theSun Property May 2015

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ON FRIDAY MAY 22, 2015
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Power of the Controller
> Rights of the Controller of Housing in granting extension of time to developers
BY DATO’ PRETAMSINGH
DARSHAN SINGH
IREFER to the comments in the
Star newspaper datedApril 25
by the honorary secretary-
general of theNational House
Buyers Association (HBA) Chang
KimLoong, wherein hementioned
that when a Controller of Housing
decides to grant an extension of
time to developers to hand over
vacant possession, he has
defeated or reduced the
purchaser’s rights.
Has the controller blatantly
and unilaterally taken away
rights which are expressly
given to themby
Parliament? Rights
which are expressly
for the purchaser’s
protection and
created to serve and
protect public interest?
RIGHTS AND
RESPONSIBILITIES
The rights of the
controller is provided in
Regulation 11(3) of the
Housing
Development
Regulation 1989 and
provides as follows.
…Where the controller
is satisfied that owing to
special circumstances or
hardship or necessity
compliance with any of
the provisions in the
contract of sale is impracticable or
unnecessary, hemay, by a certificate
inwriting, waive or modify such
provisions: Provided that no such
waiver ormodification shall be
approved if such application ismade
after the expiry of the time stipulated
for the handing over of vacant
possession under the contract of sale
or after the validity of any extension
of time, if any, granted by the
controller.
It is stated in the said regulation,
that if the controller is satisfied that
due to special circumstances,
hardship or necessity, the
compliance with the terms of the
SPA is impracticable or
unnecessary, hemaymodify or
waive such provision.
However, the proviso to the said
regulation stipulates that no such
waiver or modification shall only be
approved if the said application is
made after the expiry of the period
stipulated for the handing over of
vacant possession under the SPA or
after the validity of any extension
is granted.
authority in question has acted in
good faith. Aconverse
proposition is also applicable,
if the authority concerned
does not take into account, or
ignores considerations
which are relevant to the
purpose of the statute in
question, of which its act
will be invalid.
De Smith’s Judicial
Review, 6th Edition on p. 479
concisely sums up the law:
“Adecision-
making body
exercising public
functions which is
entrustedwith
discretionmust
not, by the
adoption of a fixed
rule or policy,
disable itself from
exercising its
discretion in
individual cases. It
may not “fetter” its
discretion. Apublic
authority that does fetter its
discretion in that waymay
offend against either or both
of two grounds of judicial
review: the ground of legality and
the ground of procedural propriety.
The public authority offends against
legality by failing to use its powers in
theway theywere intended, namely,
to employ and to utilise the discretion
conferred upon it. It offends against
procedural propriety by failing to
permit affected persons to influence
the use of that discretion. By failing to
“keep itsmind ajar”, by “shutting its
ears” to an application, the body in
question effectively forecloses
participation in the decision-making
process.”
Raja Azlan CJ AG (MALAYA)
(as the late Sultan) whowas then in
Pengarah Tanah danGalian,
Wilayah Persekutuan [v Sri Lempah
Enterprise [1979] 1 MLJ 135 FC had
an opportunity to comment on
departmental powers.
“It is a stringent requirement that
discretion should be exercised for a
proper purpose, and that it should not
be exercised unreasonably. In other
words, all discretion cannot be free
from legal restraint; where it is
wrongly exercised.”
CONCLUSION
It must be remembered that the
standard housing SPA (Schedule G
andH) does not have a force
majeure clause or an extension of
time clause, like all other
construction contracts in this
country. A study of the legislative
history of these regulations (which I
had the opportunity to peruse), will
reveal that Parliament in its wisdom,
has parked these clauses with the
controller, as an independent entity
to exercise.
A host of cases have gone to
court since these powers were
conferred in 1989 and in all these
cases, the courts have always held
that for delay in handing over of
vacant houses, the proper party to
evaluate whether any extension
should have been granted is the
Controller of Housing.
