HOUSING LAW

AIKBEE TIMBERS SDN BHD & ANOR V YII SING CHIU & ANOR AND ANOTHER APPEAL [2024] 3 CLJ 177 [Court of Appeal]

The legal regime within the Strata Management Act 2013 (SMA 2013) permits a developer and/or management corporation to impose different chargeable rates for the maintenance of parcels used for significantly different purposes in a mixed development which comprises residential and commercial parcels within a subdivided building in a single development.

Brief Facts

This case involved an integrated development project (‘the development’), comprising residential units, a shopping mall, and a car park block (the mall and the car park parcel shall collectively be referred to as ‘the commercial parcels’). The shopping mall was owned by the owner and developer of the development, Aikbee Timbers Sdn Bhd (‘developer’), whereas the residential parcels were sold to individual owners. Sit Seng & Sons Realty Sdn Bhd (‘Car Park Owner’), was the owner of the car park parcel, while Pearl Suria Management Corporation (‘Management Corporation’) was the management corporation of the development.

The issue sparked when one of the residential owners, Yii Sing Chiu (‘Yii’), discovered that the owners of the residential parcels were paying higher chargeable rates for the maintenance charges and contribution to the sinking fund as compared to the owners of the commercial parcels.

High Court’s Decision

Dissatisfied with the different chargeable rates imposed on the residential parcels and commercial parcels by the developer, Yii thus filed an action against the developer in the High Court. The High Court’s decision favoured Yii, in which it was ruled that the maintenance charges and the contribution to the sinking fund must be the same for all parcels - having different chargeable rates was illegal, null and void. Dissatisfied with the High Court’s decision, the developer and the Car Park Owner, being the respective owners of the commercial parcels, then jointly appealed against the judgment, hence the two appeals before the Court of Appeal.

The developer and the Car Park owner, being the respective owners of the commercial parcels, were ordered to pay the Management Corporation back-charges for the maintenance charges and the contribution to the sinking fund.

The High Court also ordered the Management Corporation to hold an extraordinary general meeting (EGM) within one month from the date of the order to determine the chargeable rates for the maintenance charges and contribution to the sinking fund for the residential parcels and commercial parcel and such rates must be the same for all parcels.

Pertaining to the second issue, the High Court judge took the view that the Management Corporation could only exercise its powers to impose different rates under s.60(3)(b) of the Strata Management Act 2013 (‘the Act’) ‘where it can be shown the affected parcels are subsequently used for ‘significantly different purposes’ from the original purpose. The purpose of the parcel concerned must have gone through a significant change from its original purpose before different rates could be imposed by the Management Corporation. Hence, the High Court judge ruled that Management Corporation was not entitled to fix different rates of charges for maintenance charges and contribution to the sinking fund for parcels which were different in nature or purpose as there was not a significant departure from its original purpose. Dissatisfied with the High Court’s decision, the developer and the Management Corporation jointly filed an appeal.

Issue(s) to be determined by the Court of Appeal:

(i) Whether the developer could impose different rates of charges for residential parcels as opposed to the commercial parcels for the payments of the maintenance charges and contribution to the sinking fund during the preliminary management period.

(ii) Whether the Management Corporation was entitled to, under the law, to fix different rates of charges for maintenance charges and contribution to the sinking fund for parcels which were different in nature or purpose.

Court of Appeal’s Decision

The Court of Appeal unanimously allowed both appeals, setting aside the High Court’s decision with no costs. Choo Kah Sing JCA, in delivering the judgment of the court held that:-

The Sale and Purchase Agreement (‘SPA’) that Yii entered into with the developer and Schedule H of the Housing Development (Control and Licensing) Regulations 1989 (‘HDR 1989’) stated that the expenses for the maintenance and management of the common facilities and services shall be the responsibility of the developer until such date when the purchaser takes vacant possession. After the date of vacant possession, those charges shall be paid by the purchasers to the developer as then, the exclusive common facilities were, and still are, exclusively for the use and enjoyment of the residential parcels’ owners, including Yii. It is also important to look at the type of expenses which are relevant and correspond to the type of parcels where there is more than one type of parcels. If a development has only one type of parcel, namely only residential parcels, then all residential parcels’ owners would have common rights. They will have to share the expenses as a whole, and contribute to the expenses based on their proportion to the share units assigned or allocated to them. In a mixed development, like in this case, where the developer and Car Park owner were excluded from using and enjoying the exclusive common facilities it was only the residential parcels’ owners were responsible to share the expenses for the maintenance and management of the exclusive common facilities as this would portray the fair and justifiable proportion of the costs and expenses for the maintenance and management of the common property and services as per the SPA.

