The High Court in Perbadanan Pengurusan Diamond F & Ors v Pesuruhanjaya Bangunan Kuala Lumpur & Anor [2026] 7 MLJ 848 clarified the scope of the powers of the Commissioner of Buildings (“COB”) under the Strata Management Act 2013 (“SMA”), reinforcing the principle that statutory bodies must act strictly within the powers conferred by legislation.
Background Facts
This case arose from a dispute over the validity of committee members elected at an annual general meeting (“AGM”) of a management corporation (“MC”).
While the dispute was still pending before the Strata Management Tribunal (“Tribunal”) and the Court, the COB issued a ‘letter of recognition’ identifying certain individuals as the legitimate committee members of the MC.
Complications arose when the MC sought to update its bank signatories based on the results of a subsequent AGM. The bank continued to rely on the COB’s earlier ‘letter of recognition’, as the COB declined to issue a fresh ‘letter of recognition’ for the newly elected committee members on the grounds that, among others, the statutory declaration filed in respect of the election results was not in order and that the dispute concerning the committee members remained pending before the Court.
As a result, the MC’s bank account was left in a state of suspension, prompting the MC and its newly elected committee members to commence legal proceedings against the COB and the bank.
Issues
The key issues before the High Court were, among others: –
Whether the COB has the power to issue ‘letters of recognition’ and to require additional documents beyond those prescribed under the SMA to verify the validity of management committee members.
Whether the bank was justified in refusing to act on the instructions of the newly elected committee members, and instead relying on the COB’s ‘letter of recognition’.
The High Court’s Decision
The High Court ruled in favour of the MC and its committee members, and in doing so clarified several key principles regarding the scope of the COB’s powers under the SMA.
1. COB’s role is administrative and supervisory, not adjudicatory
The Court reaffirmed that the COB’s powers are limited to administrative and supervisory functions under the SMA. The COB does not have the power to adjudicate disputes concerning the validity of general meetings, which should be referred to the Tribunal or the courts.
In this regard, the COB is not to enter into disputes between proprietors over the propriety of elections held at general meetings. The Court likened the COB’s role to that of the Registrar of Companies, who remains neutral in disputes between shareholders or directors of a company.
2. COB does not have power to issue ‘letters of recognition’
The Court held that there is no provision in the SMA or any subsidiary legislation which empowers the COB to issue ‘letters of recognition’ of newly elected committee members. Such letters are not required to certify the identities of committee members elected at an AGM.
Accordingly, the Court found that the COB had erred in advising the bank to rely on its earlier ‘letter of recognition’ to recognise committee members as signatories to operate the MC’s bank account.
3. COB does not have power to impose additional requirements beyond the SMA
The Court held that there is no provision in the SMA or its schedules that empowers the COB to require additional documents, such as statutory declarations, beyond those expressly prescribed under paragraph 7(8) of the Second Schedule of the SMA, for the purpose of verifying the identities of strata management committee members elected at a general meeting.
Under paragraph 7(8), the newly elected management committee is only required to file specific documents following an AGM, namely certified true copies of the audited accounts, the auditor’s report, the resolutions passed, and the minutes of the meeting. No further documentation is required as the names of the newly elected committee members are recorded in the minutes of the AGM.
The Court further emphasised that, unless there is an injunction or stay order of the Tribunal award pending judicial review, the COB is bound to accept the documents filed pursuant to paragraph 7(8) or a Tribunal award, as sufficient compliance with the SMA. This position is reinforced by paragraph 7(5), which stipulates that signed minutes of meeting shall be admissible as prima facie evidence of the facts stated therein without the need for further proof.
4. Bank’s refusal to recognise newly elected signatories constituted a breach of contract
While banks are entitled to verify the identity of persons who are to be the signatories to operate bank accounts, the Court found that, in this case, the bank had unjustifiably refused to recognise the newly elected signatories. This was due to its insistence on a ‘letter of recognition’ from the COB, notwithstanding that it had already received all the necessary documents sufficient to confirm the identities of the new committee members.
The Court held that the bank’s erroneous position deprived the MC of the use of the funds in its account and amounted to a breach of contract. Accordingly, the bank was ordered to release the MC’s bank account and to pay interest on the balance held at the rate of 4% per annum, calculated from the date of its wrongful refusal to recognise the newly elected signatories until the date of release of the account.
Key Takeaways
This decision reaffirms that the powers of the COB are strictly circumscribed by the SMA and further underscores several important points for stakeholders in strata developments, particularly in situations involving competing management committees.
• Management corporations may rely on duly documented AGM results without the need for any ‘letter of recognition’ from the COB.
• Commissioner of Buildings must remain neutral and act strictly within the limits of the powers conferred under the SMA.
• Property owners should refer disputes concerning the validity of general meetings or committee elections to the Strata Management Tribunal or the courts, rather than seeking administrative intervention.
• Banks and financial institutions are required to independently assess the sufficiency of documents provided and should not rely solely on informal administrative confirmations.
Disclaimer: This article is for general information only and does not constitute legal advice or legal opinion. It should not be relied upon as a substitute for specific legal advice. No person should act (or refrain from acting) based on this article without obtaining advice on the specific facts and circumstances. Halim Hong & Quek does not accept responsibility or liability for any loss or damage arising from reliance on this article. Halim Hong & Quek reserves the right to update, amend or withdraw this article at any time. All rights reserved.
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About the authors
Thoo Yee Huan
Senior Partner
Dispute Resolution
Halim Hong & Quek
yhthoo@hhq.com.my
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Meyer Thor Xiao Xin
Senior Associate
Dispute Resolution
Halim Hong & Quek
meyer.thor@hhq.com.my
