MALAYSIA Trends and Developments Contributed by: Dhinesh Bhaskaran, Rabindra Nathan, Shanti Mogan and Lai Wai Fong, Shearn Delamore & Co
Introduction Trends and developments in Malaysia this year have concentrated on both the modernisation of society and progressing the law. This is a wel- come step forward for Malaysians. Housing Developers and Purchasers: Clarification on the Law The decision of the Federal Court in Ang Ming Lee & 34 Others v Menteri Kesejahteraan Bandar, Perumahan Dan Kerajaan Tempatan And Anor [2020] 1 CLJ 162 (“Ang Ming Lee”) had opened the floodgates for liquidated ascertained dam- ages (LAD) claims by purchasers against hous- ing developers. In Malaysia, sale and purchase agreements (SPA) between purchasers and developers for housing projects are standard form agreements statutorily prescribed by the Housing Develop- ment (Control and Licensing) Regulations 1989 (HDR). One of the contractual terms is that vacant possession must be delivered within a specified timeframe, failing which the developer will be liable to pay the purchaser LAD. Previously, when a developer faced difficulty or anticipated difficulty in completing a project within the prescribed timeframe, the developer could apply to the Minister of Housing and Local Government (the “Minister”) for an extension of time. As a matter of practice, the application would be made to the Controller of Housing in the Ministry of Housing and Local Government (the “Controller”), who heads the government unit administratively dealing with such applica- tions. Both the Controller and the Minister had statutory powers – under the HDR and the Hous- ing Development (Control and Licensing) Act 1966 (HDA), respectively – to grant an extension.
In Ang Ming Lee, the developer applied for an extension after the SPA was entered into. The Federal Court held that the Controller’s decision to grant the extension was ultra vires the HDA and HDR and invalid, as the Controller had no power to waive or modify the statutory SPA. The Federal Court also reaffirmed the strong pro-pur- chaser approach to be taken when construing the HDA and HDR. The effect of Ang Ming Lee is that where a devel- oper has obtained what was hitherto a valid extension from the Controller, the developer will still be bound by the statutory timeframe and hence will have to pay LAD to purchasers, not- withstanding the extension obtained. Ang Ming Lee, on its face, has retrospective effect, and therefore every developer who has obtained and relied on an extension from the Controller sud- denly has potentially open-ended, multi-million- ringgit liability. The Federal Court, however, clarified the scope of Ang Ming Lee on 26 July 2024 and unani- mously decided that the decision is to apply prospectively and not retrospectively. In brief, the Federal Court made the following findings: • purchasers cannot rely on Ang Ming Lee in order to make financial gains against devel- opers who had obtained an extension prior to Ang Ming Lee; • Ang Ming Lee ought not apply retrospectively as that would make an extension of time granted to developers illegal within the mean- ing of the law; • to allow Ang Ming Lee to apply retrospec- tively would result in serious ramifications on the validity of the previous law and potentially lead to administrative chaos;
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