Marc Service Residence Management Corporation v 1. ) Wawasan Raya (M) Sdn. Bhd. (WA-22NCvC-952-12/2019)

WAWASAN RAYA (M) SDN BHD

TAN MEI CHUAN

FU LAI CHEE

LEONG TUD SENG

WEI XIAO GANG

BAIYAN

NG BENG HING

HON CHONG HENG

LAU LEE KHENG

KONG WAI WEI (NO. K/P: 690915-08-5593) 19/06/2023 16:28:54

CHEAH SIEW HAR

BUDI KARTIKA

FRANCISCA LUKMAN

WONG LAI HUNG

BEH SWAN SWAN

HIROYUKI SAEKI

KEK SOON POH

LIM BEE HONG

LAI KIM TECK

LAI MAY LING

HONJEN ENTERPRISE SDN BHD

TEE SHIN SAN

LIM CHONG YANN

CHOW PEI LIM

LUA SING YE

LIM EE TATT

KOJ TZU LUH

THE SOO CHEE

GAP STUDIO SDN BHD

RIYAZ ALI TOWFIQ CHINOY

AREESA RIYAZ CHINOY

LAI NYOK KIEW

MICHAEL WILLIAM GOODWIN

ZHAO YI KAI

RAZLEEN BINTI RASHIDI

METRO GAIN SDN BHD

NG SZE MIN

HUNG, SHU LIEN

YAP GEOK HONG

MOHAMMAD KAMRAN SHAUKAT

MOHAMMED AKTER HOSSAIN

VIJEYALEXMI A/P MARKANDU

LAI JET ANN

LEE LI HOON

TAN SIAK MOEY

DAVID KOONG BORMAN

MICHELLE KOONG CHING CHING

JAY KESHER SIMHA

SAMSHANA SIMHA

AMIOT FABRICE FRANCOIS, JEAN-CLAUDE

SARRO LAURENT

CHEONG YEN LEONG

SOH LIP MENG

TEU FUI BEEN

INDAH BISTARI SDN BHD

THE CHOONG PING

LIM YEAN SHUE

CHEN HSIU TAO

KAO, CHIN-CHIH

MOHAMMED ZAKIR HOSSAIN

LEE SIU FAI

YONG KHEK TOONG

TU TE-BIN

TANG KOK SAN

TAY YIE LANG

CHEONG KOK FAI

YONG KOK LIAN

KOAY CHIEW LEE

YEOH POH AI

SUHAIMI BIN SALLEH

JUSNIAR BINTI AB JALIL

SENTRY CO (PTE) LTD

SEE CHOON SOONG

LEE KIM ENG

HII LOONG MING

MOOI FI PHANG

SHIRLEY CHANDRA

TAN JIUN UEI

YONG PANG CHAUN HOLDINGS SDN BHD

LILY KUEK LEE LEE

NG WEE CHEE

IDEAHOME DEVELOPMENT SDN BHD

MOHD NAJIB BIN ABDULLAH

SIOW NGAN FOOK

SUN HUA SHUN

SADEESH RAGHAVAN

ELENA SHIEVTSOVA

ZHENG ZHI CHENG

KANDASAMY SELVAKUMAR

SUJATHA SELVAKUMAR

FADHLAN THOO LIP BOONG

ROZI FAZLEEN BINTI FADZIL

LAM MEI CHING

EDWIN TIONG GIONG SENG

TANG AI HOONG

LESTER CHAN JAY WIN

LIM EE YOUNG

LIM EE WAI

EDELEY HOLDINGS SDN BHD

CHANG CHENG HUAT

CHANG MEI YEN

ORTELLI LAURENT JACQUES

HO SIW KIW @ HO CHOON YEN

KIM KAY-LI

LU YUHANG

YANG CUILI

TAN ENG KEONG

KIM JEA WON

SHIRLEY CHANDRA

KAIZEN AERO SDN BHD

LUAN ZHI QIANG

SIN SOON PING

IGNATIUS HO TZIN SUNG

TAN BEE HER

MARCUS HO YEW HOON

JOHN WALTER BROOKSBANK

IMONG ANNE BROOKSBANK

LIM BENG SUN

TAN SOH KHENG

JAYGAN FU PONNUDURAI

FU NGET EN

VIGANESWARAN A/L PONNUDURAI

LEOW TZE KANG

SK. FARID AHMED

DAMIEN, JEAN, ANDRE AND MARIE AMIGUES

LAN-MEI CHANG EP. AMIGUES

TEA CHING YUNG

PATRICIA WONG WAN WENG

TOH SIEW HONG

CHIEW MING TEE

SOHAIL ANSAR

ZEEBA ANSAR

ANUSHE NIZAM LOW

AREEBA NIZAM POUBLAN

THE GEOK BEE

GANESH PRAKASH SELVARAJAH

JAMES TAN WOOI PIN @ CHIN WOOI PIN

JOHN TAN WOOI HANG

OKBB SDN BHD

CHEN WEI JIE

CHOW SIEW KHENG

OOI EE YAN

TAN CHOON HOW

BEVERLY WONG JZEA FAYE

CHONG KAI MUN

CHANG YOKE MUN

LOOI MENG HUI

NURUZZAMAN BIN MOBARAK

TAN MAY LIN

ANAND MUNNUSUAMY DEVARAJ

MORTEN STAAL JONASEEN

HOOI PEI KUEN

LEW YEN FONG

HARIHARAN THAYUMANAVAR

HARIHARAN HARSHAVARDHAN

HARIHARAN VISHNUVARDHAN

LI DONG MEI

JAYLEEN CO PTE LTD

MASIH JAYA SDN BHD

TROY EDWIN THOMAS

KERRY VIVENNE JAYAPRAKASAN

