Perbadanan Pengurusan 3 Two Square v 3 Two Square Sdn Bhd (BA-22NCvC-574-12/2019)

The plaintiff, a Management Corporation established under the Strata Titles Act 1985, is claiming statutory charges of RM4,252,203.37 from the defendant as of 31-10-2019.

These charges include outstanding maintenance and sinking fund contributions, as well as late payment interest from the defendant, who owns several parcels and car park bays in 3 Two Square.

The plaintiff’s claim was dismissed with costs of RM20,000.00.

Therefore, this appeal has been lodged. 29/07/2025 14:53:10 BA-22NCvC-574-12/2019 Kand. 262 Background Facts 5. 3 Two Square is a commercial development in Petaling Jaya, Selangor, comprising six blocks labelled A to F. The project features office suites, retail spaces, and a 16-storey corporate tower called Block F - The Crest.

The defendant is the developer of 3 Two Square and remains the registered owner of several parcels within the development as follows:

6.1. Thirteen shop lots in Block A;

6.2. All parcels (Parcel No. M1-F/N3/254 to M1- F/15/267) within the 16-storey corporate tower known as Block F - The Crest (hereinafter referred to as Block F units);

6.3. There are 1,370 car parks at parcels B1, B2, LG1, and LG2 of 3 Two Square (hereinafter referred to as the Car Parks), which are accessory parcels to Parcel No. M1-F/15/267 (hereinafter referred to as the Penthouse). The defendant operates and manages a car park facility or business within 3 Two Square.

The defendant served as the managing agent from 3-8-2007 until 31-7-2012, with its services officially ending on 15-8-2012.

The plaintiff’s claim relates to unpaid maintenance and sinking fund charges, including late payment interest, for Block F Units and the Car Parks, amounting to RM4,751,805.52 as of 31-10-2019.

The plaintiff’s claim is founded on six groups of invoices covering the period from 16-8-2012 to 31-10-2019, as follows: No. Invoice Group Period Claim Amount(RM) 1 Group A 16-8-2012 to 31-10-2013 516,867.21 2 Group B 1-11-2013 to 31-3-2015 150,097.72 3 Group C 1-4-2015 to 31-3-2017 410,285.99 4 Group D 1-4-2017 to 31-5-2018 1,255,947.04 5 Group E 1-6-2018 to 31-3-2019 1,122,858.41 6 Group F 1-4-2019 to 31-10-2019 796,147.00 Total Claim Amount as at 31-10-2019 4,252,203.37

On 20-11-2019, the plaintiff’s solicitors issued a Form 20 Notice under the Strata Management Act 2013, demanding the payment of the outstanding charges from the defendant.

Upon the filing of this suit, the defendant has made payments for the sum of RM499,602.15.

The defendant has challenged the accuracy and validity of the plaintiff’s claim, which will be examined in detail later in the grounds.

Whether the defendant is liable for paying maintenance charges, sinking fund contributions, and late payment interest, totalling RM4,525,203.37 as of 31-10-201, with late payment interest accruing until full settlement.

Whether:

The invoices for maintenance charges, sinking fund contributions, and late payment interest for Group A invoices are calculated per square foot;

The imposition of a 10% late payment interest on the outstanding invoices issued by the plaintiff since August 2012;

The imposition of maintenance charges and sinking fund contributions by the plaintiff on the accessory parcels at Levels B1, B2, LG1, and LG2, which are accessory to Parcel No. M1-

The Form 20 Notice issued by the plaintiff was not served separately for the 17 parcels owned by the defendant. are ultra vires or in breach of the provisions of the Building and Common Property (Maintenance and Management) Act 2007, Strata Titles Act 1985, and/or the Strata Management Act 2013, and consequently, are they considered defective, null, and void?

Whether the plaintiff’s act of applying the defendant’s payment to set off other outstanding invoices results in the calculation of the outstanding maintenance charges, sinking fund contributions, and late payment interest being incorrect, wrong, or inaccurate.

Are the utility charges and other charges (excluding maintenance charges and contributions to the sinking fund) included in the statement of account issued by the plaintiff to the defendant in breach of the provisions of the Building and Common Property (Maintenance and Management) Act 2007, the Strata Management Act 2013, and the Strata Titles Act 1985, and therefore unlawful, null, and void?

