By:
Bryan Lui (Co-Managing Partner) [bryanlui@luibhullar.com]
Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]
The Strata Management Act 2013 (SMA) governs the maintenance and management of strata properties, including responsibilities of management bodies to collect maintenance fees and sinking fund contributions. These charges are vital for ensuring the upkeep of common facilities and shared areas. However, disputes often arise regarding how such fees are calculated and allocated.
One such dispute arose in the Menara Rajawali case, which highlighted significant issues about fairness and consistency in charging maintenance fees for different parcel types in a mixed-use strata development.
Case Overview: Menara Rajawali
Menara Rajawali is a mixed development comprising residential, retail, and car park parcels. At its first Annual General Meeting (AGM) in June 2016, the Joint Management Committee (JMC) resolved to fix maintenance charges at different rates:
Residential and retail units: RM2.80 per share unit
Car park units: RM1.68 per share unit
The plaintiff, a residential parcel owner, challenged this resolution. He argued that varying rates for different parcel types were unfair and inequitable. He initiated legal action against the Joint Management Body (JMB) and the car park parcel owner, Denflow Sdn Bhd, seeking to nullify the resolutions.
High Court Decision
In 2018, the High Court dismissed Plaintiff’s case, ruling that nothing in the Strata Management Act 2013 prevents a JMB from imposing different rates for different parcel types, provided the resolution is approved at the AGM.
Dissatisfied, the plaintiff appealed the decision to the Court of Appeal.
Court of Appeal: Landmark Ruling
On 4 October 2019, the Court of Appeal overturned the High Court’s decision. The appellate court, led by Vernon Ong JCA, ruled that:
The Strata Management Act 2013 (SMA) requires the JMB to determine and impose a single rate of maintenance fees for all parcel types.
Charging different rates is unfair, inequitable, and discriminatory, especially when some parcels already benefit from lower share unit weightage.
The Court emphasized the importance of fairness in managing strata properties and ensuring that all parcel owners contribute equitably to the maintenance of common facilities.
The Court of Appeal awarded costs of RM20,000 and RM15,000 against the JMB and Denflow Sdn Bhd, respectively.
Federal Court: Dismissal of Leave to Appeal
The defendants sought leave to appeal the Court of Appeal’s decision to the Federal Court. However, on 21 May 2020, the Federal Court dismissed their application. This dismissal solidified the Court of Appeal’s ruling as binding precedent.
Impact of the Menara Rajawali Case
The Menara Rajawali decision has had a profound impact on strata management in Malaysia:
Unified Maintenance Fees: The ruling has prompted many Joint Management Bodies (JMBs) and Management Corporations (MCs) to adopt a single rate for maintenance fees across all parcel types, ensuring fairness.
Clarified Legal Obligations: The judgment clarified the obligations of management bodies under the SMA 2013, reducing instances of discriminatory practices in fee allocation.
Precedent for Future Disputes: The case has been cited in subsequent disputes, shaping the legal landscape for strata property management.
Conclusion
The Menara Rajawali case underscores the need for transparency, fairness, and adherence to the Strata Management Act 2013 (SMA) in managing strata properties. It serves as a reminder to tenants, landlords, and management bodies to ensure equitable practices in maintaining common facilities and enforcing maintenance fee structures.
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