HANI HABIB ABDUL NABI MACKI

GOH WOOI BENG

GAN SIEW GUAT

FOO PIAW LAN

FLEXIBLE REWARDS SDN BHD

KHOO CHAI PIN

KBM RESEARCH & TECHNOLOGIES SDN BHD

LEE YEW HOONG

CHOONG WAI KUAN

OH XIANG JIE

LEE WOON SHIU

KHOO HSIEN LIANG

KEE LI-NA

HO KHET WUE

LEONG CHOI HOE

GOH GEK LING, LENA

NG WEI HAN PAUL

MIYAZAKI TOKIO

ANDREW HONG SENG BENG

KULJEET SINGH A/L RANJIT SINGH

HEAP SENG HENG MARKETING

LEK HENG SONG

LEE KIEW YONG

LEE THAI FOO

FOO JONG KAN

NG YEE LING

NG YEE PING

TAN EK HUAT

TAN MING HOON

TIMOTHY EDWARD GOCHER

JEFF LEONG PAK LIM

LAURA NGUI

EONG SIW FONG

KERK SEE GIM @ GUO XU JIN

GATEWAY CORPORATION SDN BHD

DATO’ ABDUL MUTALIB ALIAS

LEW CHEN FEE

LEW CHEN FANG

JOANNA YEE HUI SZE

HONG LEE KOK

WANG AH KIAM

ACAPPELLA SUITE HOTEL SDN BHD (NO SYARIKAT: 1120068-T) …DEFENDAN-DEFENDAN

The Plaintiff’s claim is for an injunction against the Defendants from using their private residential apartments in a project called the Marc Service Residence (“Marc Residence”) for commercial purposes, by renting out the apartments for short term rentals (STR).

202 owners of the apartments were first named as Defendants but eventually the trial proceeded against only 2 Defendants i.e. the 1st Defendant and the 203rd Defendant. The other Defendants had agreed to abide by the interim injunction imposed by the Court preventing the Defendants to let out their unit of apartment for STR.

The Plaintiff’s proceeded for a full trial where the parties relied on oral testimony as well as documents to support the arguments of each party. The Plaintiff called 2 witnesses namely, SP1 the Building Manager and SP2 the Chairman of the Plaintiff for the term 2019/2020. The Defendants called 4 witnesses. Brief facts

The Plaintiff in this case is the Managing Corporation incorporated by virtue of the Strata Management Act for the management of the Marc Residence. The Marc Residence is a 2 block 35 storey apartment comprising of 637 units of apartments located at No 3 Jalan Pinang 50450, Kuala Lumpur.

The Plaintiff contends that the Defendants by giving out their apartments for STR have not only breached the agreements signed during the purchase of their property but also flouted many laws relating to residential property.

Apart from breaching the agreements and the law, the action of the Defendants letting out their apartments for STR has caused a host of problems to the Marc Residence which includes the indiscriminate use of the common areas, appointment of commercial operators to manage the apartment for the STR, advertising the Residence as a 4 star hotel and unlawful use of the apartments for illegal activities which included drug abuse and prostitution.

The Defendants defense is that the apartments in the Marc Residence had from the very beginning used for commercial purposes including for STR. This was allowed and done with the knowledge of all including the Plaintiff.

The Defendants further contended that the House Rules did not prohibit STR and even if it did, it went against the Defendants’ ownership rights of the apartment under the law.

