Strata Management

Strata Management Case Updates 13: Can TNB recovers outstanding electricity charges (owed by Developer) from JMB?

Kerajaan Malaysia (Petitioner) v Sanjung Utama Sdn Bhd (Respondent) and (Tenaga Nasional Berhad – Applicant) (Melaka High Court Companies Winding Up No. MA-28PW-05-05/2017]

Facts:

Sanjung Utama Sdn Bhd is a developer and was wound up on 5.9.2016. Private liquidator was appointed. On 27.3.2017, TNB filed proof of debt to the private liquidator but received a notice of rejection in Form 59. The grounds of rejection, among others are:

(a) the supply of electricity is for the benefit of the common property;

(b) the outstanding electricity charges should be sought against the Joint Management Body established on 20.11.2011.

The Respondent refers to Sections 10(3), 10(4), 15(1), 16, 21 Strata Management Act 2013 and argued that all monies in the maintenance account shall not form part of the property of a developer and the demand ought to be sought against the Joint Management Body.

The Respondent also further argues that the alleged debt is post winding up and ought not be admitted.

Decision:

The Judge agreed that the effective date for the purposes of determining the debt or liability of an insolvent company in liquidation is up to the date of the order of winding up ie 5.9.2016.

The judge distinguished JMB Perdana View v Saujana Triangle Sdn Bhd [2016] MLJU 1398 (where the High Court ruled that the developer is liable for the outstanding TNB bills) and ruled that the outstanding electricity charges is the responsibility of the JMB after its formation
(by referring to Sections 13(2) and 15(1) Strata Management Act 2013 and Perangin Mall v Tang Joo Ming [2013] 6 MLJ 753) and ordered a transfer or handing over of the electricity account from the Developer to the JMB.

Views:

The decision of the High Court has the effect of transferring liabilities from the developer to a JMB. This certainly will not go well with the JMB knowing that it needs to absorb liabilities upon the day of formation.

We are not too sure whether the decision would have been different if sections 15 and 16 of the Strata Management Act 2013 are interpreted literally. In brief:

s 15(1) Strata Management Act 2013 only deals with transferring of “all balances of moneys” and “assets” and not “liabilities”.

s. 16(2) Strata Management Act 2013 also confines to “any right, power or remedy granted to the developer” shall vest in the joint management body and not “liabilities”.

The only provision which deals with transferring of “liabilities”is Section 27(2)(b)(iii) Strata Management Act 2013 where it expressly provides that all assets and liabilities of the JMB are, automatically, transferred to and vest in the MC.

In the absence of expressly transferring “liabilities” in Section 15(1), it is our view that the JMB should not be taking over the liabilities of the Developer.

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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