78 property owners obtain summary judgment against Hatten Square developer over unpaid rents, non-existent refurbishments

KUALA LUMPUR (May 3) : Seventy-eight property owners in Hatten Square, Melaka, have obtained a summary judgement from the High Court there against the main developer, MDSA Development Sdn Bhd, which requires the company to pay them RM2.009 million in rental arrears for a mix of commercial and residential units, and the return of RM591,143.90 as payment for refurbishments that were never done.

Judge Mohd Radzi Abdul Hamid allowed the plaintiffs’ application for a summary judgment as he ruled that there was no arguable case.

He also ordered that MDSA Development pay RM10,000 as costs to the plaintiffs, who were represented by their solicitors from Messrs Tuang, Chu & Co, who confirmed the outcome of the case when contacted.

The 78 owners of the mixed development project known as Hatten Square filed the suit in Nov 2022. They claimed that they entered into separate Tenancy Agreements where they are considered landlords and MDSA as the tenant.

Under the agreement, the owners alleged that MDSA was required to pay the owners of the serviced suites rental within the first seven days of every third month, for a period of three years from the issuance of the certificate of completion and compliance of the operation of the hotel. The agreement is renewable every three years.

With regards to the commercial units in the development, MDSA is required to pay them rental for two years in the first seven days of every sixth month, after the respective units obtained their certificate of completion and compliance.

The owners claimed that MDSA had, between Sept 2017 to Nov 2021, breached the tenancy agreement for the service suite and commercial units by failing to pay the contracted rental sums. They further alleged that MDSA had deducted refurbishment costs from the rentals paid but actually did not do them.

Hence, they claimed RM2.036 million from MDSA as rental arrears and the return of RM591,143.90 refurbishment costs.

MDSA in their defence by Messrs Foo & Tee claimed force majeure due to the Covid 19 pandemic, and hence should be allowed to breach the agreement.

The company claimed it had informed the owners in August 2020 that it had to stop paying rent due to the Movement Control Order that had impacted the tourism industry.