Articles


An affirmative endorsement of Alvin Leong that Ang Ming Lee has retrospective effect!

By

Ranjan N.Chandran (Partner, Commercial & Construction Department)
March 5, 2021


Hakem Arabi & Associates

Introduction


This Write-Up considers the recent decision of the High Court in the case of Kok Chay Har & Ors v BH Realty Sdn Bhd 2021 1 LNS 13 (‘Kok Chay Har’) the Judgment of the Learned Judicial Commissioner Quay Chew Soon, which has agreed with the decision of another High Court in the case of Alvin Leong Wai Kuan & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Ors 2020 6 CLJ 55, the Judgment of the Learned High Court Judge Wong Kian Kheong J, that the Federal Court case of Ang Ming Lee & Ors V Menteri Kesejahteraan Bandar Perumahan, Dan Kerajaan Tempatan & Anor Appeals (2020) 1 CLJ 162 (‘Ang Ming Lee’) has a retrospective effect.


Brief Facts:

  1. The Defendant is the Developer/Vendor of a condominium units in a project known as Perdana Lakeside Residences@Metropolitan Park, Kula Lumpur.
  2. The Plaintiffs are the purchasers of various units.
  3. The Sales and Purchase Agreement (SPA) was a Housing Developers Control & Licensing Agreement 1966 (‘HDA 1966’) and a statutory contract prescribed by Schedule H of Regulation 11(3) of the Housing Development Regulations 1989 (‘HDR 1989’)
  4. The SPA provided for Liquidated Ascertained Damages (‘LAD’ if the Defendant failed to deliver Vacant Possession of the units within 36 months from the SPA date as per clauses 25 and 27 of the ‘HDR 1989’.
  5. The Plaintiffs case is that after the execution of their SPA’s the Defendant amended the time for the completion of the project and delivery of vacant possession from 36 months to 42 months without the knowledge and consent of the Plaintiffs.
  6. The Defendant’s case is that it had obtained two (2) separate Extensions for the delivery of vacant possession and which extensions were granted by the Controller of Housing.
  7. The 1st Extension granted by the Controller was for a period from 36 months to 42 months vide letter dated 2.7.2013 and the 2nd Extension was for a period from 42 months to 48 months vide letter dated 30.9.2015.
  8. It was the Defendant’s case that it had communicated the time extensions to the purchasers, the 1st extension was communicated around July 2013 and the 2nd extension was communicated around February 2016.
  9. It was the Plaintiffs case that they were not given a chance to be heard before the Controller of Housing when the said extensions were granted.
  10. Vacant Possession of the units were given on 21.6.2017 and the Plaintiffs contended that it was outside the time period stipulated of 36 months and hence the claim for LAD.

It must be recalled that the Federal Court in the Ang Ming Lee held that, the Minister had no power to delegate his powers to the Controller of Housing pursuant to Regulation 11 (3) of the Housing Development Regulations 1989 (‘HDR 1989’) to waive the time period of the completion of the development project from 36 months to a period of 42 months without first obtaining the consent of the purchasers and such an act was void in law.

The Federal Court in Ang Ming Lee held that the said act of delegation was ultra vires the Housing Developers (Control & Licensing) Act 1966 as it amounted to varying the terms of the agreement. In short any modifications to the terms of a Housing Development Sales and Purchase Agreement cannot be done unilaterally without the prior consent of the purchasers bearing in mind that the Housing Developers Act is a legislation for the protection of the purchasers.

This recent decision of the High Court in Kok Char Har case which sighted with approval the Alvin Leong case is indeed welcomed, as we now have two decisions of the High Court which have held that the Ang Ming Lee case will apply retrospectively.

Both these High Court decisions undoubtedly bring about greater clarity and dispel all doubts on the retrospective application of the Ang Ming Lee decisions and thereby affords the much needed comfort and assurance to home buyers that their interest is safeguarded by law from Developers who may attempt to vary the completion date of a subject project.

