The decision of the Court of Appeal
Whether the Minister’s Decision is illegal in the light of Ang Ming Lee
The main issue in this appeal was aptly summarised by Lee Swee Seng JCA when his Lordship delivered the unanimous decision of the Court of Appeal. “The elephant in the room before the Federal Court
[in Ang Ming Lee
] was whether the Minister may delegate his powers to regulate the terms of a contract of sale to the Controller and the answer is that the Minister cannot do so … Here the question was not whether the Minister has the power to “waive or modify” the terms of the statutory SPA but whether the Controller has such a power. The fact that the Federal Court held that the Controller does not have such a power cannot be taken to mean that the Minister also does not have such a power. The thrust and tenor of the Federal Court’s Grounds of Judgment was not on the Minister’s power to “regulate” the terms of the statutory SPA or for that matter to “waive and modify” the terms but rather whether the Minister may delegate this power to the Controller
His Lordship explained that in response to the question posed above, the Federal Court in Ang Ming Lee
held that the Controller could not grant an extension of time to a developer to complete the units under a statutory SPA because the Minister cannot delegate to the Controller what it could regulate under the Act. The Federal Court observed that sections 4(3) and 4(4) of the Act provided for delegation of the Controller’s power to specified persons but that there is no provision that enables the Controller to exercise the Minister’s powers. This supported the Federal Court’s view that Parliament did not intend for the Minister’s powers to regulate the terms and conditions of a statutory sale and purchase agreement (‘statutory SPA
’) to be delegated to the Controller. Thus, Regulation 11(3) which allows the Controller to waive or modify the provisions of a statutory SPA was ultra vires
The Court of Appeal went on to clarify that the Federal Court in Ang Ming Lee
did not say that the Minister has no power to ‘vary and modify’ the terms of a statutory SPA, and that this issue was not considered by the Federal Court as it was not the issue before the apex court.
The Court of Appeal added that Ang Ming Lee
did not hold that the Minister could not grant an extension of time on the ground of special circumstances or hardship pursuant to the powers conferred on him under section 24(e) of the Act to regulate the terms and conditions of a statutory SPA. According to the Court of Appeal, the fact that the Controller has no power under Regulation 11(3) of the Regulations does not negate the Minister’s power to make a decision under Regulation 11(3) or under Regulation 12 in an appeal from an invalid decision under Regulation 11(3) of the Regulations.
In any event, with or without Regulation 11(3) or Regulation 12 of the Regulations, Parliament had empowered the Minister under section 24(2)(e) of the Act to “regulate and prohibit the conditions and terms of any contract” between a licensed housing developer and a purchaser. The Court of Appeal opined that the expression “regulate and prohibit” is wide enough to include “waive and modify” any provisions under Regulation 11(3) of the Regulations with respect to the time period to complete the Units and with that, the application of the liquidated ascertained damages claim only to completion after the expiry of the extended completion period.
The Court of Appeal also distinguished Ang Ming Lee
on its facts. In that case, the decision to grant the extension of time was made by the Controller whereas the decision in the present case was made by the Minister. As the material facts are ‘poles apart’, the proposition of law made in one case cannot be transported and transposed into a different factual matrix especially where the decision maker in Ang Ming Lee
is the Controller but the Minister in the present case.
Whether the Minister’s Decision should be set aside for procedural impropriety in that there was a breach of natural justice when the Purchasers were not heard
According to the Court of Appeal, the requirement to accord a right of hearing to the purchasers as set out by the Court of Appeal in Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor v Ang Ming Lee & Ors and Other Appeals
 4 MLJ 545 must now be considered in the light of the observation of the majority judges in the Federal Court’s decision in Maria Chin Abdullah v Ketua Pengarah Imigresen & Anor
 1 LNS 7 that the real meaning of the right to be heard depends on the circumstances and nature of each case.
In the present case, there was no express requirement under the Act for the Purchasers to be given a right to be heard. What is important is that the Minister must act fairly and take into consideration the interest of the Purchasers whose rights he is entrusted under the Act to safeguard. There is thus no need for the Minister to hear the Purchasers individually or independently unless he has some doubts as to how the Purchasers’ interest may best be safeguarded as in various options and permutations open to them.
What is required of the Minister in this instance is to act honestly and by honest means; to act justly and to reach just ends by just means in relation to natural justice in an administrative law context. As the Minister entrusted to oversee the performance of a licensed housing developer under the Act, the Minister is duty-bound to ensure that a decision is reached where the Developer would be able to bring the Project to a completion despite the 17 months delay due to the SWO.