The Defendants’ also contends that the at the 6th Annual General Meeting of the Plaintiff it was resolved to amend the House Rules to allow and formalize the use of the apartment for STR with a penalty of RM200 to be imposed in the event the granting of STR causes any nuisance or losses to the common areas. The issue

The main issue before the Court after considering all the evidence tendered by way of oral as well as documentary evidence is whether STR is allowed at the Marc Residence.

In determining this issue the Court ruled that both the Plaintiff witnesses are competent witnesses who have full knowledge of the issue at hand. The Defendant’s objection that the 2 witnesses are not authorized to testify on behalf of the Plaintiff is baseless.

The Court has observed both the witnesses and regard them as truthful and reliable witnesses and there is nothing to indicate from their testimony that they are unauthorized or incompetent to testify.

In considering the evidence in this case the Court noted that there is no formal definition of STR in the law or any documents tendered. However in general terms as the acronym STR suggest the rental of the premise is for short period of time of 6 months and less.

However in the Court’s view the significant difference between a normal tenancy and STR is not the period but the intention in which the premises is rented out. It is the Court’s understanding that in an STR the intention of the parties is not to rent out the premise for purpose for residence in the ordinary sense of the word, but more to allow for a stay for a certain purpose. Once the purpose is achieved the person staying leaves after paying for the number days of stay.

The other notable difference in the Court’s view between a tenancy and STR is that there is no formal tenancy agreement entered in an STR between the parties as opposed to a regular tenancy.

In short the Court in this case rules that STR refers to the apartments not rented out for purposes of residence but only for a limited stay. There is no dispute between the parties in this case that the units of apartments can be tenanted out for purposes of long term residence. The only dispute is whether the apartments can be let out for STR.

In determining the opposing views of the parties with regards to STR, the Court thaught it fit to consider all the agreements between the parties starting with the Sale and Purchase agreement between the developer and the purchasers.

As all the Sale and Purchase agreement between the developer and the purchasers were basically the same save for a few minor variations, the Court needed only to look at only one of the Sale and Purchase agreement for the purposes of this case.

The Court looked at the Sale and Purchase agreement between the developer Beverly Towers Development Sdn Bhd and one Foo Siew Bee which was exhibited in the Bundle of Documents. The Recitals to the agreement states that “the Developer is developing part of the land into block of service apartment “.

The Court noted that nothing in the Recitals in the agreement suggest that the apartments were developed for the use of the service apartment for commercial purpose as suggested by the Defendants.

In clause 1 of the agreement the word “Buildings” is stated to mean “collectively the 2 buildings comprising of service apartment units, the commercial units and multi-storey car park…”.

The above definition categorizes the Building in to 2 categories one the service apartment the other the commercial units. It is glaringly clear from the above definition that the purchasers intending to use the building for commercial purpose must purchase the commercial units as opposed to the service apartments.

Apart from the Sale and Purchase agreement all the purchasers signed the Deed of Mutual Covenant (“DMC”). For the purposes of this trial the Court looked at the DMC signed by the same purchaser as above. The terms in the DMC are almost similar to the terms in the Sale and Purchase agreement.

Clause 3.02 of the DMC clearly stipulates that the parcel shall not be used “otherwise than as a private dwelling and exclusively for residential purposes”

It is clear from the reading of both the Sale and Purchase agreement and DMC that the service apartments in Marc Residence are to be used for solely residential purposes. This is a clear intention of the parties in entering both the agreements and therefore the Court is duty bound to give effect to the clear intentions of the parties.

The intentions of the party becomes clearer with the publishing of the House Rules by the Developer applicable to all the purchasers of the units of the service apartment. The House Rules formulated by the Developer were adopted by the Plaintiff in its 1st AGM. Being so adopted the Court rules that the House Rule is an agreement which binds all purchasers and residents of the Marc Residence.

It is clear from the House Rules the only occupants of the Marc Residence recognized are those who have registered with the Management as residents.

The definition of “Resident” is stated as “the Unit owner, Lessee and person lawfully occupying the Unit. For the purposes of this House Rules a person shall not be deemed to be lawfully occupying the unit if he is not registered with the Management”.

It is clear to the Court from the evidence led by the Plaintiff’s witnesses is that persons allowed to stay under STR are never registered with the Plaintiff. In the Court’s view the person staying under STR therefore cannot be regarded as a Resident of Marc Residence. In fact the Court will go as far to say that persons not registered with the Management are in fact trespassers.

All the doubts as to whether STR is allowed in Marc Residence is removed by clause 2 of the House Rules under the topic of “Use of Housing Units and Common Property”. The heading of Clause 2.1 of the House Rules which is entitled “Residential Dwelling/Tenancy” itself amplifies the use of the premise.

Clause 2.1(a) makes it doubly clearly by stating that “the Units are constructed for private residential dwellings and shall be used for private residential purposes only”.

