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2021 MarsdenLR 3621
HIGH COURT MALAYA JOHOR BAHRU
TEO SIANG HIAN JHON & ANOR – Appellant
Versus
SOUTHKEY CITY SDN BHD – Respondent
[Civil Appeal No: JA-11ANCvC-21-11/2020]
Statutory extensions to contractual obligations under the Housing Development Act must comply with legislative authority; otherwise, they are rendered invalid.
Headnote:(A) Housing Development (Control & Licensing) Act 1966 – Section 24 – Housing Development (Control & Licensing) Regulations 1989 – Regulations 11 and 12 – Appeal against the dismissal of application for summary judgment – Learned Magistrate found triable issues regarding the statutory contract and timeline extensions – Court determined Ministry's extension was ultra vires Schedule H of the Housing Development Regulations. (Paras 10, 12, 14, 18, 20)
(B) Statutory Contracts – Contractual completion periods in statutory agreements must adhere strictly to statutory provisions – Extensions must comply with regulatory provisions to be valid, otherwise deemed invalid. (Paras 17, 22)
Facts of the case: Plaintiffs sought liquidated damages for delays in delivery of property and common facilities as per the terms of the Sale and Purchase Agreement, which was governed by the Housing Development Regulations.
Findings of Court: The Court held that the extension granted by the Ministry was invalid, confirming that the correct completion period was the statutory 36 months. Plaintiffs' appeal was allowed, correcting the Magistrate's error. (Paras 12, 23)
Issues: Whether the Ministry had the power to extend the statutory completion period, and whether the Magistrate erred in finding triable issues requiring a full trial. (Paras 8, 9)
Ratio Decidendi: The extension of the completion period was declared ultra vires and thus unenforceable, sustaining the interest of the property purchasers under the Housing Development framework. (Para 22)
Result: Appeal allowed with costs.
The legal document discusses the validity of statutory extensions to contractual obligations under the Housing Development Act and related regulations. The key points are as follows:
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Statutory Compliance for Extensions: Extensions of contractual completion periods granted by the Ministry must be authorized within the scope of legislative authority. If such extensions are made beyond the powers conferred by the relevant legislation, they are considered ultra vires and therefore invalid (!) (!) .
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Nature of the Contract: The Sale and Purchase Agreement (SPA) in this context is a statutory contract governed by Schedule H of the Housing Development Regulations. As a statutory contract, its provisions are legally binding and must adhere strictly to statutory provisions, including timelines and conditions (!) (!) .
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Invalidity of the Extension: The extension granted by the Ministry was found to be ultra vires because the relevant regulations that purportedly authorized such an extension were themselves invalid. This is because the regulations relied upon to justify the extension were declared ultra vires the enabling legislation, rendering the extension itself invalid (!) (!) .
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Effect of Invalid Extensions: Since the extension was invalid, the original statutory completion period of 36 months applies. Any contractual obligations or claims for damages based on the extended period are not enforceable (!) (!) .
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Legal Principles on Statutory Contracts: The legislation and regulations are enacted primarily to protect purchasers, and their provisions must be interpreted in a manner that promotes this purpose. Changes to statutory contracts that are not authorized by law are invalid and cannot be used to alter the rights and obligations of the parties (!) (!) (!) .
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Retrospective Effect of the Court’s Decision: The decision declaring the extension invalid applies retrospectively, meaning that any actions or decisions based on the extension prior to the court’s ruling are also invalid (!) .
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Implication for the Case: The court held that the extension granted by the Ministry was beyond its lawful powers, making it ultra vires and therefore unenforceable. Consequently, the contractual timeline of 36 months remains the valid period for completion, and the claim for liquidated damages due to delays is valid based on this period (!) (!) (!) .
In summary, the court emphasized the importance of adherence to legislative authority when modifying statutory contracts and confirmed that any unauthorized extensions are invalid, reinforcing the protection of purchasers’ interests under the law.
JUDGMENT
Introduction
[1] This was an appeal ("this Appeal") against the decision of the learned Magistrate on 26 October 2020, in dismissing the Appellants' application for summary judgment against the Respondent, pursuant to O 14 of the Rules of 2012 ("Rules of "). For ease of reference, the Appellants and Respondent will be referred to respectively as the Plaintiffs and Defendant.
The Factual Background
[2] Pursuant to a sale and purchase agreement ("SPA") dated 31 August 2013, the Plaintiffs had purchased from the Defendant, the developer, a unit at A-18-3A, Mosaic SR Tower A, Southkey, Johor Bahru, Johor ("the Unit") at the price of MYR763,000.
[3] Although the SPA was a contract pursuant to Schedule H to the Housing Development (Control & Licensing) Regulations 1989 ("Housing Development Regulations"), clauses 25 and 27 of the SPA provided for 42 months (instead of 36 months as statutorily prescribed) as the completion period.
Time for delivery of vacant possession
25. (1) Vacant possession of the said parcel shall be delivered to the Purchaser in the manner stipulated in cl 26 within forty two (42) calendar months from the date of this Agreement.
(2) If the Vendor fails to deliver vacant possession of the said Parcel in the manner stipulated in cl 26 within the time stipulated in subclause (1), the Vendor shall be liable to pay to the Purchaser liquidated damages calculated from day to day at the rule of ten per centum (10%) per annum of the purchase price from the expiry date of the delivery of vacant possession in subclause (1) until the date the Purchaser takes vacant possession of the said Parcel. Such lilquidated damages shall be paid by the Vendor to the purchaser immediately upon the date the Puchaser takes vacant possession of the said parcel.
(3) For the avoidance of doubt, any cause of action to claim liquidated damages by the Purchaser under this clause shall accrue on the date the Purchaser takes vacant possession of the said parcel.
...
Completion of common facilities
27. (1) The common facilities serving the said housing development shall
be completed by the Vendor within forty two (42) calendar months from the date of this Agreement. The Vendor's architect shall certify the date of completion of the common facilities.
(2) If the Vendor fails to complete the common facilities in time the Vendor shall pay immediately to the Purchaser liquidated damages to be calculated from day to day at the rate of ten per centum (10%) per annum of the last twenty per centum (20%) of the purchase price.
(3) For the avoidance of doubt, any cause of action to claim liquidated damages by the Purchaser under this clause shall accrue on the date the Vendor completes the common facilities.
[Emphasis Added]
[4] The Defendant subsequently applied for and obtained from the Kementerian Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan ("the Ministry"), a further extension of six months to deliver vacant possession, which approval was communicated via letter dated 1 December 2016.
[5] The Defendant had surrendered vacant possession of the Unit on 30 August 2017 and the common facilities on 31 December 2017, resulting in what the Plaintiffs claimed to be, a delay of 183 days and 306 days respectively, on the basis that delivery of vacant possession should have been on 28 February 2017.
[6] The Plaintiffs filed their claim on 21 February 2020 for liquidated ascertained damages ("LAD") in the amount of MYR38,254.52 and MYR12,793.32 for the delay in delivery of the Unit and common facilities respectively.
[7] On 30 August 2020, the Plaintiffs filed an application for summary judgment, which was dismissed by the Magistrate. As a result thereof, the Plaintiffs appealed to this Court. This Appeal was allowed for the following reasons.
Contentions, Evaluation, And Findings
[8] The learned Magistrate concluded that there were triable issues, namely, whether the Plaintiffs had objected to the initial completion period of 42 months as op