Decision of the Court Addressing the issue under 14(a), the plaintiff submitted that Group A invoices were indeed calculated on a square foot basis. However, the plaintiff states that this method of calculation was enforced by the defendant, occurring since the Developer Management Period, continuing through the Joint Management Body until the 2nd AGM of the Management Corporation.

The plaintiff further argues that the defendant employed this method to underpay, despite it leading to higher payments had a share unit-based billing system been used. This practice continued even after the plaintiff implemented a share unit-based billing system in 2013.

It is noteworthy to state that the plaintiff submitted that the defendant devised and applied its method of assessing maintenance charges by referring only to the built-up area (square foot) of each parcel. The plaintiff admitted this method violated the formula under the strata legislation. Therefore, the defendant does not have to make any payment for the 1,370 car parks and eventually paid a nominal rate of RM0.05 per square foot for the car parks.

The plaintiff also claims that the defendant delayed normalising the billing system after the post-2nd AGM by failing to provide the strata roll despite repeated requests from the committee members. As a result, the conversion method was only implemented once the plaintiff obtained the strata roll from the Land Office.

The plaintiff maintains that the defendant cannot invoke the protections of the Strata Management Act 2013 due to their persistent refusal to comply with its provisions.

Under the law, Section 36(c) of the Strata Titles Act 1985 and Section 59(2)(a) of the Strata Management Act 2013 require that maintenance charges and sinking fund contributions be calculated strictly in proportion to the share units allocated. The Court of Appeal case of Ekuiti Setegap Sdn Bhd v Plaza 393 Management Corp (established under the Strata Titles Act 1985) [2018] 4 MLJ 284 is referenced.

It is also observed in the trial that the defendant did not control the Joint Management Committee or the Management Corporation. PW2 admitted during cross-examination that the defendant only held 3 out of 9 votes in the Joint Management Committee. How can it be said to demonstrate control when the votes clearly show a minority?

Similarly, during the first AGM on 12-1-2010, the election of 6 out of 7 committee members was coordinated with the defendant because only seven individuals volunteered. While the suspicion is considerable, it does not prove that the defendant influenced the election process or candidate nominations.

At the 2nd AGM on 7-3-2012, there is no evidence before this court that the defendant hindered other parcel owners from participating in the election process or joining the committee.

During cross-examination, PW2 testified that the total invoice amount to the defendant for Group A was RM93,215.40. In contrast, the amount for Group B, calculated on a share unit basis, was RM94,264.56. This difference amounts to only a 1.1% increase, or RM1,049.16 per month. The financial benefit claimed by the plaintiff is minimal.

Section 17(1) of the Building and Common Property (Maintenance and Management) Act 2007 does not require a developer to calculate maintenance charges and sinking fund contributions based on share units. In contrast, Section 8(2)(a) of the same Act explicitly requires the Joint Management Body to charge according to share units.

I fully agree with the defendant’s argument that the above demonstrates a statutory distinction between a developer’s duties and those of a Joint Management Body, supported by the two legal provisions mentioned. Furthermore, the Strata Management Act 2013, which mandates charges to be proportional to share units, only came into effect on 1 June 2015. As a result, during the Developer’s Development Management period, the applicable laws were the Building and Common Property (Maintenance and Management) Act 2007 and the Strata Titles Act 1985, neither of which required developers to set maintenance charges and sinking fund contributions based on share units.

The conduct of the plaintiff since 1-11-2013 to change the billing method from square foot to share units basis further strengthens the defendant's argument that the plaintiff is aware that invoices issued on a square foot basis are illegal.

Addressing issue 14 (b), the plaintiff argues that there is no statutory requirement for the plaintiff to pass a specific late payment interest resolution at the 1st AGM. The law, as outlined in Section 58(d) of the Strata Management Act 2013, cannot be applied retrospectively. Therefore, it does not invalidate the plaintiff’s claim for late payment interest.

The plaintiff contends that the 10% interest was legitimately adopted at the 2nd AGM on 7-3-2012 through the House Rules. Reference was made to Clause 17.5(b), and this was affirmed at the 3rd AGM. Accordingly, resolutions can be passed by consensus or by a show of hands, and this is recorded in the AGM minutes.

