Badan Pengurusan Bersama Cova Suites v Edmund Tay Kim Joo (BA-22NCvC-237-06/2024)

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KHOO CHOONG NEONG @ KHOO BEE HONG

ZFORCE SECURITY SERVICES & SYSTEMS SDN. BHD. [Company No.: 383462-K] 22/06/2026 09:47:30 BA-22NCvC-237-06/2024 Kand. 149

CHANDRAN A/L RAJU …DEFENDANTS GROUNDS OF JUDGMENT

This suit arises from a management crisis at Cova Suites Condominium in 2019, following the election of a new Joint Management Body (JMB) committee. The Plaintiff alleges that the former committee members, who held office consecutively for seven to nine years, together with their accounts manager, recklessly mismanaged owners' funds and breached their fiduciary and statutory duties. While the Plaintiff frames its case around fiduciary breach, conspiracy and financial mismanagement, the central issue is straightforward as to whether the Plaintiff has proved, through credible evidence and proper legal foundation, that the Defendants mismanaged the condominium during their tenure as the previous committee.

The Plaintiff is the Joint Management Body (JMB) of Cova Suites, established under the Strata Management Act 2013. It commenced this action against seven Defendants, alleging mismanagement of funds, breaches of fiduciary and statutory duties and conspiracy to defraud the JMB during the Defendants' tenure. The 1st to 4th Defendants, are former committee members who served voluntarily for approximately seven to nine consecutive years. The 5th Defendant is the former Accounts Manager employed to manage the JMB's financial records. The 6th and 7th Defendants are security service providers engaged during the former committee's tenure.

The dispute arose when a new committee assumed control in 2019 and allegedly discovered financial irregularities, delays in statutory filings and issues concerning the management of Bumi Lot quotas and strata title perfection. The Plaintiff in summary contends that: I. The 1st to 4th Defendants failed to implement proper procurement procedures, resulting in the prolonged appointment of contractors without competitive quotations or adequate competency assessments. II. The 5th Defendant breached her fiduciary duty by failing to detect or report such irregularities. III. Owners' funds were wasted through unauthorised incentive allowances to security guards and other personnel. IV. Accounting irregularities occurred, including the failure to prepare or audit financial statements for certain years. V. All seven Defendants conspired to defraud or injure the JMB by exploiting personal and familial relationships to retain control over the condominium's management and finances.

The Defendants however, deny the allegations and contend that many of the complaints concerning contractor appointments, security guard incentives and clamping fees have already been litigated and determined in previous proceedings before the Magistrates’ and Sessions Courts. Accordingly, they argue that the present action is barred by the doctrines of res judicata and issue estoppel. The 1st to 4th Defendants further maintain that they acted in good faith as volunteer committee members and made decisions they believed were necessary to ensure the continued operation and management of the condominium, particularly during periods when the developer was in liquidation.

The first issue before the Court is whether the 1st to 4th Defendants breached their fiduciary and statutory duties as former committee members by mismanaging JMB funds, failing to exercise proper oversight in contractor appointments and causing accounting irregularities.

The second issue was whether the 5th Defendant breached her fiduciary duty as the former Accounts Manager by failing to detect, report or prevent financial irregularities and whether she together with the 6th and 7th Defendants, conspired with the former committee members to defraud the JMB.

The third issue was whether the Plaintiff's claims are barred by res judicata and estoppel, on the basis that the same matters have already been litigated and determined in earlier court proceedings. COURTS ANALYSIS AND FINDINGS BREACH OF FIDUCIARY AND STATUTORY DUTIES BY FORMER

It is trite law that the burden of proof lies on the Plaintiff throughout, who must prove its pleaded case on a balance of probabilities. However, this Court is mindful that while the standard remains constant, the strength and quality of evidence required to discharge that burden, must commensurate with the gravity of the allegations made by the Plaintiff. The more serious the allegation, the more compelling the evidence must be before the Court.

In other words, allegations in the nature fraud, conspiracy and breach of fiduciary duty, cannot be sustained on the basis of mere suspicion, hindsight criticism or general dissatisfaction with past management decisions. Such claims must be supported by clear, credible and convincing evidence. Mere speculation or assumptions however strongly felt by the Plaintiff, do not discharge their burden of proof.

