theSun Property April 2017

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theSun ON FRIDAY | MARCH 11, 2016 20 theSun ON FRIDAY | APRIL 14, 2017
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THISweek, we feature an
article by lawyer Datuk
PretamSinghDarshan Singh
referring to the action taken
by theMalaysian Anti-Corruption
Commission (MACC) on
improprieties relating towaiver of
bumiputra allotment of houses in
Johor.
OF STATE COUNCILS AND
HOUSE PRICES
There has been practice to impose a
condition on housing developers,
that they should set aside certain
portion of the houses they build, to
be sold to bumiputras and in the
event they are unable to sell these
lots, the developer has to pay a
penalty. This raises the issue of
whether the state, i.e. the local
planning authority, has the power to
impose such an award (nomatter
hownoble the intentionmay be).
This issue is not new and has
been discussed previously in the
courts of law. One such case is the
landmark lawsuit betweenMajlis
Perbandaran Pulau Pinang vs
Syarikat Berkerjasama Serbaguna
Sungai Gelugor [1999] 3 CLJ 65.
In this case, the dispute was
whetherMajlis Perbandaran Pulau
Pinang (Penang City Council) had
the power to impose the disputed
conditionwhereby 30%of low-cost
houses have to be built and sold at a
cost not exceeding RM25,000 per
unit in accordance with
“garispanduan-garispanduan
mengenai rumah pangsamurah
Majlis” (Council guidelines on low-
cost housing).
The people (society) agreed at
its AGM, that the selling price of a
two-bedroom flat, measuring an
average of 500sq ft, shall not
exceed RM32,000 and a three-
bedroom flat, measuring an
average of 650sq ft, shall not
exceed RM45,000.
Being in a dilemma due to the
ceiling price stipulated in the
guidelines on low-cost housing,
the developer sought the
intervention of the courts as it
was of the understanding that the
council had no such power to
impose conditions relating to prices
of houses.
THE VERDICT
The case, described as a “veritable
legal porcupine bristling with
interesting and complex points of
Law” went on appeal to the Federal
Court. It was a landmark case in the
field of “Planning Law and Judicial
Review” in this country and
prominent counsel on both sides
put up very convincing arguments
that ran across six days.
At the end, Edgar Joseph Jr
(Federal Court judge) made no
apologies for the “acres of paper and
streams of ink” that were devoted to
the preparation of the unanimous
judgment by the Federal Court.
Joseph held that it is axiomatic
that local authorities are creatures
of statute and their qualities and
powers can only be derived by
reference towhat is expressed or
implicit in the statutes under which
they function.
The statutory scheme of the
Local Government Act confers
upon local authorities a distinct
political function, towhich the
courts, by application of ordinary
principles of statutory construction,
should give effect.
“Taken at its full face value, the
above provisions would appear to
confer unlimited power on the
planning authority to impose any
condition it wishes (for example),
because it considers the condition
to be in the interest of the housing
policy of the state government. But,
thematter must be probed further.”
On probing further, the Federal
Court concluded that the entire
decision of Majlis Perbandaran
Pulau Pinang was wholly null, void
and of no effect and stated that the
council had no power to fix the
prices of houses.
SIMILAR CASE
In the case of CaymanDevelopment
(Kedah) Sdn Bhd vsMohd Saad Bin
Long [1999]MLJU 290, Caymanwas
a housing developer that wanted to
develop a piece of land in the
Mukimof AlorMerah, Alor Star,
constructing a low-cost housing
project. The state authority of
Kedah imposed a condition that the
developer had to:
“Menjual rumah-rumah yang
dibina dengan harga kurang 5%
daripada RM25,000.00
(RM23,750.00).”
[Translation: “To sell the built
houses with 5%discount off
RM25,000.00 (RM23,750.00).”]
When the developer sold the
houses without the stipulated
discount, the purchasers sued the
developer to enforce the discount
as imposed by the state authority
of Kedah.
At the High Court,
Hishamuddin J held that the state
authority has no power to fix the
requirements regarding the price
of each of the units to be sold to
the public, as well as the discount
of 5% (to be given), as
these are not the kind
of requirements
envisaged by the
National Land Code.
Hishamuddin J:
“I have no doubt
whatsoever of the
good intention of the
state authority, and
that in prescribing the
price and the
discount, it certainly
had inmind the
interest of the low-
income group of the
general public, who
would constitute
the potential
buyers of the low-
cost units. Yet,
with the greatest
respect, I do not
think that
Parliament, in
enacting
Subsection 125
(5)(c) of the
National Land
Code, had in
mind to confer on
the state
authority such
huge power, so as
to empower it to
even fix the price
of the low-cost
units for the purpose of sale to
potential buyers, let alone to
prescribe any discount.
“Such requirements, as imposed,
are commercial in nature. The state
authority, being a regulatory body
on matters pertaining to land, in
determining the nature of the
requirements to impose (if any)
when approving a conversion,
should avoid entering into the
commercial arena. Instead, it
should only confine itself to
matters directly pertaining to the
usage of land and the imposition of
rent and premium (consequential
to the conversion).”
LAWS AND LIMITATIONS
Both these cases illustrate the point
that both the state authority and
“majlis” (state council) have no
power to impose any condition
relating to prices of houses and
discounts, as these are considered
commercial aspects that both
should avoid entering into. Being
mere regulatory bodies, they should
only confine themselves to
regulatorymatters such as
prescribing the usage of land and
the imposition of rent and premium
consequential to the conversion (of
usage to the land).
Both cases remain unchallenged
and continue to be good precedents
as there have not been any
legislative amendments to overturn
these decisions. It is therefore
timely to look into the fixing of the
quota and subsequent penalty
being imposed, as it may not have
the proper legislative support.
A proper legal framework may
be the step forward, as such quota
and penalty imposition is also
prevalent in other states.
Datuk Pretam Singh Darshan Singh, a
lawyer by profession, has previously
worked as senior federal counsel, deputy
public prosecutor with the Attorney
General’s Chambers and legal adviser to
several government departments and
agencies. He is currently partner at a
legal firmwhile simultaneously serving as
president of the
Tribunal for Home
Buyers’ Claims.
Leveraging his vast
knowledge and
decades of
experience, he
contributes articles
to local and
international journals, besides delivering
lectures and talks at relevant forums.
> The need for legislative intervention and support
Laws and legal boundaries