Armanee Condominium Joint Management Body v Burgess Rawson Management Sdn Bhd (BA-12ANCvC-59-11/2024)

This is an appeal by the Appellant/Defendant against the decision of the Session Court Judge (SCJ) given on 17.10.2024 in allowing the Respondent’s/Plaintiff's application to strike out Armanee’s counterclaim under O18 Rule 19 of the Rules of Court 2012 (ROC).

Having heard both parties, perused the Appeal Record, and read the submissions, I allowed the appeal with costs. The case was remitted back to the Sessions Court for the Appellant to proceed with their counterclaim against the Respondent.

Respondent now appealed to the Court of Appeal, and below are my grounds of judgment.

Burgess Rawson Management Sdn. Bhd. (Burgess) is a company which carries on the business of property management and offers consultancy services to joint management bodies. Armanee Condominium Joint Management Body (Armanee) is the joint management body for Armanee Condominium, responsible for the management and maintenance of the condominium.

In January 2011, Armanee appointed Burgess to provide management services, and a Service Agreement was signed on 13.1.2011 by both parties, outlining the contractual duties (see Appendix A of the Service Agreement).

The key terms of the Service Agreement are that the monthly property management fees are RM15,000.00. Upon termination or expiry of the agreement, Burgess’ appointment will continue on a month-to-month basis under the terms of the contract.

On 10.3.2023, Armanee issued a letter to Burgess informing them that the appointment on a monthly basis would cease on 31.3.2023.

Burgess filed an action at the Sessions Court claiming a total of RM339,393.42 from Armanee for the management fees allegedly owed. The sum includes overtime costs/allowances, undercharged staff costs and other charges.

Armanee filed its defence and counterclaim against Burgess for its failure to perform its contractual duties. They assert, inter alia, that Burgess had breached its contractual obligations by failing to collect maintenance fees from the previous owner before allowing the transfer of the unit to the new buyer, in breach of clause 3.4 of the Service Agreement. This failure resulted in a loss for Armanee amounting to RM12,472.12. Further, it was alleged that, due to a large amount of uncollected maintenance fees and sinking funds, Armanee was forced to appoint a credit controller to assist in their collection, at a cost of RM50,544.00. Further, it was submitted that, due to Burgess’s poor record keeping, Armanee had to appoint an accounting firm to resolve the accounting issues, which had cost them RM66,960.00.

Armanee listed a few other allegations of breaches by Burgess in the management of the condominium and prayed for a sum of RM556,387.85 as special damages in their counterclaim.

Burgess filed Enclosure 7 on 4.4.2024 for a summary judgment under Order 14 of the ROC. Enclosure 7 was allowed by the SCJ on 30.5.2024. Armanee appealed to the High Court. Justice Elaine Yap heard the appeal and decided, on 7.3.2025, to allow the appeal partially, whereby the sum claimed was reduced to RM308,293.45.

Prior to the decision of the appeal, after summary judgment was recorded before the SCJ, Burgess filed another application, Enclousre 35 on 21.6.2024, to strike out Armanee's counterclaim. This was heard and decided by the SCJ on 17.10.2024. It was allowed, hence this appeal before me.

The SCJ allowed Burgess’ application to strike out Armanee’s counterclaim on the ground that the determination of the summary judgment had consequently disposed of the counterclaim.

Armanee’s main contention in this appeal was that the SCJ failed to appreciate the nature of the application before him, which was a striking out application and not for summary judgment.

This argument was based on the notes of the proceeding (e-review) on 17.10.2024, where the SCJ states that the application for striking out was allowed solely on the grounds that the issues in the counterclaim had been raised in the previous summary judgment proceeding and were decided.

Upon perusal of the SCJ’s reasons, he had agreed with Burgess’s contention that Armanee’s defence and counterclaim were afterthoughts, not supported by evidence, that the documents were unpleaded, and that the counterclaim was a mere attempt to avoid their obligation to pay Burgess. More interestingly, the SCJ states that the issues raised were similar to those in the summary judgment application, which the Court had already decided; therefore, the substratum of the counterclaim became non-existent.