In my opinion, when looking into the nature of the Defendants' service to JMB, the evidence before this Court establishes that the 1st to 4th Defendants were neither professional property managers nor individuals possessing specialised expertise in finance, accounting or condominium administration. They were ordinary unit owners who came forward to serve on the Joint Management Committee at a time when no other proprietors were willing to assume the burden and responsibilities of managing the development. This Court accepts that the 1st to 4th Defendants undertook their roles voluntarily and without remuneration, motivated primarily by the need to ensure the continued operation and maintenance of the condominium. This was particularly so during a challenging period when the developer had gone into liquidation and the management body faced significant operational difficulties. In such circumstances, it would be unjust to judge their conduct by the same standard expected of professional managers acting in a commercial capacity.

During trial, I observed that the Plaintiff had failed to establish a breach of fiduciary duty against the 1st to 4th Defendants and the evidence adduced suffered from fundamental deficiencies. Firstly, the Plaintiff's witnesses provided testimony that was largely speculative and lacked the requisite technical expertise. For example, allegations concerning technical mismanagement of lift maintenance and access card systems were supported only by lay testimony rather than proper expert evidence. The Plaintiff did not call any relevant engineers, technical specialists or regulatory experts to substantiate its claims of contractor incompetence or defective systems.

Secondly, the Plaintiff's principal witness made several critical admissions under cross-examination that materially undermined the Plaintiff's case. PW1, Ang Hooi Bee, who is himself a layperson, admitted that there was no documentary evidence of financial kickbacks or improper payments. When challenged by the defence, PW1 was unable to support allegations regarding mechanical wear and tear or the alleged use of counterfeit HCD cards with anything beyond his own testimony. Crucially, the Plaintiff failed to call engineers, representatives from Toshiba or any experts recognised by the JKKP (Department of Occupational Safety and Health) to prove that the contractors engaged were incompetent or that the equipment installed was substandard. In the absence of such evidence, this Court treats these assertions as speculative and incapable of sustaining the allegations pleaded. This Court is therefore unable to find on the evidence before it, that the 1st to 4th Defendants breached their fiduciary duties as alleged.

PW2, Syed Ozal Zakaria, was the building manager appointed in 2020. He testified regarding alleged irregularities during the period from 2013 to 2019.This Court observed that PW2 was unable to provide even a basic assessment of the equipment he claimed was damaged, despite having been in his management role for eight months prior to trial. More significantly, PW2 lacked personal knowledge of the relevant period, as he was not employed by the JMB during the tenure of the former committee. He was therefore unable to provide concrete evidence regarding contractor selection processes or the alleged irregular payments. In the circumstances, this Court finds PW2's testimony to be speculative and of no probative value in establishing the alleged misconduct of the 1st to 4th Defendants during their tenure.

Although the Plaintiff levelled criticisms against the former committee's handling of contractor appointments, procurement processes and financial administration, this Court finds no evidence that the 1st to 4th Defendants acted dishonestly, fraudulently or for any improper purpose. Crucially, there is no proof that they personally profited from any of the impugned transactions or received any secret commissions, kickbacks or other financial benefits arising from the engagement of contractors or service providers.

In my opinion, the decisions made by the 1st to 4th Defendants fell within the scope of managerial and administrative judgments necessary for the day-to-day operation of the condominium. The law recognises that office-bearers and committee members who serve voluntarily ought to be afforded a measure of protection from personal liability, particularly where decisions are made honestly, in good faith and in what they reasonably believed to be in the best interests of the organisation. This Court must guard against converting every allegation of poor management or administrative shortcoming into a cause of action for breach of fiduciary duty.

I accept that the 1st to 4th Defendants, as former committee members and office-bearers, stood in positions of trust and were required to act in good faith and in the interest of the Plaintiff. The real question, however, is whether the Plaintiff proved that they acted dishonestly, disloyally for improper purposes or in knowing breach of their statutory obligations.

After considering the evidence as a whole, I am unable to make such a finding. The Plaintiff's case was mounted in broad and serious terms mismanagement, wastage, questionable accounts, improper payments, procurement failures and statutory non-compliance but the proof ultimately fell short of establishing actionable breaches in law.