Furthermore, insofar as the formula to determine the rate of charges is concerned, it is the total expenses divided by the total allocated share units. “Total expenses” must be understood as expenses relevant to the parcels concerned and to be shared in proportion to the share units assigned to each parcel relevant to those expenses in the whole development. A developer is, therefore, tasked to determine the chargeable rate based on the total expenses which are applicable to the relevant parcels concerned in the whole development. Otherwise, there is no need for the law to state that the rate of charges to be paid ‘shall be determined by the developer’. If there can only be one rate, the law would have been worded in this way: ‘During the preliminary management period, the amount of the Charges to be paid shall be in proportion to the share units assigned to each parcel’. Therefore, with regards to the first issue on chargeable rates applicable to the developer and the Car Park owner, it was affirmative that the developer was entitled in law to impose different chargeable rates between the residential parcels and commercial parcels for the maintenance charges and contribution to the sinking fund in the development during the preliminary management period as the rigid imposition of only one chargeable rate for maintenance charges for residential parcels and commercial parcels would not reflect the true construction of a social legislation.

Pertaining to the second issue, this court disagreed with the High Court’s interpretation. The Act does not mention change of use from the original purpose to another purpose for a parcel. Further, s. 34(4) of the Strata Title Act 1985 (‘STA 1985’) states that “a proprietor is not allowed to apply for any amendment of the express conditions on his documents of strata title.” Therefore, the use of the parcel could not be changed.

The phrase ‘for significantly different purposes’ in the SMA Act must be understood to mean significantly different purposes in the use of the parcels for this development i.e. parcels used for residential purposes and parcels used for commercial (mall and car park) purposes.

As distilled from the SMA Act, the test for determining chargeable rates, is ‘just and reasonable’. The sums charged must be just in the sense that one must pay for what one is entitled to enjoy and to share his responsibility with those who share the same rights and benefits. The sums charged must be reasonable in the sense that the identified expenses for the common property must not be excessive or unreasonable.

In the present case, the AGM report had provided three types of expenses, namely, fixed expenditures, variable expenditures and utility charges. Most of the items in the expenditure list were expenses for maintaining the exclusive common facilities which were for the exclusive use of the residential parcels. There are only a few items which were shared with the commercial parcels.

The total expenditure for the residential parcels was RM122,222.34 (excluding 1% contingency) as opposed to the total expenditure for the commercial parcels of only RM9,328.82. If the commercial parcels’ owners were to share the expenses of the residential parcels, the result would be unjust and unreasonable. Hence, this court was satisfied that the charges imposed were just and reasonable with reference to the actual expenses incurred or expected expenditure in respect of the parcels mentioned above.

ANNA CHIN KUI LEN v. RJ REALTY SDN BHD & ANOR AND OTHER APPEALS [2025] 2 CLJ 204 (Court of Appeal)

Case Digest :

[1] When interpreting the terms of the standard sale and purchase (Form C) under the Sarawak HDR 2014, the overarching purpose of the housing development legislation must be considered, rather than merely the literal meaning of the words. The intent of the Housing Development (Control and Licensing) Act 1966 and the Housing Development (Control and Licensing) Regulations 1989 is to ensure that all payments are made in accordance with the statutory SPA.

[2] Regulation 9(4) of the Sarawak HDR 2014 explicitly prohibits the collection of any payment, including booking fees, outside the framework of a legally binding sale and purchase agreement. If a booking fee is collected before a formal sale and purchase agreement is executed, the calculation of liquidated ascertained damages for vacant possession shall commence from the date a booking fee is collected.

Lakefront Residence Sdn Bhd v. Tribunal Tuntutan Pembeli Rumah & Anor and Other Appeals [2024] 1 MLRA 485 [Court of Appeal]

Brief facts

The 2nd and 3rd respondent (‘the purchasers’) entered into the sale and purchase agreements (‘SPAs’) with Lakefront Residence Sdn Bhd (‘vendor’) on the basis of the SPA Approved Plan indicated and promised the installation of a centralised conditioning system (‘CACS’).

The vendor unilaterally amended the original SPAs Approved Plan with another plan in which all indication for CACS were removed without the purchasers’ prior consent. In fact, the building was originally designed with the intention to install a CACS, thus the parcels were never designed to include outdoor ledge for compressors for split unit air conditioning units indoors (‘split ACs’) and the vendor also never provided any solutions for the parcels to install the split ACs outdoor compressors. Instead, the vendor merely installed the outdoor compressor within the indoor area which is at the “yard”, also recognized as parcel of the kitchen’s area.