In the face of such clear intentions in the agreements as well as the House Rules there is no slightest doubt that Marc Residence does not allow STR. The Defendants contention that the practice of giving STR has been going on with the knowledge of the management from the beginning does not in any way imply that STR is allowed.

The failure of the management taking any action earlier against STR can be sign of weak enforcement but certainly not a waiver of the clear intentions of the parties. Any explicit approval for STR can only be done if the various provisions in the agreements and House Rules are repealed or replaced.

In the face of this explicit intentions of the parties, the Court also rules that what transpired at the 6th AGM of the Plaintiff was not to allow STR but only to impose a penalty of RM200 on any flouting of the House Rules. This fact was testified by both the Plaintiff’s witnesses. The imposing of the penalty was necessary due to the frequency of the flouting of the House Rules as well as creations of nuisance by the unsupervised number of persons in the Marc Residence due to the STR.

The Court dismisses the suggestion of the Defendants that the purport of the amendment at the 6th AGM was to vote for the allowing of the STR. The Court had has heard the recording of what transpired at the AGM and agrees with the Plaintiff the vote was for the imposing of the penalty.

The resolutions passed by the AGM even if the Court were to agree with the contention of the Defendants that the vote was more than just imposing a penalty, in the Court’s view any resolutions passed cannot supersede or contradict the provisions of the DMC and the House Rules which clearly disallows for the apartment to be used for commercial purposes.

Besides the agreement on the use the apartment for private residential the House Rule also provides other restrictions and covenants which cannot be overcome by the mere imposing of a penalty or making a resolution to allow for STR.

Apart from the agreement to use the service apartments for residential purposes, the purchasers and residents had also agreed to abide by the other covenants found in the DMC which includes the covenant of 3.02 “ not to allow any nuisances in the Parcel or commit nuisances in the Common Property nor engage in anything which is a source of annoyance to other residents or occupants or which interferes with the peaceful enjoyment of the Parcel and Common Property by other residents or occupants”

The House Rules further states “Residents shall not (a) make any immoral, improper, offensive, unlawful use of his Unit or the Common Property or any part thereof”.

The evidence led by the 2 Plaintiff witnesses clearly showed that the unit used for STR had caused a host of problems which included the abuse of the common property, immoral an illegal activities being carried out and total disregard for the peaceful enjoyment of the apartment by person residing in the apartments. None of this evidence of the flouting of the DMC and House Rules was challenged by the Defendants.

Based on the factors above the Court rules that the purchasers and residents have agreed to abide by the provisions and the House Rules. The Court rules reading the DMC and House Rules, letting out the apartments for STR is strictly prohibited by these agreements.

The only way the restrictions against STR can be lifted is if the Plaintiff as the Managing Corporation repeals and terminate the entire DMC and the House Rules. Just amending certain clauses of the House Rules as has been argued in this case is insufficient to lift the restrictions imposed. The law and regulations

However even the repeal and termination of the DMC and House Rules might not be sufficient as the residents are still bound by the law and regulations regulating residents involving strata title and private residence.

The Strata Management (Maintenance and Management) Regulations 2015 statutorily prohibits in the Third Schedule the owners of Strata Title “to use or permit to be used for his parcel in such manner or for such purposes as to cause nuisance or danger to any other proprietor or the families of such proprietor” (Reg 8.8).

Under this Regulations also the proprietor is prohibited from interfering with the peaceful use of the enjoyment of the residents of other parcels and also prohibited from carrying out immoral or illegal activities.

Apart from the laws relating to strata titles there are a host of legislation which regulates premises used for residential purposes and commercial purposes. Therefore facilities necessary for residential purposes might be different from those available for commercial purposes.

In this case the Court rules that the Residence is a purely a private residential accommodation and the apartments in the Residence cannot be utilized as a hotel or a motel or for any such commercial purpose and also cannot be advertised as such.

Based on the factors above the Court allowed the Plaintiff’s claim by imposing a permanent injunction against the practice of letting out on STR the service apartments in Marc Residence.

The Court also awarded a cost of RM50,000 as cost of the proceedings to be paid by the Defendants to the Plaintiff. Dated: 16.6.2023 sgd DATO’ HAJI AKHTAR BIN TAHIR Judge High Court of Malaya, Kuala Lumpur PARTIES For the Plaintiff: Tetuan Shahabudin & Rozima B-6-5, Northpoint Offices Midvalley City No. 1 Medan Syed Putra Utara 59200 Kuala Lumpur For the Defendant: Tetuan Josephine, L K Chow & Co. B-03-06, Tingkat 6 3 Two Square, No. 2