The plaintiff also submitted that, at all relevant times, from the Developer Management Period through the periods of JMB and Management Corporation, a 10% late payment interest has been imposed. The defendant, however, chose to raise objections only after the commencement of these proceedings.

The plaintiff also contended that the defendant’s witness, DW1, acknowledged that the late payment interest was passed at the 2nd AGM and that the defendant, at all material times, was aware of the interest rate charged.

However, the plaintiff’s witness, PW2, was unable to confirm whether the imposition of 10% late payment interest had been validly adopted through a proper voting process at the 2nd AGM. PW2 did admit that the word “adopted” does not appear in the minutes of the 2nd AGM.

There is no resolution passed at the 3rd AGM to adopt or approve the imposition of a 10% late payment interest. And no mention of late payment interest being charged in the minutes of the 3rd AGM. These facts have been admitted in the evidence of PW2 in court. (refer to pages 105 and 106, notes of evidence).

The House Rules serve as an internal guidebook and may be amended as necessary. As submitted by the defendant, with which I agree, the House Rules were not formally adopted by resolution; they were merely circulated internally. Therefore, the enforcement of a 10% interest rate was not justified without a resolution passed to adopt the House Rules or the specific 10% late payment interest outlined within. Furthermore, the application of a 10% interest rate as stipulated in Sections 58(d) and 60(3)(c) of the Strata Management Act 2013 is effective from 2-6-2013 onwards.

I rule that the calculation of the interest rate is questionable because there is ambiguity regarding the commencement date for the interest calculation. I refer to Invoice No. 0038677 dated 1-7-2019, as narrated by the defendant, concerning maintenance charges for July 2019. The invoice states that the due date for payment is 15- 7-2019, which means that late payment interest will only accrue from 16-7-2019. However, this is contradicted by Note (4) at the bottom of the same invoice, which indicates that payment must be made by the 14th day of the month. That implies interest begins to accrue on the 15th day of the month. This conflicts with the earlier stated due date on the 16th day of the month.

The plaintiff’s witness, PW1, also expressed uncertainty about the actual due date for the payment when he testified in court, and this fact remained unchallenged (refer to pages 68 to 70, notes of evidence).

Given the confusion and contradictions I observe, I conclude that the method used to calculate late payment interest is flawed.

Regarding the 14(c) issue, the plaintiff acknowledges that there is a separate invoice for the car parks. The plaintiff contends that issuing a separate invoice for the car parks is solely for administrative and accounting reasons. Furthermore, the plaintiff asserts that the defendant introduced this practice, which the plaintiff subsequently adopted. The total charge remains within 120,852 share units. There is no double-billing, so Section 36 of the Strata Management Act 2013 is not violated.

The plaintiff cited DW1’s testimony, which states that the charges were only for 71,524 share units allotted.

Section 36 of the Strata Titles Act 1985 specifies that accessory parcels do not possess independent share units. Instead, their share units are assigned to the main parcel. The plaintiff failed to adhere to this legal requirement.

It is an undisputed fact that the share unit allocation for unit F-39-H, which includes 1,370 accessory car park parcels, totals 71,524 share units. What remains a mystery is how the share units for the car parks have been separated from the main parcel. PW1 was unable to explain the basis for this division of share units. He failed to provide any rationale regarding the calculation methodology.

I do not accept the plaintiff's reason that they continued using the method of issuing separate invoices introduced by the defendant. Anything illegal cannot be justified by any reason. From 1-4-2017, the plaintiff changed its invoicing practice and started issuing a single invoice for both the main parcel and its accessory parcels. The plaintiff’s actions show that the previous practice of issuing separate invoices for accessory parcels was inappropriate and against the statutory framework.

Therefore, because of non-compliance with the statutory requirement under the Strata Titles Act 1985, the plaintiff’s invoices are invalid and unlawful.

The plaintiff issued a Form 20 notice to the defendant under Regulation 31 of the Strata Management Regulations 2015. This notice is issued whenever there are outstanding sums due to the JMB/MC under Section 78(1) of the Strata Management Act 2013.

The notice issued covers all 17 parcels.

The plaintiff argues that the defendant used a method of issuing a single invoice for all 17 parcels during the Developer Management Period. This practice continued until the plaintiff's second AGM. The new committee members continued to use the same invoicing system set up by the defendant. The defendant did not raise any objections to this practice until these proceedings.