Just weeks ago inOxbridge
Height Sdn Bhd v. Abdul Razak
Mohd Yusof &Anor [2015] 2 CLJ 252,
the Court of Appeal had an
opportunity to address settlement
agreement for the extension of time
between the developer and the
purchaser, whichwas entered into
the tacit approval of JPN although
no extension of time was formally
granted by the controller.
The court said:“With regards to
the second issue on the invalidity of
the settlement agreement, the learned
HighCourt Judge concluded that it
was an attempt to evade the
provisions of the Housing
Development (Control and
Licensing) Act 1966 and the Rules
hereunder. The effect of the
settlement was contracting out of the
lawwhich provided the right to house
buyers to claim for LAD for late
delivery, even though a consideration
of RM1 was paid. The court dismissed
the argument that the settlement
agreement was a collateral contract
which could exist, alongside the SPA.
The court drewon the decisions in
MKRetnamHoldings Sdn Bhd
v. Bhagat Singh Surian Singh
[1985] 1 CLJ 520; [1985] CLJ (Rep)
199[1985] 2MLJ 212, and Sentul
Raya Sdn Bhd v. Hariram
Jayaram&Ors andOther
Appeals [2008] 4 CLJ 618.”
The Court of Appeal went
further and held that: “We therefore
found that on the peculiar facts of this
appeal, therewas no full contracting
out and no situationwhere the
purpose of the housing legislation
being ‘to protect theweak against the
strong’ was ousted. In terms of policy,
there should be nothing illegal in law
for a Settlement Agreement to be
negotiatedwith the full participation
and direction from JPN, with a view
to save a failing housing project from
being an abandoned project. It will be
in the public interest, and in the
interest of house buyers, if the law
allowed a regulated settlement and
waiver of LADon terms as specified
in the settlement agreement, which
was the subject matter of this appeal.
The purchaser has a right to appeal
against the decision of the controller,
if he or she is dissatisfiedwith
decision to extend the time.”
From this landmark decision
it is established that:
1. the Controller of Housing
has power to grant
extension of time;
2. evenwhere no extension is
granted, any settlement
agreement entered into
with the purchasers,
negotiatedwith the full
participation and direction
from JPN is valid and
binding;
3. it is in the public interest
and interest of house buyers
to allow for waiver of LAD
to save a failing housing
project frombeing an
abandoned project; and
4. suchwaiver is not
contracting out from
the SPA.
Any purchaser who has been
servedwith an extension order by
the controller, maywithin fourteen
(14) days after having been notified
of the decision of the controller,
appeal against such decision and
take it upwith theminister. The
decision of theminister, oncemade
thereon, shall be final and shall not
be questioned in any court. This
power is a check and balance on the
powers of the controller as the
minister is ultimately
answerable in Parliament and by
courts in judicial review
applications.
It is therefore apparent that there
is nothing in lawwhich is illegal for
the Controller of Housing to grant
any extension of time, provided that
the controller can take into account
only such considerations as may be
relevant to the purpose for which
the power has been conferred. If the
controller takes into account certain
circumstances or considerations
which are irrelevant or extraneous
to the purpose or the tenor of the
statute in question, then its act will
be invalid, even if the controller has
acted in good faith.
The controller, like a trustee,
holds power on trust and acts
validly onlywhen acting reasonably.
We hope that the controller will
continue to exercise these
powers reasonably, to better
protect the interest of house
buyers, as failure to do sowould
be an abdication of the duty
imposed by parliament.
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From the above it is apparent that
the controller has a right to grant
extension of time by the very
Parliament that has granted the
right to purchasers to claim
LiquidatedAscertainDamages or
LAD. Certainly this exercise of
power may be stated to be proper
exercise of administrative
discretion and not otherwise.
EXCERPTS AND CITATIONS
M. P. Jain, in Administrative Lawof
Malaysia&Singapore (1980) wrote
on p. 289: Many a time the statutes
confer power but do not mention the
considerations for its exercise. Even
in such a case, the authority can take
into account only such considerations
asmay be relevant to the purpose for
which the power has been conferred.
If the authority takes into account
certain circumstances or
considerations which are irrelevant
or extraneous to the purpose or the
tenor of the statute in question, then
its act will be invalid even if the