Omitech Road Systems (M) Sdn Bhd v Bina Puri Construction Sdn Bhd (BA-37G-63-05/2024)

The short question raised by this appeal is whether RM23,919.18 standing to the credit of the judgment debtor’s Maybank Account no. 510237559675 (“Maybank Account”) are trust monies where the judgment debtor claims that they comprise maintenance fees and sinking fund collected for purposes of a strata title property.

In this case, the judgment debtor relies on the decision of the High Court in Quek Jui Meng v Bina Puri Properties Sdn Bhd [BKI-A52NCvC-18-2/2021] (“Quek Jui Meng”) as authority for the proposition that the subject monies in this case are trust monies.

In Quek Jui Meng, the Court had determined that monies in a bank account were held on trust by the judgment debtor for all the owners of the Jesselton Condonimium developed by the judgment debtor and that accordingly: Facts and Evidence [5] The deputy registrar agreed with the submission of judgment debtor that the monies in the Maybank Account are trust monies and dismissed the application of the judgment creditor to make the garnishee order nisi absolute. She did so based on the following evidence:

An assertion that the Maybank Account is an account to receive maintenance payments and sinking funds for the apartments in Taman Permata, Sandakan.

An assertion that the funds in the Maybank Account are funds collected for and on behalf of the management and occupants of the said apartment building and that the judgment debtor holds the same on trust.

A copy of a statement of account for the Maybank Account in the name of the judgment debtor for a 3-day period from 1 to 3 July 2024 that show, inter alia, in-flow of payments from individuals with unit numbers, some with no description and some with remarks such as maintenance fee/sinking fund/water bill.

A copy of the Board of Directors’ resolution of the judgment debtor dated 18-3-2020 that resolved a change of authorized signatories for the Maybank Account, apparently designated for “Taman Permata, Sandakan, Management Corporation,” to six (6) signatories: “to operate such account[s] in the manner set forth for the time being and to act on any instructions and accept any receipts or other documents relating to the accounts, transactions or affairs of the Company if so signed on behalf of the Company.” [6] There is also a submission (with no evidence) that the management corporation for the Taman Permata apartment has been established under section 14 of the Sabah Land (Subsidiary Titles) Enactment 1972. [7] It should be noted that the Maybank Account is in the name of the judgment debtor, and not the management corporation. It is also not asserted in the judgment debtor’s affidavit that it is the developer of the Taman Permata apartment building or under what legal basis it has purported to collect maintenance fees and sinking fund from proprietors. Analysis and Findings No statutory trust [8] The Taman Permata property is located in Sabah and is not governed by the Strata Management Act 2013. It is instructive to note that the Strata Management Act 2013 provides explicitly that two (2) funds may be collected by a developer: a) Section 10 Developer to establish maintenance account “10(4) Notwithstanding any other written law to the contrary, all moneys in the maintenance account shall—

not form part of the property of the developer;

be held in trust for the purchasers; and

only be used by the developer solely for the purpose of meeting the actual or expected general or regular expenditure necessary in respect of the following matters:

(i)…(xiii)…” b) Section 11. Developer to establish sinking fund account “11(4) Notwithstanding any other written law to the contrary, all moneys in the sinking fund account shall—

not form part of the property of the developer;

be held in trust for the purchasers; and

be used by the developer solely for the purpose of meeting the actual or expected capital expenditure necessary in respect of the following matters:

(i)…(iii) …” [9] Even if the judgment debtor is the developer of the Taman Permata apartments, there is no equivalent provision in the Land (Subsidiary Titles) Enactment 1972 in Sabah which the judgment debtor says applies in this case i.e. there is no provision akin to those found in sections 10 and 11 of the Strata Management Act 2013. [10] In fact, the Land (Subsidiary Titles) Enactment 1972 does not make any provision for the collection of funds for the maintenance of strata title properties before the setting up of the management corporation at all. The Land (Subsidiary Titles) Enactment 1972 provides only for the establishment of the management corporation in section 14 and in section 19, mandates that once constituted, the management corporation shall establish a fund for administrative expenses. [11] By analogy, it is worth pointing out that even the funds of the joint management body and the management corporation under the Strata Management Act 2013 are not protected under any statutory trust after they are passed from the developer. [12] There is accordingly no applicable statutory trust in respect of the funds in the Maybank Account. No Implied Trust [13] I should further add for completeness that there is also no recognized specie of implied trust over monies collected by either developer, joint management body or management corporation that can secure such funds from the hands of creditors. [14] This is not to say that such funds can never be regarded as trust funds, indeed they should be, for the collective interest of the proprietors of a strata property. However, an express trust must be created. No proof of express trust [15] On first principles, the burden of proof is on the judgment debtor to establish that the money in the Maybank Account is a trust account because an express trust was created over the said account. If the judgment debtor cannot provide adequate proof of a trust, the court may deem the funds in the Maybank Account as ordinary company funds subject to garnishment. [16] To prove the existence of a trust and claim that the garnished bank account is a trust account in this case, the best evidence that the court would expect to be produced are as follows:

Board Resolution declaring the funds collected to be trust funds, in lieu of formal trust documentation.

Written agreement with property purchasers specifying that fees collected are held in trust.

Records showing the funds are used only for property maintenance or related expenses.

Documentation of the account’s purpose and designation e.g. as “Trust Account for Maintenance Fees/Sinking Fund”.

Evidence sufficient to confirm that funds in the account have not been commingled with other funds of the judgment debtor’s business. [17] None of the above were adduced in evidence. Having reviewed the material before me in this case, I do not regard the evidence adduced by the judgment debtor as sufficient to prove the existence of a trust at all. The submission that the management corporation has been established for the Taman Permata apartment renders the entire premise of the judgment debtor’s arguments highly questionable. [18] In Roberts v Death, Castle, Garnishee (1881) 8 QBD 319, the Court held that a garnishee order nisi ought not to be made absolute if it be suggested, and there is reasonable ground for so suggesting, that the money sought to be attached is trust money. It was also held that if the suggestion is disputed, the proper order would be that the money should be paid into court pending an inquiry, whether it be trust money or not. [19] In this case, as the judgment debtor has had the opportunity to present its evidence to prove the trust, there is no need for an inquiry into the balance RM23,919.18 in the Maybank Account. I therefore allow the appeal, restore the garnishee order nisi, and order that it be made absolute per the Notice of Appeal in Enclosure 16. [20] By consent, there is no order for the costs of this appeal. Bertarikh : 10 Disember 2024 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam Untuk Pemiutang Penghakiman: Wan Ying Ling, Messrs Keppy Wong & Assoc. (Kuala Lumpur) Untuk Penghutang Penghakiman: Davey Wan Guan Hui, Mesrs Lee J (Ipoh) Untuk Orang Yang Digarnis Pertama dan Kedua: Sudharshini A/P Maniam,