This issue was discussed and answered affirmatively in the decision of Aikbee Timbers Sdn Bhd & Anor v Yii Sing Chiu & Anor (Court of Appeal, Civil Appeal No. W-02(NCVC)(A)-1323-07/2022) & Pearl Suria Management Corporation v Yii Sing Chiu & 2 Ors (Court of Appeal, Civil Appeal No: W-02(NCVC)(A)-1389-07/2022).

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Brief Facts:

Aikbee Timbers SDN BHD, the developer for Pearl Suria, Menara Pearl Point 2 (“the Development”) and Pearl Suria Management Corporation, the management corporation of the Development filed their appeals respectively against a High Court Order dated 23.6.2022 (“High Court Order”) which  was in favour of parcel owners of residential parcels.

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The High Court Judge held that:

1. 1. The imposition of different chargeable rates of charges on residential parcels and commercial parcels by the developer during the preliminary management period were illegal, null, and void;
2. 2. The imposition of different chargeable rates of charges on residential parcels and commercial parcels by the management corporation during its management period were illegal, null, and void;
3. 3. The chargeable rates for the maintenance charges and contribution to the sinking fund must be the same for all parcels;
4. 4. The owners for the commercial parcels shall pay the management corporation the back- charges for the relevant period for the chargeable rates for the maintenance charges and contribution to the sinking fund; and
5. 5. The management corporation shall hold an extraordinary general meeting within one month from the High Court Order to determine a uniform rate of chargeable rates for the maintenance charges and contribution to the sinking fund for all parcels.

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The Court of Appeal set aside the High Court Order, unanimously allowed both the appeals and held that:

2. 1. Section 52(2) of the Strata Management Act 2013 authorizes the developer to determine the chargeable rates based on the total expenses which are relevant to the relevant parcels in the Development; and
3. 2. Section 60(3)(b) of the Strata Management Act 2013 grants the management corporation the power to impose different chargeable rates for parcels which are used for significantly different purposes in a mixed development.
4. Provided that the determination of the above chargeable rates must be just, reasonable and  is in compliance with  provisions of Strata Management Act 2013.
5. 3. The ratio decidendi in the earlier Court of Appeal’s decision of Muhamad Nazri bin Muhamad v JMB Menara Rajawali & Anor relied on by the parcel owners to support their claim for a single rate for all types of parcels was not applicable here due to the different formulas in the allotment of share units.
6. 4. In view thereof, the developer and the management corporation are entitled to impose different rates for its residential and commercial parcels which aare used for significantly different purposes in a mixed development. Their appeals were duly allowed with no order as to costs and the High Court order be set aside.

This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.

About the author

Tan Keen Ling
Senior Associate
Real Estate, Banking & Finance
Halim Hong & Quek
kltan@hhq.com.my