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Lai Chee Hoe

Lai Chee Hoe

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Strata Management Case Updates 10 – Can a JMB apply different rates of charges?

Muhamad Nazri Bin Muhamad v JMB Menara Rajawali and Denflow Sdn Bhd

Kuala Lumpur  High Court Originating Summons No. WA-24NCVC-186-01/2018

Facts: 

The Plaintiff is a parcel owner of the residential component. The development area, namely Menara Rajawali consists of residential, retail and car park parcels.  Allocated share units of the development area were assigned. The 1st Defendant is the Joint Management Body of Menara Rajawali and the 2nd Defendant the owner of the car park parcel.

In an AGM held on 25.6.2016,  it was unanimously resolved that the mandate be given to the JMC to fix multiple rates of charges as below:

(a) Residential parcels – RM3.26 per share unit

(b) retail shop parcels – RM3.26 per share unit

(c) car park parcel – RM1.68 per share unit

sinking fund is 10% of the different rates of charges imposed.

The Plaintiff alleged that the multiple rates imposed are invalid and null and void, filed an Originating Summons in the Kuala Lumpur High Court. The Originating Summons predicated only on interpretation of Sections 8, 12, 21, 25 and the 1st Schedule of the Strata Management Act 2013. The predominant issue is whether the Strata Management Act 2013 allows a different rates of charges be imposed.

The Plaintiff refers to S 8, 12, 21, 25:

(a) Section 12 SMA 2013, in particular S 12(3) “the amount of the charges are to be paid under subsection (1) and (2) shall be determined by the developer in proportion to the allocated share units of each parcel.”

(b) Section 21(1)(b) SMA 2013 “to determine and impose the charges to be deposited into the maintenance account for the purpose of the proper maintenance and management of the buildings or lands intended for subdivision into parcels and the common property.”

(c) Section 21(2)(a) “to collect the Charges from the parcel owners in proportion to the allocated share units of their respective parcels.

(d) Section 25(2) “the amount of the charges to be paid under subsections(1) and (2) shall be determined by the joint management body from time to time in proportion to the allocated share units of each parcel.”

The Defendant argues that nowhere in Sections 8, 12, 21 and 25 and the 1st Schedule SMA prohibits the JMC from charging different rates of charges. In amplication, it was argued that weightage factor provided in Schedule 1 shows different weightage for different parcels.

Decision

The Court in analysing those sections mentioned above found in favour of the Defendant and ruled that there is nothing in those sections of the SMA 2013 which prevents a Joint Management Committee / Joint Management Body (JMC / JMB) from fixing different rates of charges for different types or categories of units in a stratafied project, as long as they are approved by a general meeting. It is valid and legal for the JMB to fix different rates of charges for the residential / retail and car park parcels since it is well within the mandate imposed by the AGM.

Views

I am not entirely convinced of the decision since the only provision in the entire SMA 2013 which deals with different rates of charges, ie Section 60(3) SMA 2013 was not referred to. I believe if Section 60(3) was referred to, the line of arguments would have been different, and maybe the decision. A close analysis of Section 60(3) clearly show that multiple rates can only be applied after a Management Corporation is established but not anytime before that.

The other Section (within the period of JMB) which may support charging of a different rates of charges is S 32 SMA 2013.

Takeaways:

If you wish to explore introducing multiple rates in a development area, make sure you rely on the correct provisions of the Strata Management Act 2013 and Strata Management (Maintenance and Management) Regulations 2013. Do note that drafting the necessary resolutions are equally important as the apportionment of expenses and the exclusivity of the common property may also need to be voted on.

If you wish to implement different rates of charges and understand the procedure, you can email to hello@burgielaw.com.

Get more Case Updates with your FREE copy of the

Strata Management Case Update
(43-pages in PDF format)

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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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