RM589mil suit rejected Court:

  • Nation
  • Thursday, 13 Oct 2011

KOTA KINABALU: A move by the state to cancel a huge integrated tourist resort project around the Tanjung Aru beach area was upheld by the Kota Kinabalu High Court.

Judicial Commissioner Stephen Chung Hian Guan ruled in favour of the state government to terminate the project and rejected a RM589mil suit filed by the developer Paramaha Enterprise Sdn Bhd, and 11 other companies.

The High Court’s decision meant that about 52ha of beachfront land in Tanjung Aru, which was alienated to the companies to carry out deve­lopment in the prime land, would be given back to the state government.

However, Paramaha and the 11 others are appealing against the decision.

The development agreement was signed on May 25, 1996 between Paramaha and the Sabah government but was terminated on May 28, 2003 after the state alleged the developer failed to commence construction work for certain phases of the project.

The state had appointed Paramaha to develop the land adjacent to the Kota Kinabalu International Airport and the Tanjung Aru beach into what was described under the agreement as an “integrated tourist resort” project.

Among others, the project included the construction of government residences that were due for completion within eight years of the agreement or not later than Jan 1, 2005 as stipulated in the land titles.

The state then alienated a title each to Paramaha’s 11 appointed nominees for the purpose of the project.

According to court documents, despite approval to begin certain phases of the project under the agreement, no construction took place.

Subsequently, the state terminated it and Paramaha initiated legal action claiming this was unlawfully done. It claimed loss of RM589,624,860 in profits and alternatively RM40m for unlawful termination .

Paramaha’s contention was that the commencement time for construction was not met as the complete approval for all relevant plans had not been given.

The state government, in its counter claim against Paramaha said it was entitled to terminate the development agreement and argued that Paramaha and its nominees were only trustees of the land titles alienated to them and that these should be surrendered back to the state.

The High Court made its decision on July 1, which only came to light after the Sabah Attorney-General’s office, upon enquiry from The Star, provided the judgment yesterday.

The state government was represented by Md Hanafiah Md Kassim, the state counsel from the Sabah Attorney-General’s office, while Ansari Abdullah represented Paramaha.

Since the signing of the agreement, old colonial houses in the area had been demolished.

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