VIGNESH NAIDU A/L KUPPUSAMY NAIDU v PREMA BONANZA SDN BHD [2023] MLJU 277

Court of Appeal (Putrajaya)

Ultra Vires Law

1.  The Appellant is one of the purchasers of a unit of property (“Unit”) development project known as the Sentral Residences (“Project”) which was developed by the Respondent at the value of RM2,168,000.00.  The Sentral Residences was a mixed-use development project in Kuala Lumpur that included two towers of service apartments and was referred to as a giant township project.

2.  According to the Housing Development (Control and Licencing) Regulations 1989 (“Regulations”), which were created in accordance with the Housing Development (Control and Licencing) Act 1966 (“Act 118”), in the case of stratified properties, a developer, such as the Respondent, is required to deliver vacant possession of the parcels within a period of 36 months pursuant to the statutory sale and purchase agreement.   If the developer found to be in non-compliance with the said period of time, the purchasers are entitled to liquidated damages from the developer.

3.  On 16 December 2010, which was about 18 months before the execution of the sale and purchase agreement between the parties (“SPA”), the Respondent then had obtained a time extension under the Regulations from the statutorily prescribed period of 36 months under the same Regulations to an extended period of 54 months, due to the complexity and size of the development of the Project.

4.  On 25 January 2017, the Respondent notified the Appellant in writing that the certificate of completion and compliance had been issued and that it was prepared to give the Appellant the vacant possession of the Unit.

5.  Nonetheless, on 21 August 2020, the Appellant filed a lawsuit at the High Court against the Respondent, claiming for the liquidated ascertained damages (“LAD”) of RM392,021.92 for the Respondent’s delayed delivery of vacant possession.  It was argued by the Appellant that the delivery deadline was invalid.  According to the SPA, possession should have taken place on 17 July 2015, which is based on the completion of 36 months starting from the SPA’s date, as specified in H of the Regulations.

6.  The Appellant’s application for summary judgment was refused by the High Court, thus the instant appeal was filed by the Appellant.

1.  The Federal Court’s ruling in Ang Ming Lee v Menteri Kesejahteraan Bandar, Perumahan & Kerajaan Tempatan [2020] 1 CLJ 162 (“Ang Ming Lee”) is crucial to the appeal case.  Regulation 11 (3) of Act 118 gives the Housing Controller the authority to waive or modify any provisions in the statutory contract of sale in Schedule H to the Regulations. Nonetheless, according to the Federal Court’s judgment in Ang Ming Lee, Regulation 11(3) of Act 118 was found to be ultra vires.  The Federal Court judgement’s emphasised that the authority vested to the Housing Controller to modify or waive the period of 36-month timeframe for vacant possession prescribed in the statutory contract of sale is ultra vires.

2.  The following excerpts from Her Ladyship Tengku Maimun Tuan Mat CJ’s ruling captured the substance of the Federal Court’s ruling:

“[55] Finally, on the third task. In the instant appeals, the Schedule H contract of sale prescribed by the Regulations is to carry into effect the provisions of the Act, which is to protect the interests of the purchasers. The regulations made by the Minister must thus achieve the object of protecting the interests of the purchasers and not the interests of the developers. And at the risk of repetition, the duty to protect the interests of the purchasers is entrusted to the Minister.”

“[56] By delegating the power, vide reg. 11(3) to the Controller to waive or modify the prescribed terms and conditions of the sale of contract, it is now the Controller who has been entrusted to regulate the terms and conditions of the contract of sale. Further, by modifying the prescribed terms and conditions and by granting the developer the extension of time, the Controller has denied the purchasers’ right to claim for LAD. This modification and the granting of extension of time to the developer, does not appear to us to protect or safeguard the purchasers but rather the developer and this militates the intention of Parliament.”

[Emphasis added]

3.  The Federal Court’s fundamental and overriding goal in Ang Ming Lee was to safeguard the interests of the purchasers, who were the less powerful parties to the sale and purchase agreements made in accordance with the aforementioned Schedule H to the Regulations. One of the many times that point was emphasised in the judgement is as follows:

“[40] The Act being a social legislation designed to protect the house buyers, the interests of the purchasers shall be the paramount consideration against the developer. Parliament has entrusted the Minister to safeguard the interests of the purchasers and the Minister has prescribed the terms and conditions of the contract of sale as per Schedule H. We find no contrary indication in the language, scope or object of the Act that such duty to safeguard the interests of the purchasers may be delegated to some other authority.”

[Emphasis added]

4.  The main contention of the Respondent was that in Ang Ming Lee, the sale and purchase agreements were amended after the execution of the agreement made unlike in the instant case that the Respondent had obtained the consent of the purchaser as the extension was granted prior to the entry of the SPA.

5.  The Court found that this contention is without merits.  It makes no difference whether the extension was given before or after the sale and purchase agreements had been completed with the purchasers as in Ang Ming Lee.  As a matter of fact, the Housing Controller has no authority to grant any extensions or amend the statutory contract because Regulation 11(3) is ultra vires, so it makes no difference that the extension in this case was obtained prior to the execution of the SPA, regardless of the circumstances.

6.  The notion of stare decisis obligates the Court to abide by Ang Ming Lee for the instant appeal.  The Housing Controller extended the deadline for the current appeal by 18 months in accordance with Regulation 11(3) of the Regulations is not legal as the basis of Regulation 11(3) is ruled to be ultra vires.

7.  With all due respect, the Court held that the finding of the High Court that the extension of time granted is plainly erroneous and with not effect.  The Court found that the points highlighted by the Respondent does not raise any triable issues.

Decision

1.     Ultra vires is a Latin phrase used in law to describe an act which requires legal authority but was done without such authority.  Any provision of law which is rendered ultra vires shall be deemed to be invalid.

2.     The assessment for a provision to be considered as ultra vires may be made by considering the following factors:

(a)  enacted beyond the main purpose, or

(b)  enacted beyond the special powers expressly given by the statute to effectuate the main purpose, or

(c)  enacted neither within the main purpose nor the special powers expressly given by the statute but incidental to or consequential upon the main purpose.