I find no satisfactory evidence that the 1st to 4th Defendants personally enriched themselves, diverted JMB funds for their own benefit or intentionally preferred private interests over the interest of the Plaintiff. The Plaintiff was unable to prove that the impugned decisions were tainted by dishonesty, conflict of interest or any secret profit.

Significantly, PW1 conceded under cross-examination that no police report had been lodged, nor had any complaint been made to the Malaysian Anti-Corruption Commission (MACC). This materially weakens any allegation of bribery or corruption. In contrast, the Defendants provided commercial explanations for the disputed arrangements, including that certain contractual clauses and incentives were adopted as practical compromises to maintain essential services during periods of financial constraint particularly when the developer was in liquidation. These explanations, which were not effectively contradicted by the Plaintiff are consistent with pragmatic management decisions rather than evidence of corrupt conduct.

In my opinion, when evaluating the probative value of the evidence led by the Plaintiff, it is apparent that the testimonies of PW1 and PW2 consisted largely of assumptions reasoned from historical archives, past appointments of contractors and accounting irregularities occurring during the tenure of the First to Fourth Defendants.

Significantly, the Court observes that a considerable portion of this evidence did not emanate from direct personal knowledge of the events at the material time but was rather synthesized via ex post facto reviews, speculative assumptions and secondary interpretations of the record. Whilst this Court accepts that such evidence is technically admissible and relevant, the probative weight to be assigned to these retrospective reconstructions must be heavily circumscribed. This caution is all the more imperative given that the essence of the Plaintiff's claim rests upon grave allegations of fraud, conspiracy and the deliberate defalcation of funds, which demand cogent and compelling proof. Accounting Complaints and Statutory Term

The Plaintiff relied heavily on allegations of accounting irregularities, delayed audited accounts and financial obscurity during the 1st to 4th Defendants' tenure. However, this Court must distinguish between poor administrative governance and actionable civil liability. While I acknowledge that proper bookkeeping and timely submission of audited accounts are vital statutory obligations under the Strata Management Act 2013, administrative delays or imperfect record-keeping do not, without more, establish fraud, dishonesty, conspiracy, or a breach of fiduciary duty. The Plaintiff has failed to demonstrate how these accounting deficiencies directly translated into a recoverable civil loss caused by any specific Defendant. To succeed in a claim for damages, the Plaintiff must prove not only a breach but also that such breach caused quantifiable loss. This the Plaintiff has not done.

As to the complaints that the Defendants exceeded their statutory term limits or imposed penalties above the lawful boundaries, I find no evidence of bad faith or direct loss to the Plaintiff that would justify the imposition of personal civil liability in damages. These were, at their highest, technical or procedural irregularities rather than evidence of dishonest or fraudulent conduct.

As for the presumption of good faith, The Strata Management Act provides protection for actions taken in good faith, notwithstanding technical defects or disqualifications. The Plaintiff bears the burden of displacing the legal presumption that the Defendants acted bona fide. On the evidence before this Court, the Plaintiff has failed to discharge that burden. Accordingly, the allegations of breach of statutory duty do not, in the circumstances of this case, give rise to actionable civil liability against the 1st to 4th Defendants. Conspiracy Allegations Against the 7th Defendant

The Plaintiff failed to prove its claim that the Seventh Defendant conspired with the First through Fifth Defendants to cause it financial harm. No direct evidence of an agreement, combination, common design or concerted unlawful action was presented at trial. Rather, the Plaintiff relied on tenuous inferences regarding a refund and the Seventh Defendant’s general relationship with the security services providers. This factual baseline is insufficient to ground a claim in conspiracy. Serious tortious allegations require substantial, affirmative evidence, which cannot be substituted by assumption and speculation

The dispute over the refund involves two opposing legal positions. The Seventh Defendant argues that even if the refund proves his personal receipt of the funds, the Plaintiff cannot maintain a cause of action because the court in Suit 2101 held that the clamping fees belonged to the contractor (the Sixth Defendant), the Plaintiff sustained no loss, meaning any claim for retained funds belongs exclusively to the contractor. The Plaintiff, however, views the refund as a clear admission of illegality and personal misconduct. While the Plaintiff relies on this as a fresh ground for liability, the Seventh Defendant maintains it is an impermissible attempt to relitigate a settled issue. This Court finds itself in agreement with the Seventh Defendant that the current claim represents an impermissible attempt to relitigate a matter that has already been definitively settled by a court of competent jurisdiction. ALLEGED BREACH OF FIDUCARY DUTY BY THE 5TH DEFENDANT

