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When must the property developer deliver vacant possession ?

When must the Developer deliver vacant possession? A Strict 24 or 36 Months?

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The Law

Housing Development (Control and Licensing) Act 1966 (“HDA 1966”) read together with the Housing Development (Control and Licensing) Regulations 1989 (“HDR 1989”) provides that the time for delivery of vacant possession as stipulated in the statutory Sales and Purchase Agreements (“SPA”) is either 24 months for landed property with individual title, i.e. landed house etc. (Clause 22(1) of Schedule G) or 36 months for subdivided building with strata title, i.e. apartment etc. (Clause 25(1) of Schedule H). 

Clause 22(1) of Schedule G – Vacant possession of the said Building shall be delivered to the Purchaser in the manner stipulated in clause 24 herein within twenty-four (24) calendar months from the date of this Agreement.Clause 26(1) of Schedule H – Vacant possession of the said Parcel shall be delivered to the Purchaser in the manner stipulated in clause 27 herein within thirty-six (36) calendar months from the date of this Agreement. 

Thus, the ultimate question now is whether can the Developer who is unlikely to deliver the vacant possession within the stipulated time due to unforeseen circumstances extend the time of delivery?

Note: 

One should be noted that the SPA that you have signed to buy a property with the developer is a special contract. The SPA is prescribed and regulated by the statute and so a housing developer does not enjoy the freedom to make the provisions of the contract between themselves (Sentul Raya v Hariram a/l Jayaram & 13 Ors (and 9 Other Appeals) [2008] 4 CLJ 618). Thus, the parties including the developer are not allowed to contract out of the schedule form as the schedule is manifestly passed to protect the purchaser who do not negotiate from a position of equal strength (SEA Housing Corporation Sdn Bhd v Lee Poh Choo [1982] 2 MLJ 31). 

But there are always exceptions to the rule…

Under s.24(2)(e) of the HDA 1966 empowered the Minister of the Housing and Local Government (“Minister”) to ‘regulate and prohibit the conditions and terms of any contract’ between the developer and the purchaser whereas the Controller of Housing (“Controller”) is allowed to ‘waive and modify’ any provisions of the contract under reg.11(3) of HDR 1989.

Therefore, according to the Act, so long if the developer has successfully applied for an extension of time from the Ministry of Housing and Local Government or the Controller, they are allowed to amend the contract and extend the time of delivery of vacant possession. Housing Developers may so make application to the Controller or the Minister to seek modification of the time of delivery of vacant possession, subject to the very limited scope. However, in the case of Ang Ming Lee & 34 Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor (and 5 Other Appeals) [2020] 1 CLJ 162, question as to who should allow the modification under reg. 11(3) has arised.

Ang Ming Lee & 34 Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor (and 5 Other Appeals) [2020] 1 CLJ 162

In this case, several questions of law were raised and our focus here is mainly on three questions:

1. Whether the Controller of Housing has the power to waive or modify any provision in the Schedule H Contract of Sale as prescribed by the Minister under the HDA 1966;

2. Whether s.24 of the HDA confers power on the Minister to make regulations for the purpose to delegate the power to waive or modify the Schedule H Contract of Sale to the Housing Controller; and

3. Whether reg.11(3) of the HDR 1989 is ultra vires the HDA 1966.

The Federal Court interpreted s.24(2)(e) of the HDA 1966 strictly and clarified that there is no provision within the HDA 1966 which enables the Minister to delegate its power to waive or modify provisions in prescribed statutory SPAs to the Controller of Housing

The Court observed that although s.4(3) & s.4(4) of the Act provided for delegation of the Controller’s power to specified persons however there is no provision that enables the Controller to exercise the Minister’s powers. Such power can only be exercised by the Minister personally. Thus, the Controller in this case could not grant an extension of time to a developer to complete the units under a statutory SPA as the power that lies within the Minister to regulate the terms and conditions of a statutory sale and purchase agreement cannot be delegated to the Controller himself. Consequently, reg.11(3) of the Regulations that conferring power on the controller to waive and modify the terms and conditions of the contract of sale is ultra vires the Act. The extension of time that granted to the developer by the Controller is thus invalid.

Nevertheless, the Minister still can vary and modify the terms of the statutory SPA through the powers vested in him under the HDA 1966. This has been affirmed in the recent case of Bluedream City Development Sdn Bhd v Kong Thye & 184 Others and 5 other appeals [2022] 2 CLJ.

Bluedream City Development Sdn Bhd v Kong Thye & 184 Others and 5 other appeals [2022] 2 CLJ

In this case, 2 extensions of time to deliver the vacant possession were applied by the Developer to the Controller of Housing. Nonetheless, following the Controller’s refusal to grant the further extension of time of 17 months (from 42 months to 59 months) on the 2nd application, the Developer then appealed to the Minister of Housing who eventually extended the completion time to 59 months from the date of agreement. The purchasers then applied to challenge the 2ndextension of time that granted by the Minister through judicial review applications at the High court.

The judicial review has been allowed by the High Court and following the decision in Ang Ming Lee, the High Court held that the Developer is bound to pay the liquidated ascertained damages (“LAD”) as claimed starting from the period of 36 months as per Schedule H.

On an appeal to the Court of Appeal, the Court distinguished this case from Ang Ming Lee based on the point that the material facts of these two cases are poles apart. In Ang Ming Lee, the extension of time was granted by the Controller on behalf of the Minister whereas in this case, the extension is granted by the Minister personally rather than in Ang Ming Lee. Although the Minister is not permitted to delegate the power of ‘varying and modifying’ to the Controller of Housing, however, s.24(2)(e) of the HDA 1966 does not prohibits the Minister himself from exercising the power to waive or modify the terms of the statutory SPA in order to “regulate and prohibit the conditions and terms of any contract” between a developer and its purchasers. Also, it should be noted that the Federal Court in Ang Ming Lee did not hold that the Minister cannot grant an extension of time when the circumstances so required. The Court of Appeal in allowing the appeal, denied the purchasers’ claims of LAD.

In short

1. Generally, the developer must deliver the vacant possession within 24 months or 36 months depends on the type of property as required under HDR 1989.

2. The developer may apply for an extension of time subject to limited circumstances but it should only be granted by the Minister of Housing and Local Government or else the extension would be invalid. (Bluedream City Development v Kong Thye)

3. The Controller of Housing is not permitted to extend the time of delivery of vacant possession as reg.11(3) is ultra vires the HDA 1966 as affirmed in Ang Ming Lee.

By Property Department

This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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