The purchasers had no choice but to accept delivery of Vacant Possession, the purchasers remained resolute to challenge the Vendor’s unilateral decision to instead use split unit ACs and hazardously install the outdoor compressors in an indoor portion of the parcel. The wrongful installation of the split unit ACs and the peculiar and hazardous indoor installation of the outdoor compressors were reported as a defect in Purchasers’ respective list of defects during the Defect Liability Period. Dissatisfied with the Vendor’s refusal to provide solutions to relocate the outdoor compressors out of their indoor areas, the respective Purchasers had no other options but to arrange a solution to relocate the outdoor compressors at their own loss and expense. Upon having to bear the relocation costs on their own, the Purchasers thereafter filed a claim before the TTPR (‘1st Respondent’) to recover the relocation costs from the Vendor before the lapsing of the Defect Liability Period. TTPR had duly allowed the Claims and awarded damages to the Purchasers to compensate the costs of relocating the outdoor compressors.

Dissatisfied with the TTPR’s decisions to allow all of the TTPR Claims, the Vendor had first applied to the High Court for a Judicial Review and Certiorari to quash the decision of the TTPR on the following grounds:

[1] The TTPR had exceeded its jurisdiction as the disputation regarding the non-installation of the CACS was a matter outside of the SPAs and was instead a matter under the Deed of Mutual Covenant;

[2] The issue before the TTPR was regarding the hazardous location where the outdoor compressors were installed and not regarding the issue of the Vendor’s unilateral decision to install split unit ACs instead of the CACS; and

[3] The TTPR Claims ought to be time barred as it was commenced beyond the 12 months’ limitation period under Section 16N (2) of the Housing Development Act.

High Court Decision

(Note: we have to be minded that in a Judicial Review Application against a tribunal’s decision, the Courts by and large should refrain from unnecessarily re-litigating and trying the facts and merits of the tribunal’s decision. See Court of Appeal in Teoh Kok Seng v Heesland Sdn Bhd & Anor [2023] 5 MLJ 475: “As a general rule, the courts ought not to usurp or encroach the jurisdiction of any tribunal and dive into the substance or merits of a tribunal’s decision. And this limitation should be observed with the highest degree of vigilance and restraint. Nonetheless, a challenge on substance (again, subject to the limitation of any specific statute or provision and the factual matrix of a given case) may still be mounted if the decision’s errors were sufficiently profound to be either illegal, irrational (or unreasonable), procedurally improper, or disproportionate.”)

The learned High Court judge (‘HCJ’) had dismissed all of the 4 appeals by the vendor on the following grounds:

[1] TTPR had not exceeded its jurisdiction as the SPAs itself referred to the SPA’s Approved Plan (which provided for the installation of the CACS);

[2] The vendor by its own Vendor’s Admission Letter had admitted that the initial promise under the SPAs was that the building shall be installed with a CACS and not split unit ACs;

[3] The vendor by its own Vendor’s Admission Letter had admitted that the unilateral decision to deviate from the SPA’s Approved Building Plan was not communicated to the purchasers/residents; and

[4] The TTPR Claims were well within the time limitation as it was commenced even before the expiration of the Defect Liability Period.

Dissatisfied with the High Court’s decision the Vendor appealed to Court of Appeal.

Court of Appeal’s Decision

Issue 1: whether the High Court was right in finding that the TTPR claims were not time barred The approved plan, the Building Plans and the vendor’s response letter all admitted that the original plan under the SPAs included infrastructures for the installation of a CACS. The vendor cannot now negate its own prior admissions and contrarily contend that the CACS was never promised and planned by the vendor. As such, it was obvious that there was a defect within the ambit of the defect liability period clause in that the vendor had unilaterally and unlawfully deviated from the Building Plans and Description. The applicable proviso should be s.16N(2)(b) of the HDA in that the 12 months’ limitation period only accrues upon the expiry or lapsing of the 24 months’ defect liability period. It was clear that the TTPR claims were not time barred. Hence, this issue was answered in the affirmative.

Issue 2: whether the High Court was right in finding that the TTPR had not gone beyond its jurisdiction under s.16N(2) of the Housing Development (Control and Licensing) Act 1966 (HDA)

The statutory jurisdiction of the TTPR was a qualified jurisdiction (in that it could only delve into disputes strictly arising from the terms of a SPA). In this instance, the SPAs, the SPAs Approved Plan, the Building Plan and the Vendors Admission Letter all proved that the term and promise for the installation of the CACS was a term within the SPAs itself. When the vendor had unilaterally deviated from the promised plans embedded within the SPAs, the vendor’s breach and transgression was directly against the SPAs. Thus, it could not be said that the purchaser qualms against the hazardous indoor installation of the outdoor condensers were not within the four corners of the SPAs. The aforementioned considered, this issue was also in affirmative. It was indeed appropriate for the High Court to find that the TTPR had not gone beyond its jurisdiction under s.16N(2) of the HDA to allow the TTPR Claims.

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