In relation to the second issue, this Court accepts that the 5th Defendant was a subordinate employee with no decision-making authority over payments or contractor appointments. Her role was limited to administrative bookkeeping functions. The Plaintiff's attempt to establish conspiracy through the familial relationship between the 5th Defendant and the 3rd Defendant, who are mother and son, is rejected. A familial relationship does not, on its own, establish a conflict of interest or wrongdoing particularly where the 5th Defendant possessed no decision-making authority and acted purely in a subordinate administrative capacity. There is no legal or regulatory prohibition against family members of JMB office-bearers being employed by the JMB. The Plaintiff's reliance on this relationship, coupled with speculative testimony, falls far short of proving conspiracy.

The Plaintiff's failure to call material witnesses, specifically the office bearers and the previous building supervisor, Yap Hiew Meng, leaves critical factual disputes unresolved. Accordingly, this Court finds that the Plaintiff has failed to adduce sufficient evidence to substantiate the allegations of fraud and conspiracy.

Upon an examination of the evidence, this Court finds that all decisions concerning appointments, administration and payments were made collectively by the office-bearers, as opposed to the Fifth Defendant acting unilaterally. Moreover, the Plaintiff has failed to discharge the burden of proving that the Fifth Defendant authorized wrongful payments, engineered the appointment of contractors, derived improper benefits or personally profited from the arrangements impugned herein. In the premises, the record is devoid of satisfactory evidence establishing any quantifiable loss occasioned directly by the Fifth Defendant's purported acts or omissions.

Insofar as the Plaintiff argues that the Fifth Defendant attracts civil liability for statutory non-compliance or the omission to appoint auditors, such an argument is entirely misconceived. The power to enforce regulatory compliance vests in the appropriate public authorities or the collective office-bearers, and cannot be extended to an individual employee. Consequently, this Court finds that no evidence has been adduced to link the Fifth Defendant to any alleged fraud, conspiracy or deliberate breach of duty.

The third issue, which pertains to the doctrines of res judicata and estoppel, turns on whether the Plaintiff's present claims against the former committee members and service providers are barred on the ground that substantially identical issues have been definitively adjudicated in prior proceedings. In addressing this issue, reference must be made to the landmark Federal Court decision in Asia

Commercial Finance (M) Berhad v Kawal Teliti Sdn Bhd [1995] 3 CLJ Therein, the apex court affirmed the prohibition against the reassertion of a cause of action that has been determined by a final judgment between the same parties, thereby preventing litigants from collaterally challenging the correctness of a prior final judicial determination.

However, the Plaintiff resists the application of res judicata and issue estoppel by contending that the current action features distinct causes of action, focusing on the fiduciary breaches of former committee members and an ex-employee rather than the simple contractual disputes with external contractors litigated previously. Consequently, the Plaintiff argues that no counterclaim could have been brought in those earlier contractor suits due to a lack of "material affinity" between internal management breaches and external claims for work done.

In addition, the Plaintiff contends that the claims against the Fifth Defendant are not barred by res judicata, as the previous counterclaim against this party was explicitly withdrawn with liberty to file afresh, leaving the issues unresolved by any final judgment.

In my view, this Court is guided by the well-established principle pronounced in Henderson v Henderson (1843) 67 ER 313. Under this doctrine of extended res judicata, litigants are barred from litigating issues or facts which were so clearly part of the subject matter of the previous proceedings that it was incumbent upon them to have raised them at that juncture. Turning to the facts at hand, the disputes concerning the external contractors, namely TN Elevator, A-Phone, SKE Solution, SCRC and Top-Top, were fully ventilated in previous suits, where the Plaintiff had already raised equivalent allegations of incompetence and substandard workmanship.

As for the Clamping Fees and Parking Charges, the 7th Defendant argues that the validity of Clause 4, which allowed the retention of clamping fees, was already decided in Suit 2101 at the Magistrates' Court and affirmed on appeal. In my opinion, re-raising the legality of these fees is seen as an abuse of the court process and the Plaintiffs are now barred from using those same facts to claim a breach of fiduciary duty.

