Residents Seek Legal Action Against Developers of Two Prominent Projects
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Some 40 residents from both Lido Four Season and the Light Residences gathered in unity at Lido Four Season's club bar on Saturday, 7 April 2018, to collectively discuss taking legal action against the developers for Liquidated Ascertained Damages (LAD) on the basis that the developers failed to deliver the projects on time.
On 2 March 2017, the High Court of Kota Kinabalu allowed 30 homebuyers' application for judicial review against the Ministry of Local Government and Housing (MLGH) and quashed a previous decision by the Ministry in approving an appeal for Extension of Time (EOT) of 180 days to RA Concept Sdn Bhd for the development of The Light Residences condominium.
The High Court ruled that the act of granting the EOT by the Ministry without there being a decision by the Housing Controller beforehand is a clear breach of Section 12 and 14 of the Sabah Housing Development (Control and Licensing) Rules 2008.
As for Lido Four Seasons, the homebuyers won the court case to quash the EOT issued by the Ministry of Local Government and Housing in the Court of Appeal on 7 March 2018 after the Ministry issued the approval of EOT on 26 January 2016.
Developers Kinsabina Group and RA Concept have replied to the homebuyers' demands by saying that their Letter of Appeal for the quashed EOTs is still pending in MLGH.
"If you don't have the letter of EOT, then by law, you're liable to pay for LAD. Your application with MLGH does not apply to us homebuyers. Our contracts are with you (the developer/s)" said Luther, a resident at Lido Four Seasons citing the Housing Development Act (HDA) under Licensing and Control, where there is no clause that states that a developer can defer and/or avoid LAD payment when applying for EOT.
The residents also urged MLGH to jump on this matter. "The ministry should jump in to protect the purchasers' interests. The ball has now been rolled back to them (MLGH) but they have not said anything" shared Luther.
We reached out to the developers and in response to this pressing matter, Datuk Gerald Goh, Chief Operating Officer of Kinsabina Group expressed his view, saying he understood that the homebuyers are applying for a judicial review to determine the validity of the EOT.
"We applied through the right channels, however, there was a slight mix-up and instead of getting a signature from the Housing Controller, our EOT letter was signed by the Permanent Secretary of the MLGH" said Goh, adding that it was on this note that the High Court chose to rule in favour of the homebuyers.
It is reported that RA Concept, the developer of Light Residences made a mistake in their application of EOT; submitting their application to MLGH instead of the Housing Controller specifically. RA Concept was not available to comment at the time of reporting.
"The final verdict did not state that by default we were required to pay them (the homebuyers) LAD. No such judgement was passed on. Instead, it was passed back to the Housing Controller. We have been advised to wait for the new Housing Controller to be appointed by the Ministry and until then, our application will be pending with the Housing Controller" added Goh.
He also stated that only the Housing Controller has the power to grant or reject the EOT, and in the future, all applications should be made using the Housing Controller's letterhead, not the Permanent Secretary of MLGH. The Permanent Secretary of MLGH may be mistakenly deemed Housing Controller but according to the court's explanations, it is two different entities.
"Let's wait for the Housing Controller's decision. If the appeal is rejected then we will definitely pay the LAD" said Goh who also urged the homebuyers to be patient and wait for the new Housing Controller to take his/her seat.
Goh also shared that prior to the new delivery time allowance, developers were only given 36 months to complete a project of more than 800 units whereas the new legislation allows developers to take 42 months to complete.
The Housing Controller will now grant a 42 months completion time for developers who wish to build a development with more than 400 units. Goh stated that it is unfair to apply the 36 months delivery period broadly as one development may have 800 units while another development may only have 100 units.
"Let this be a lesson to all developers. Be sure that if and when you do apply for an EOT that the letter is signed by the Housing Controller and not the Permanent Secretary of MLGH" said Goh.
Read the follow up news here: RA Concept Responds to LAD Issue.