TELL THAT TO UMNO: Return RM1.8 Million, “no man should enrich himself unjustly" - judge

KUALA LUMPUR - The High Court has ordered a developer to return about RM1.8 million paid for the maintenance and management of common facilities at nine apartment blocks in Port Dickson.

Judge Datuk V.T. Singham ordered Pengkalen Holiday Resort Sdn Bhd (PHR) to pay the money to two management corporations set up under the Strata Title Act 1985.

Perbadanan Pengurusan Paradise Lagoon Apartment North and South, referred as management corporations, currently maintained and managed the property.

The developer had been collecting money, which included a management fee, from property owners since 1994.

In 2000, the management corporations were formed but the developer had since then refused to return money on grounds it was a common practice in the development industry to retain any surplus amount after having stopped managing the property.

Singham in his 32-page judgment said no man should enrich himself unjustly.

"The court is unable to discern any legal principle which would justify the developer to retain, transfer or convert RM1.8 million which was paid to the PHR apartment account for its own use and benefit," he said in allowing the claim by the management corporations.

He said it would be grossly inequitable and unjust to permit the developer to transfer assets which belonged to proprietors into his personal account.

He said the developer had in fact kept the "surplus fund" in trust after collecting the money from property owners.

He said the common practice in the industry to retain all money collected for maintenance and management during the pre-formation of the management corporation was a "mere creation of an expectation" and this was insufficient legal right.

Singham ordered that the RM1.8 million was inclusive of five per cent interest from the time the suit was filed and the management corporations be paid a further RM50,000 in costs.

Perbadanan Pengurusan Paradise Lagoon Apartment North and South filed a suit against PHR last year after the developer did not want to sign a statement of accounts and hand over the sinking fund money which amounts to RM1.8 million.

The developer claims that the money belongs to him but the apartment unit owners claimed that the sinking fund account was kept in trust.

The developer took the position that the plaintiffs (management corporations) had no locus standi to file the suit because the money was collected from the individual owners before the management corporations were established.

Developers in main cities maintained condominium units of property owners through associations before the introduction of the Strata Title Act in 1985.

There were numerous complaints that some developers and association committee members failed to act in the interest of property owner after collecting hefty maintenance fee.

Under the Building and Common Property (Maintenance and Management) Act 2007, management corporations are now accountable to the Commissioner of Buildings and the local authorities.

In an immediate response, May Leong, a former chairman of one of the management corporations, said yesterday's ruling would "open the eyes" of developers and other interested parties in collection and retaining of maintenance charges.

NST