Federal Court to decide if KPKT can grant extension of time to developers – reports

PETALING JAYA (Oct 10): The Federal Court will decide whether the Housing and Local Government (KPKT) Ministry has the authority to grant developers an extension of time (EOT) for their property development projects.

If the ministry is allowed to grant EOTs to developers, this would exempt them from paying liquidated ascertained damages (LAD) to buyers – at 10% of the purchase price per year – if they fail to deliver their properties promptly to the affected buyers, reported Malaysiakini and The Star.

A three-member Federal Court bench led by Justice Datuk Seri Balia Yusof Wahi has granted leave to pose three questions of law from 104 housebuyers and two questions from developer BHL Construction Sdn Bhd in its cross-appeal.

The other judges presiding over the case between the buyers, developer and the ministry are Justice Datuk Alizatul Khair Othman and Justice Datuk Rohana Yusof.

Andy Wong represented the housebuyers, George Varughese represented the developer while senior federal consel Shamsul Bolhassan acted for the mininstry.

The bench granted leave to hear both appeals by the housebuyers and developers after both parties did not object to the questions of law posed.

The three questions posed by the housebuyers are:

1. Whether the housing controller has the power to waive or modify any provision of the schedule H contract of the sales and purchase agreement, as prescribed by the minister under the Housing Development (Control and Licensing) Act 1966?

2. Whether Section 24 of the Act confers power on the minister to make regulations for the purpose to delegate the power to waive or modify schedule H of the contract of sale to the housing controller?

Whether regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 is ultra vires of the 1966 Act?

On the other hand, the developer's two questions are:

1. Whether the minister could delegate his duties (signing of the letter) of EOT to an officer in the ministry and whether the letter pursuant to regulation 12 must be signed personally by the minister?

Whether the minister is obliged to afford the purchasers with a hearing prior to the minister granting the extension of time albeit there is no such provision or requirement under the act or the regulations.

In March this year, the Court of Appeal made a landmark ruling that KPKT must consult housebuyers before issuing EOTs.

The bench comprising Justices David Wong Dak Wah, Hasnah Mohammed Hashim and Harmindar Singh ruled unanimously in the appeals brought by the Urban Wellbeing, Housing and Local Government Minister, the Controller of Housing under the ministry and BHL Construction against the Kuala Lumpur High Court decision.

The High Court had on Feb 27, 2017 granted permission for a judicial review application by the 104 housebuyers of the Sri Istana Condominium on Old Klang Road to challenge Regulation 11(3) and the EOT issued on Nov 17, 2015.

The judicial review was allowed on the basis that Regulation 11(3) was ultra vires the 1966 Act and the Controller had no authority to waive or amend the contract of sale between the purchasers and the developer.

The buyers also sought to quash the decision of the Housing Controller who had in a letter on Nov 17, 2015 lengthened the time period for delivery of vacant possession to 48 months from 36 months in respect of the Sale and Purchase agreement entered into between the purchasers and the developer.

The bench said the Housing Development (Control and Licensing) Act served to protect the interest of purchasers.

As the rights of the purchasers to claim damages if the project was delayed would be adversely affected or even extinguished, the judges ruled that the homebuyers must be given an opportunity to be heard before a decision is made over the EOT.

As the buyers of the properties are an easily-ascertained group, they should be at least informed of the developer's application for any extension of time to complete a project and be given a reasonable amount of time to air their views before a decision is made.

Justice Harmindar who read the ruling out said the decision in this case

The matter is of public interest as a Parliamentary reply revealed that the KPKT, under the Barisan Nasional administration, had approved 304 EOTs up to April last year.