Case Study: Joint Management Bodies (JMBs) And Management Corporations (MCs) Can Only Charge A Single Rate Of Maintenance Charges

• Law Firm: MahWengKwai & Associates
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Trials & Appeals & Compensation
• Author: Mr Raymond Mah and John Chan
• Published date: 13 February 2023

Issue:

Menara Rajawali is a mixed development comprising 208 residential, retail and car park parcels.
Our client Muhamad Nazri bin Muhamad was an individual parcel owner.

At the 1st Annual General Meeting (AGM) of the JMB on 25 June 2016, it was resolved that mandate be given to the Joint Management Committee (JMC) to fix the maintenance charges for:

• Residential and retails units at a rate not more than RM3.26 per share unit; and
• Car park units at a rate not more than RM1.68 per share unit.

At the 3rd JMC Meeting on 12 August 2016, the JMC fixed the maintenance charges for:

• Residential and retails units at a rate of RM2.80 per share unit; and
• Car park units of a rate of RM1.68 per share unit.

On 26 January 2018, Muhammad Nazri commenced an Originating Summons at the Kuala Lumpur High Court against the Defendants - the Joint Management Body (JMB) and owner of the car park parcels Denflow Sdn Bhd respectively in Menara Rajawali - for declarations that both resolutions by the JMB and JMC were null and void. He claimed that different rates of maintenance charges for different parcels was unfair and inequitable.

However, on 4 September 2018, the High Court dismissed the Plaintiff's Originating Summons and held that there is nothing in the Strata Management Act 2013 (SMA) which prevents the JMB/JMC from fixing different rates of charges for different types of parcels as long as this was approved at the AGM.

Dissatisfied with the decision of the High Court, the Plaintiff appealed to the Court of Appeal in October 2018. Our Mr Raymond Mah was appointed as counsel to lead the arguments at the Court of Appeal.

Approach/Strategy:

In summary, we submitted that Sections 21 and 25 of the SMA expressly require the JMB to determine only one consistent maintenance charges rate for all types of parcels. We further submitted how unfair and inequitable it would be for a parcel owner to pay a lower rate of maintenance charges despite having more share units and higher voting power. As far as the 2nd Defendants' car park parcels were concerned, those units already enjoyed a lower weightage factor in the calculation of its share units.

Result:

On 4 October 2019, the Court of Appeal unanimously allowed the appeal and overturned the High Court decision. Vernon Ong JCA read the grounds of judgement and explained the Court's finding that "the JMB is required to determine and fix only a single rate of maintenance charges for all types of parcels" to avoid an "inequitable...