It was also submitted that the SCJ’s reason for allowing the striking out was, inter alia, due to the fact that the O14 application was allowed and upheld by the High Court.

From the record, I see that Justice Elaine Yap had allowed Armanee’s appeal in part, hence the revision to the amount claimed by Burgess was ordered. Be that as it may, Justice Elaine Yap, however, had not decided on Armanee's counterclaim. I refer to the notes of proceedings on the decision made by Justice Elaine Yap on 7.3.2025: “Appeal allowed in part. Sessions Court SJ is revised to the following extent: SJ allowed on the principal sum of RM308,293.45 [RM339,423.42 less the disputed staff costs], enforcement of which is to be stayed pending the disposal of the remaining claims, including as to interest, and (if applicable, depending on the outcome of the pending appeal) the counterclaim. Costs of the appeal to the Appellant at RM5,000.00”

In the present appeal, it is imperative to note that Justice Elaine Yap did not consider or decide the claim for special damages in Armanee’s counterclaim in her ladyship’s decision after hearing the appeal on the O14. Therefore, the SCJ’s reliance on and reason that the issues in the counterclaim had been determined at the summary judgment proceeding was wrong.

I refer to Her Ladyship’s grounds of judgment (Civil Appeal No. BA-12B-55-06/2024) at paragraph 14, which states as follows: “[14] However, it was brought to the Courts attention that the counterclaim had been struck out summarily by the Sessions Court and was pending appeal under a separate appeal. In the circumstances, this Court considered that the current status of matters did not permit consideration of the defence of set off as a triable issue.”

It is worth noting that an application for summary judgment pursuant to Order 14 of the ROC and an application for striking out under Order 18 Rule 19 involve two different sets of principles, tests and burdens of proof. The facts of the case may be similar, as may the issues arising. However, it is necessary to appreciate the difference in the nature of the claim between the relief sought by Burgess and the claim made by Armanee.

Perhaps both stem from the same Service Agreement, but Burgess’s claim concerns the management fees due to them, while Armanee’s counterclaim concerns clauses that Burgess allegedly failed to perform, resulting in losses to Armanee. For example, the failure to collect maintenance and sinking funds from unit owners. This is a valid issue, and Armanee should be allowed to put it forward for determination, regardless of its likelihood of success.

On whether the counterclaim was obviously unsustainable, I had perused Armanee’s counterclaim and submissions, and also Burgess’s contention, and I find Burgess’s entitlement of the amount claimed as in the SOC for recovery of management fees does not exclude or automatically deny Armanee’s alleged rights on the special damages/set off amount, which should be given the chance to prove. I also find that, though it may arise from the same set of facts, the counterclaim can be litigated separately on its entitlement.

Therefore, even if Burgess were entitled to the management fees due to them, it does not make them not liable for any other possible breach of the same agreement.

Just for revision, under order 14 of the ROC, the main element to succeed would be the Defendant’s (Armanee) inability to raise triable issues on the main claim (see Voo Min En & Ors Leong Chung Fatt [1982] CLJU 47, FC). However, the principles for striking out of an action were that the counterclaim would have been clear and obviously unsustainable. But having a weak defence would still entitle Armanee to be given the right to have their day in Court (see Sivarasa Rasiah & Ors v. Che Hamzah Che Ismail & Ors [2012] 1 CLJ 75).

I reiterate, I am of the opinion that consideration in an application for summary judgment is different from an application to strike out under O18. Therefore, the SCJ's reason, at paragraph 13 of his GOJ, is a misdirection of the law.

Based on the above discussion, I find that the SCJ had erred in applying the standard of proof in this striking out application, which amounted to a serious error in procedural law. Hence, this appeal is allowed with costs of RM3000, subject to the allocator. The decision of the SCJ is set aside, and the matter is remitted back to the Sessions Court for Armanee to proceed with the counterclaim against Burgess. Dated this: 30th October 2025 ~signed~ (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR For the Appellant: Harvinpal Kaur Ghuman together with Sabrina Mohamed Ameen Messrs Othman Hashim & Co For the Respondent: Gavin Jay Anand Jayapal together with Sivanandini Sreegantham and