Apex Court ruling leaves Court of Appeal’s contradicting decisions in limbo

• Apex Court held that the ‘threshold’ under Section 96 of Courts of Judicature Act has not been met. Hence, ‘leave of court’ to escalate to Apex Court denied.

On Jan 4, the Federal Court dismissed the application by a group of purchasers to get leave to pursue their appeal against a Court of Appeal (COA)’s ruling that the Urban Wellbeing, Housing and Local Government Minister (now renamed Minister of Local Government Development) has the power to grant extension of time (EOT) to a housing developer to deliver vacant possession.

The buyers had pinned their hopes on Bludream City Development Sdn Bhd to deliver the serviced apartments it promised to build within three years in Mines Resort City, Seri Kembangan in Selangor; in default of which to pay compensation in lieu. 

However, their dreams were quashed when the Apex Court refused to grant leave to the buyers.

“The decision is unanimous that the appellants have not passed the threshold under section 96 of the Courts of Judicature Act. The leave application is dismissed with no order as to costs,” said Tan Sri Abang Iskandar Abang Hashim, who led the three-member bench.

At the time of delivering the decision, the Federal Court did not provide other grounds in support of the decision.

Bludream buyers in the lurch

To give some background, the buyers started fighting their case more than two years ago when the then Minister had allowed an EOT of 17 months (on top of another six months granted earlier) to the developer.

At first, on Jan 3, 2020, the buyers had scored the first victory when the High Court allowed the purchasers’ judicial review application and quashed the Minister’s decision in allowing the 17-month EOT. Thus, it entitled the buyers to liquidated ascertained damages (LAD) claims for the late delivery.

However, the COA overturned the High Court’s decision after allowing the appeals brought by the developer and the minister. Undaunted, the buyers wanted to challenge the COA’s decision at the Federal Court, but as mentioned, was stopped short by the recent dismissal.

The ruling does not set a precedent

The National House Buyers Association (HBA), acting on a pro bono basis, held a watching brief of the Federal Court’s virtual hearing of the case on Jan 4, and would like to provide clarification concerning some erroneous reports, misleading news and misunderstood interpretations of this ruling.

Firstly, the dismissal of leave application does not mean henceforth, the minister has the power to decide on whether to grant EOT for delivery of vacant possession without hearing the rights of purchasers.

This is because the issues have not been substantively argued at the Federal Court to produce a decision that sets a precedent for all the legal fraternity to abide by. The Federal Court has merely ruled that the leave application filed by the purchasers had failed to satisfy the required threshold and nothing beyond that.

The Federal Court’s dismissal of the leave application must be considered in regard to the nature of leave application. Not granting leave does not mean the Federal Court endorsed the COA’s decision as correct.

Right to appeal to Federal Court

Except in limited circumstances, the right to appeal to the apex court is not automatic. In order to filter out unnecessary appeals, the parties wishing to file an appeal to the Federal Court must first obtain leave (or permission) from it before they are allowed to do so.

The applicable threshold to meet is set out in section 96 of the Courts of Judicature Act 1964, namely the case posed to the Federal Court must either be:

• questions of general principle decided for the first time; or
• a question of importance upon which further argument and a decision of the Federal Court would be to public advantage

(hereinafter referred to as the “threshold”).

The two questions remain unanswered

The purchasers in the Bludream City case posted two leave questions before the Federal Court:-

1. Whether the minister is required to afford a “right to be heard” to the affected party prior to a decision being made under Regulation 12 of the HDR;

2. Where the controller’s decision is null and void by reason of Regulation 11(3) of HDR being declared “ultra vires”, whether the minister’s decision made under Regulation 12 of HDR arising from an appeal against the said decision of the controller is also null and void.

Unlike a substantive hearing of an appeal, at the leave stage, the Federal Court is more concerned with the question(s) of whether the threshold has been met.

It is probably for this reason, that in dismissing the leave application, the bench led by acting COA president Abang Iskandar, sitting with Justice Datuk Rhodzhariah Bujang and Justice Datuk Mohamed Zabidin Mohd Diah, have expressly held that the threshold had not been met.

Earlier COA decided differently

Secondly, it is erroneous to assume the decision on Bludream City’s case applies to all developments because as of now, there are at least two contradicting decisions by the COA on this issue.

Earlier in 2020, in Ang Ming Lee and others vs Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan and another, the COA Justice (now elevated to Federal Court Judge) Datuk Harmindar Singh Dhaliwal stated:

As the rights of the purchasers to claim damages in the event of delay would be adversely affected or even extinguished by the exercise of such discretionary power, it is our judgment that the purchasers must be given an opportunity to be heard prior to any decision made.

As such, the recent dismissal of the leave application is yet another missed opportunity for the Apex Court to decide once and for all whether the “right to be heard” ought to be afforded to the hapless purchasers.

Previously in another case, the Federal Court granted leave on a similar question but did not answer the question posed because in that case, the EOT was not granted by the minister but by the controller of housing.

In the Bludream City case, the purchasers who would be affected by the minister’s decision are easily ascertainable, given that the developer has all the necessary contact information to reach out to the purchasers. After all, the particulars of their purchasers are within the sale and purchase agreement.

They ought to be notified of the developer’s application for any EOT to complete the project and be given a reasonable period of time to state their views, apprehensions, objections and difficulties before any decision is ultimately taken by the minister.

Unfortunately, the (previous) minister did not seek the views of the affected purchasers prior to allowing the 17-month EOT although it is a known fact that the EOT would adversely affect the purchasers’ right to claim for LAD.

The minister’s decision made in denial of the rights to be heard is therefore bad in law and ought to be set aside.

Denial of rights against spirit of social legislation

Denial of right to be heard is also against the spirit of the Housing Development (Control and Licensing) Act 1966, which has been consistently recognised as a social legislation enacted to protect the interest of purchasers. The right to be heard is not only a universal concept but an elementary administrative law (learned in law school) and must be observed at all levels especially when an individual or a body has power to determine issues affecting the rights of other individuals.

Perhaps the time will come in future where the Federal Court is given the opportunity to clarify the issue. Until and unless it makes an unequivocal decision, the courts below are left unguided as to what the correct and proper application of the law is, which may now lead to further conflicting decisions in the courts below and uncertainty and upheaval in future judicial decisions.

And until then, the laws may be far from settled. So, we live to fight another day on the two unanswered questions.

At the Federal Court case, the purchasers of Bludream City development were represented by Dato’ Andy Wong, Viola Lettice De Cruz, Godfrey Thomas Fernandez, Rex Wong, Claudia Lynette Silva and Nur Atiqah. Albert Soo and Koh Kean Kang held a watching brief for the National House Buyers Association (HBA).

This article is written by Datuk Chang Kim Loong, the Honorary Secretary-General of HBA, a non-government and not-for-profit organisation manned wholly by volunteers.

HBA can be contacted at:
Email: [email protected]
Website: www.hba.org.my
Tel: +6012 334 5676