One can only appreciate the rationale of both these High Court decisions since, if it was decided by the Federal Court in the Ang Ming Lee decision that the act of delegation by the Minister to the Controller of Housing was ultra vires

Regulation 11(3), then any prior such delegation must necessarily likewise be declared ultra-vires.

One cannot fathom an argument that what was decided in Ang Ming Lee on the ultra-virus act, can only apply prospectively subsequent to the decision. The fact remains that once the Federal Court has ruled that there was a breach of the law then, it must apply retrospectively to all such acts or breach even prior to the said decision.

This is more so for a social legislation like the Housing Developers Act which must safeguard the paramount interest of the purchasers/house buyers

The High Court in Kok Chay Har di state as follows:-

“The Apex Court in Ang Ming Lee did not express a specific direction on prospectivity. Thus the general principle of retrospective effect applies”. (JC Quay Chew Soon High Court KL)

The Kok Chay Har decision sighted with approval what was held in the Alvin Leong case as follows:-

“there were no exceptional circumstances for the doctrine of prospective overruling to apply to the decision in Ang Ming Lee. On the contrary, as held in may cases(including Ang Ming lee), the object of the HDA and HDR is to protect a ‘homebuyer’(as defined in S.16A HDA). Accordingly, in line with the purpose of HDA and HDR, it is in the interest of homebuyers for the Judgment in Ang Ming Lee to be given retrospective effect” (Wong Kian Kheong J High Court Shah Alam)

It is to be noted that there was then is a further clarity which is indeed welcomed by the Kok Chay Har case, where Developers ingeniously contend that any challenge mounted by the purchaser in respect of the extension of time granted must be by way of Judicial Review.

This was rejected by the High Court in Kok Chay Har on the basis that this ultra vires extension which was illegal and ab-initio had already been decided by the Federal court in Ang Ming Lee and there was no necessity for any further challenge.

This is what the Court said:-

“D further contends that the appropriate mode to challenge the Time Extensions is by way of judicial review. However, Ang Ming Lee has already determined the Time Extensions to be illegal and void ab initio. As such, there is nothing to challenge. The fact that the Plaintiffs did not quash the Time Extensions by way of a judicial review does not make the Time Extensions legal and valid”.

This is welcomed as purchasers/homebuyers should not be burdened with the filing of applications to further clarify legal positions in law that has already been decided by the highest Court in the land. Their time and resources can then be focused on the recovery of their rightful entitlement for Liquidated Ascertained Damages as per their Sale and Purchase Agreement for the delay in completion of their parcel.

Be that as it may, it must be borne in mind that the application that was before the High Court in the Kok Char Har case was only an interlocutory application by the Defendant/Developer to Strike Out the Plaintiffs Writ and Statement of Claim. The Court was therefore only concerned whether the Plaintiffs claim was one which was obviously unsustainable and decided in favour of the Plaintiffs by dismissing the Defendant’s Striking Out application.

Conclusion


One can only appreciate both the decisions of the High Courts in the Kok Char Har case and the Alvin Leong case by appreciating the proposition of the law that Court decisions have a retrospective effect

The decision that was relied upon by the High Court in the Kok Char Har case was the Court of Appeal decision in the case of Abillah Labo Khan V PP (2002) 3 CLJ 521which although was a criminal decision, Gopal Sri Ram JCA (As he then was latter Federal Court Judge) said as follows:-

“It is a fundamental principle of adjudicative jurisprudence that all judgments of a court are retrospective in effect”.

It can be noted that there are no doubt converse decisions where retrospectively is not welcomed as it will open the flood gates to litigation and it has been held that unless the pronouncements of the Court state otherwise, that the decision is intended to be of prospective application. One such decision is the celebrated land acquisition decision of our Federal Court in the case of Semenyih Jaya Sdn Bhd V Pentatbir Daerah Hulu Langat & Another case (2017) 5 CLJ 526 where the Court held that since Section 40D of the Act was held to be unconstitutional, the decision was to have a prospective effect and the doctrine of prospective overruling was to apply. The exact sentiments expressed by the Federal Court were as follows:-

“As a matter of principle, a court Judgment is “retrospective in effect unless a specific direction of prospectivity is expressed”.