Where prior counterclaims concerning these exact facts were explicitly dismissed and all subsequent avenues of appeal have been completely exhausted, the threshold of finality is absolute. Consequently, res judicata and estoppel operate as a complete procedural bar, preventing the Plaintiff from re-litigating the same facts and issues in a fresh suit. The doctrines of res judicata and estoppel serve as fundamental pillars of the administration of justice, primarily anchored upon the public policy principle of finality interest reipublicae ut sit finis litium, which dictates that there must be an end to litigation and that a party should not be twice vexed for the same cause.

Moving forward on the issue of liberty to file afresh, when a Court grants liberty to file a fresh suit, I accept that it merely clarifies that the withdrawal of the earlier proceeding does not amount to a final adjudication on the merits and the Plaintiff's substantive rights remain intact. However, in my opinion, the boundaries of such liberty are strict and the subsequent suit must remain attached to the identical cause of action or the specific procedural defects identified upon withdrawal.

Should the Plaintiff attempt to introduce a new cause of action, seek unrelated reliefs or fundamentally alter their legal theory, such maneuvers exceed the scope of the liberty granted and are susceptible to striking out upon application by the Defendant. Applying these principles to the facts at hand, the burden rests squarely upon the Plaintiff to demonstrate legitimate grounds for regenerating its claim against the Fifth Defendant. Liberty to file afresh does not clothe a litigant with the right to restructure a dispute in a more opportunistic or wider fashion to the manifest prejudice to the opposing party. Such liberty remains a strictly procedural curative mechanism to rectify technical defects and cannot be weaponized as a license for strategic relitigation. Statutory Immunity and the Bona Fide Exercise of Committee Powers under the SMA

The significance of the statutory protections embedded within the Strata Management Act (SMA), preserves the validity of a management committee's actions when done in good faith, notwithstanding any subsequent defects, vacancies or disqualifications.

Para 8, 2nd Schedule of Strata Management Act 2013 provides that: - “8. Acts of management committee valid notwithstanding vacancy, etc. Any act or proceeding of a management committee done in good faith shall, notwithstanding that at the time when the act or proceeding was done, taken or commenced there was –

(a) a vacancy in the office of a member of the management committee; or

(b) any defect in the appointment, or any disqualification of any such member, be as valid as if the vacancy, defect or disqualification did not exist and the management committee were fully and properly constituted.” In the case of Perbadanan Pengurusan 3 Two Square v 3 Two Square Sdn Bhd & 1 Anor [2019] 1 LNS 2281 Vazeer Alam JCA (as he then was) decided that: “The principle is that the council members; in carrying out the duties and functions of the management corporation as provided in the STA, are required to act in the best interest of the management corporation and all the proprietors. And so long as council members act in good faith and in the best interest of the proprietors as a whole, no personal liability will arise in connection with the exercise of any duty or function of the management corporation.

While the Court clarified that this provision does not immunize dishonesty or bad faith, it emphasized that where lay committee members act bona fide in discharging their functions, the judiciary must exercise caution. Personal liability should not be imposed on past members simply because later office-bearers or subsequent management bodies disagree with their historical decisions.

For the reasons stated above, I find that the Plaintiff has failed to establish the pleaded claims against any of the Defendants on a balance of probabilities. The evidence does not support the allegations of fiduciary breach, conspiracy, fraud, actionable misconduct or recoverable loss as alleged. Further, substantial parts of the claim against the 7th Defendant are barred by res judicata and estoppel and certain historical claims are in any event unsustainable by reason of limitation. Accordingly, the Plaintiff's claim is dismissed in its entirety against the 1st to 7th Defendants. Costs are awarded to the Defendants. Date: 19 June 2026 SGD SHOBA DORAI RAJAH JUDICAL COMMISSIONER SHAH ALAM HIGH COURT Solicitor for the Plaintiff: Bernard Scott with Jones Lee and Sukai Wan [MESSRS SAULT SCOTT & CO.] Solicitor for the Defendant 1-4: Tan Yan Yong [MESSRS YY TAN & CO. (PETALING JAYA)] Solicitor for the Defendant 5: Devan A/L Narayanan Raman [MESSRS DEVAN & ASSOC. (KUALA LUMPUR)] Solicitor for the Defendant 7: Kabina A/P Levan [MESSRS G. SANDHU, KABINA & ASSOCIATES]