Friday, July 30

Developer ordered to refund money to service fee fund

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KOTA KINABALU: Condominium unit owners may have a say in managing the service fees funds and other management matters in the future.

A unit owner, Tan Kung Ming said that he hoped the laws will change in the near future to allow unit owners to form committees with legal standing before the subsidiary titles are issued for that purpose.

He explained that under current Sabah laws, condominium unit owners would have to wait until the subsidiary title is issued (which has taken almost a decade to date) before the owners can form an owners’ committee with legal standing, and this makes it difficult for owners to take action against the developer as an owners’ committee during that period.

Tan was referring to a court case, in which he was one of 12 plaintiffs who filed a civil suit against the developer of Peak Vista Condominium, South-East Best Sdn Bhd.

He said that although it would have been ideal for the whole amount of RM602,717.86 (which is the total amount used by the defendant to pay the penalties incurred with Sabah Electricity Sdn Bhd – SESB) to be returned to the Service Fees Funds, it was a good step forward in holding developers accountable for their actions especially when it comes to using the service fees funds whilst the developer is the interim management corporation.

In the civil case on Friday, which came up for decision, Sessions Court judge Ummu Kalthom Abd Samad found that the plaintiff had failed to prove or explain that the defendant (South-East Best Sdn Bhd) had acted fraudulently and/or dishonestly and/or inappropriately in releasing the sum of RM602,717.86, to pay the penalty to SESB.

She also ruled that the plaintiffs also failed to prove that the defendant in its capacity as the developer of the condominium had recklessly and/or negligently entered into the SESB contract whereby an obligation was placed on the plaintiffs and other purchasers to meet 75% of the maximum Demand pursuant to the SESB contract and becoming liable for penalties.

However, she found that the defendant in its capacity as the developer of the condominium was reckless and/or negligent in failing to re-negotiate and doing follow up to lower the maximum Demand in order to mitigate the penalty imposed by SESB.

Furthermore, she said that despite the negligence, due to the fact that the plaintiffs are filing the suit as individuals as the owners and not on behalf of all the owners, they (plaintiffs) can only ask for the return of their shares of the penalties back to the fund.

Thus, the court dismissed prayer (a) para 24 statement of Claim, regarding the payment of RM602,717.86 by the defendant into the Service Fees Fund.

The judge, however, allowed prayer (b) para 24 Statement of Claim which involved monies to be refunded to the Service Fees Funds and ordered that the sum of RM13,924.12 to be paid/refunded by the Defendant into the Service Fees Fund with interest of 5% per annum from date of judgment until the refund being made.

She also awarded costs in the sum of RM1,700 to the plaintiffs, as well as an order for the defendant to provide the plaintiffs with relevant accounts and bookkeeping records pertaining to the Service Fees Fund for the years ending Dec 31, 2011, Dec 31, 2012, Dec 31, 2013, Dec 31, 2014, Dec 31, 2015, and Dec 31, 2016 if they have not yet been provided.

The plaintiffs, in their statement of claim stated that the defendant in its capacity as manager of the condominium, had used funds from the Service Fees Fund to pay the total penalty incurred by the defendant, in its capacity as the developer.

Therefore, they requested for relief against the defendant to pay the amount of RM602,717.86 into the Service Fees Fund; the defendant to produce to the plaintiffs the relevant accounts and bookkeeping records pertaining to the Service Fees Fund for the years ending December 31 for the year 2011 until 2016 and costs, among others.

The plaintiffs were represented by counsels Daphne Wong and Cynthia Chang while the defendant was represented by counsel Sean Liang.