A question that has to be considered by the Minister is whether the Developer would be able to complete the Project if the Second Extension (which corresponds with the duration of the SWO) was refused. The Purchasers must, in the opinion of the Court, also look at the hard reality that being saddled with substantial claims for liquidated and ascertained damages could result in the Developer not being able to do so, and that would not be in the interest of the Purchasers.
The Court of Appeal also took into consideration that the subsidence and cracks in the nearby school that resulted in the SWO were not caused by the Developer but rather, by water entrapment beneath the school.
Where the facts are not in dispute but only the reasonableness of the positions taken by the opposing parties, the Court would be in the position to consider the positions taken and pitted against each other and to assess and evaluate whether the decision of the Minister is reasonable in the circumstances of the case. According to the Court of Appeal, there is a convergence of interest in the Developer completing the Project and delivering vacant possession to the Purchasers in spite of being prevented by the SWO from doing the work through no fault of theirs and the Purchasers not having to bear the interest on their loans during the extended period of completion and during the whole period of completion by reason of the Developer bearing the same under the Developer Interest Bearing Scheme (‘DIBS
’) but forgoing the interest on late delivery.
In the circumstances, the Court was of the view that it could not say that the Minister had taken into account irrelevant factors or that he had failed to take relevant factors into account in granting the Second Extension or that the Minister had not acted honestly by honest means or that he had acted mala fide
in granting the Second Extension to the Developer. In fact, the learned Judge went further to opine that decision to grant the Second Extension equivalent to the duration of the SWO appears to be reasonable, fair and just in the circumstances.
Whether the Minister’s Decision should be set aside on the ground of Irrationality
According to the Court of Appeal, Parliament granted flexibility under the Act to the Minister to extend the time of completion so that in valid and worthy cases, “a balancing act may be done to extend the time of completion, taking into consideration the delay caused, which was beyond the developer’s control and the extent of completion of the project as a whole and the interest of the purchasers
After a detailed consideration of the relevant factors, such as (i) the Developer not being able to continue work during the SWO and therefore had no cash flow, but having to bear the continuing costs during this period, such as interest payment on its bridging loans, the workers’ wages, lease rentals and other overheads; (ii) the issues that may arise if the Project is abandoned; (iii) the existence of the DIBS which meant that Purchasers who had taken loans to purchase their Units did not need to pay interest to service their loans; (iv) the Developer not being responsible for the cracks and subsidence at the nearby school that led to the issue of the SWO; and (v) the Developer requesting only a period of extension corresponding to the duration of the SWO, the Court of Appeal opined that the Minister’s Decision did not come within the meaning of ‘irrationality’ as established in Associated Provincial Picture Houses Ltd v Wednesbury Corporation
 1 KB 233 (that is, ‘a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it
’.) In fact, their Lordships went further as to say that they did not disagree with the Minister’s Decision.
Whether the Court should interfere with the Minister’s Decision
According to the learned Judge, while the Court is always in a position to review a Minister’s decision by way of judicial review and would strike down a decision when it does not comport with the principle of fairness, reasonableness, proportionality and basic human decency, the present case is not such an instance.
What is important, said the Court of Appeal, is that the Minister in arriving at his decision must not be actuated by bad faith or motivated by irrelevant considerations. It must be arrived at fairly taking into consideration the hardship suffered by the Developer.
The Court explored at length the possible hardship that could be inflicted on the Purchasers if the Project is abandoned. It also reiterated the hardships suffered by the Developer as a result of its inability to work on the Project during the SWO (e.g. having to bear interest on bridging loans and other overheads) and expressed concern that an additional burden of facing another round of claims by the Purchasers could cause the collapse of the Developer.
The Court added that the Developer was not trying to take advantage of its own delay and to short-change the Purchasers. It was a case of a genuine need for a period of extension that corresponds to the period of delay caused by the SWO which was not due to any fault of the Developer.
For the reasons set out above, the Court of Appeal allowed the appeal by the Appellants.
This decision has clarified in no uncertain terms that the Federal Court in Ang Ming Lee
only decided that the Minister could not delegate his powers under the Act to grant an extension of time for the completion of the units in a housing development to the Controller. It has also clarified that the Minister may personally exercise the power under the Act and the Regulations to waive and modify any provisions of a statutory SPA, including extending the completion period. With this clarification, we may now see licensed housing developers beating a path to the Minister’s door to seek an extension of time to complete their housing development projects.
It is to be noted that an application has been filed for leave to appeal to the Federal Court.
Case summary by Kok Chee Kheong (Partner) of the Corporate Practice and Jocelyn Lim Yen Tse (Partner) of Construction and Engineering Practice of Skrine