In this update
Introduction
The Federal Court’s 2020 decision in Ang Ming Lee marked a pivotal moment in Malaysian housing law by declaring Regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 (“HDR 1989”) ultra vires the parent Act. We have in our earlier article highlighted its application in this article. This ruling invalidated the Minister’s power to grant extensions of time (“EOT”) for developers, forcing them to face claims for Liquidated Ascertained Damages (“LAD”) for delays.
Immediate Impact of the Ang Ming Lee Decision
Initially, the Ang Ming Lee ruling created significant disruption in the housing industry. Developers who had relied on EOTs to delay the delivery of properties were suddenly exposed to claims for Liquidated Ascertained Damages (“LAD”) from purchasers for late delivery. The invalidation of these EOTs meant that developers could no longer escape liability for delays by relying on the extensions granted by the Controller of Housing.
Prospective vs. Retrospective Application
One of the key issues following the Ang Ming Lee decision was whether the ruling should apply retrospectively or prospectively. A retrospective application would mean that all EOTs granted under Regulation 11(3), even those granted before the Ang Ming Lee decision, would be considered invalid. This could potentially lead to an avalanche of claims against developers for LAD, significantly impacting the housing market.
Recognizing the potential chaos and injustice a retrospective application could cause, the Federal Court in Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd clarified that the Ang Ming Lee decision applies prospectively. This means that EOTs granted before the Ang Ming Lee decision are not retroactively invalidated. Developers and purchasers who had relied on these extensions based on the legal framework as it existed before Ang Ming Lee can rest assured that their contracts and extensions remain valid.
Court’s Role and Future Implications
Post-Ang Ming Lee, the courts have emphasized strict adherence to statutory contracts. Developers must comply with all legal requirements and timelines, as the courts are less likely to overlook failures. While the prospective application of Ang Ming Lee maintains market stability, it also reinforces the need for accountability within the industry.
Conclusion
Ang Ming Lee has reshaped the legal landscape for developers and purchasers, emphasizing the importance of statutory protections and the need for compliance. The decision, while applied prospectively, serves as a reminder of the critical role of the courts in upholding these protections and ensuring fair play in the housing market.
Reference Cases
- Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals [2020] 1 MLJ 281; [2020] 1 CLJ 162, FC (refd)
- CIMB Bank Bhd (formerly known as Bumiputera Commerce Bank Bhd) v Sebang Gemilang Sdn Bhd & Anor [2018] 3 MLJ 689
- Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd Federal Court Civil Appeal no. 02(i)-70-08/2022 (W)