of holding that the minister is not vested with such powers. It is also noted that there are no express provisions under the HDR for such an application for extension of time to be made to the minister. Another possible avenue is Section 2(2) of the HDA as discussed above, for the scheduled agreements to be exempted altogether. Nevertheless, assuming such an avenue is open, there should be clear parameters as to circumstances which would warrant such an extension of time or exemption. Housing developers and the minister should also be mindful that homebuyers may challenge such a decision via judicial review. This is sensible, so as to safeguard the interests of homebuyers and as a check and balance against unfettered exercise of the minister’s powers, essentially keeping it on its toes.

On July 26, 2022, in the case of Ombak-Ambak Holdings concerning four leave applications to appeal to the Federal Court, questions of law relating to issues post-Ang Ming Lee were posed. The Federal Court granted leave for seven questions of law.

As reported in an article titled “Issues post-Ang Ming Lee — Federal Court granted leave to appeal on 7 questions of law” by Chee Hoe & Associates, the law firm representing the successful applicants for leave to the Federal Court (led by Lai Chee Hoe and Ooi Xin Yi), with these questions of law, the Federal Court is set to resolve dilemmas and concerns arising from Ang Ming Lee, by looking at the following scenarios:

(i) Purchasers who have voluntarily signed sale and purchase agreements that provide a time period for the delivery of vacant possession and completion of common facilities which are different from that in the statutory prescribed Schedule H agreements (36 months); and

(ii) Housing developers that are caught in a situation similar to the developer in the Ombak-Ambak Holdings case, which have, prior to the change of law as per Ang Ming Lee, duly adhered to the statutory regime then.

The decision in Ang Ming Lee in itself does not amount to an overreach in favouring homebuyers over the interests of housing developers. However, as highlighted by Choong in his article, “if these decisions are misread, misunderstood, misinterpreted or misapplied, the possibility of Justitia gone too far is not far-fetched.”

Similar to the views of Choong, who continues to teach and inspire us (his former students), we believe that the courts “must guard against the misapplication and misuse of the benevolent approach” as enunciated in Ang Ming Lee. After all, it was Shakespeare (with his alleged mistrust of lawyers) who wrote, “Poise the cause in justice’ equal scales, whose beam stands sure, whose rightful cause prevails.” (Henry IV, Part 2, Justice and Judgment).

With the upcoming hearing and eventual decision in Ombak-Ambak Holdings, it is wished and hoped that there can be further clarity on these issues, and for the landscape to be reshaped in favour of a more just outcome for all concerned.

Kwan Will Sen is a partner at Lim Chee Wee Partnership, a boutique dispute resolution law firm, and Lee Suan Cui is an associate at the partnership

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