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Lai Chee Hoe

Lai Chee Hoe

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Strata Management Case Updates 8 – Can a JMB sue after the MC is established

Park Access Sdn Bhd & Ors v Badan Pengurusan Bersama Prima Avenue dan DPCC Fasa 1 (Block G, H, I) and other appeals (CA)

Facts:

The Plaintiff is the JMB and claimed that the accessory parcels of car park bays be declared as common property and the Sale and purchase agreement entered into be declared null and void.

The Defendant questioned on the locus standi of the JMB in initiating the action and filed a striking out application in the High Court. The High Court dismissed the striking out application and the Defendant appeal to the Court of Appeal.

This is a pre-SMA case and the provisions referred to by the CA are:

S 39, 42 Strata Titles Act 1985 (deleted by A1450) and S 4(1), 15 BCP (repealed by SMA)

Issues to be determined

Whether the JMB has the locus standi to commence the suit after MC was established on 24.1.2014. (The OS was filed on 4.6.2014 and the suit was filed on 22.12.2014).

The 1st AGM of the MC was convened on 11.6.2016 and management committee was elected on 11.6.2016

Decision of the Court of Appeal:

The JMB should continue to exist until the 1st AGM of the MC, and the JMB shall be not later than 1 month of the 1st AGM conduct a hand over exercise.

Parliament did not expressly provide that, notwithstanding Sections 39 and 42(1) STA (which is now deleted by A1450), in the interim period after the MC was established and up to the date of completion of hand over by the JMB, the JMB has the legal right to institute any action to recover common property. Since Parliament is silent, the express provision should be given effect.

Upon the establishment of the MC on 24.1.2014, the MC  becomes the proprietor of the common property and the JMB has lost its locus standi to sue on behalf of the proprietors to claim any proprietary rights over the common property.

Views:

With all due respect to the decision of the Court of Appeal, I think the decision is wrong for a few reasons:

(a) initiating an action requires a committee to deliberate. A Management Corporation established by virtue of opening the book of a strata register is a procedural necessity which does not have a committee to undertake the duties. A management committee is elected only at the 1st AGM convened by the developer upon satisfying the threshold of 25% registering the strata. Convening a 1st AGM will usually take years. Only when the 1st AGM is convened and a management committee is elected, the management committee can undertake the duties and exercise the powers of a management corporation. See: Section 56(1) SMA 2013. Further transfer duties also start to run from the date of 1st AGM and NOT date of establishment of management corporation.

(b) in addition, Section 28(2) SMA 2013 would have answered the question of the court of appeal. By virtue of Section 28(2), the management corporation shall have the same right, power, remedy or liability as if it had at all times been a right, power, remedy or liability of the management corporation, including those rights in respect of any legal proceedings or applications to any authority by or against the joint management body pending immediately before the date of the expiry of 1 month from the date of the 1st MC AGM. This clearly shows that Parliament intended the JMB to continue to have the rights to sue and be sued until the expiry of 1 month from the date of 1st MC AGM.

 

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Lai Chee Hoe

Lai Chee Hoe

Partner at Chee Hoe & Associates. With 10+ years of experience under his belt, he specializes in civil and corporate litigation. He is also the current Chairperson of various Joint Management Bodies.

 
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