Therefore, the plaintiff contends that the objection raised by the defendant is merely an afterthought, appearing only in the amended statement of defence. Reference is made to the High Court case of City One Management Corporation v LJ Harta Sdn Bhd [2024] 8 AMR 264, where it was decided that Form 20 is not mandatory. Section 4(3) of the Interpretation Act 1948/1967 is also cited, with the plaintiff asserting that statutory references to "parcel” in the Strata Management Act 2013 must be read as including "parcels".

The plaintiff further submits that the defendant failed to plead the issue of issuing a single consolidated invoice for the 17 parcels. Therefore, it should be disregarded as it is highly prejudicial to the plaintiff’s case.

It is established law that a Management Corporation can only recover outstanding maintenance charges and sinking fund contributions from a proprietor as outlined in the Strata Management Act 2013. The relevant statutory provisions are Sections 60(4), 61(4), and 78 of the Strata Management Act 2013.

When the statutory notice issued by the plaintiff under Form 20 is reviewed, it does not specify or allocate the amounts owed by each parcel proprietor. This conflicts with the purpose of serving a notice under Form 20, which is to inform a parcel owner of the outstanding charges related to maintenance fees and sinking funds. As a result, the defendant was unable to determine the exact outstanding amount for each parcel, which is prejudicial to the defendant.

The plaintiff’s witness PW2 admitted during his evidence that the Form 20 was issued collectively for all 17 parcels due to a combined invoice billing method for these parcels. This case marks the first time a Form 20 notice has been issued. Additionally, for the 13 shop lots owned by the defendant in Block A, separate invoices were issued for each unit.

I rule that when the legislature establishes procedural steps within a statutory framework, these steps must be followed strictly. Although Section 78 of the Strata Management Act 2013 states that a written notice may be served on the proprietor demanding payment of unpaid amounts, I interpret the word "may" as indicating a mandatory procedural step necessary to initiate claims for recovering maintenance charges and sinking fund contributions.

I agree with the defendant’s argument that the notice must be issued to each individual parcel. This is clear from the frequent use of the phrase “in respect of a parcel” throughout the Act. Furthermore, the purpose of the Form 20 notice refers to a parcel, indicating that specific details of charges related to maintenance and sinking fund contributions must be provided for each respective parcel. Therefore, Section 4(3) of the Interpretation Act 1948/1967 does not apply to these proceedings.

I also rule that the defendant’s past conduct cannot justify actions that are not permitted under Sections 60(4), 61(4), and 78 of the Strata Management Act 2013, read together with Regulation 31 of the Strata Management Regulations 2015. The High Court case of S.E.A. Housing Corporation Sdn Bhd v Pentadbir Pejabat Daerah Dan Tanah Petaling [2024] MLJU 1903 is referenced.

The cumulative issuance of Notice under Form 20 is defective and not legally enforceable.

The plaintiff has admitted that when the defendant makes a payment with specific instructions regarding which invoice the payment should be applied to, the plaintiff has settled the older outstanding invoices. The plaintiff justified this practice as a consistent method of settling older outstanding invoices for all parcel owners. The only exception was for invoices issued on a square-foot basis, specifically those for Group A.

The plaintiff also argued that the defendant was aware of the plaintiff’s practice and had not raised any objections or even questioned the plaintiff’s actions. The plaintiff maintains that the defendant has not suffered any prejudice from this practice.

I agree with the defendant’s argument that the plaintiff’s behaviour conflicts with Section 60 of the Contracts Act 1950.

Section 60 of the Contracts Act 1950 states that if a debtor explicitly indicates how a payment should be allocated, the creditor must adhere to those instructions. This is relevant to the plaintiff and defendant in the current case. The case of Nam Joo Hong Chan Feedmills Sdn Bhd v Soon Hup Poultry Farm [1985] 2 MLJ 206 from the Federal Court is cited.

I strongly agree with the defendant’s stance that estoppel should not be used to justify actions that are unlawful and breach statutory laws and regulations.

Based on the above, I conclude that the plaintiff's conduct is unlawful and breaches the defendant’s explicit instructions.

The plaintiff, at all relevant times, asserts that its claim is based on unpaid maintenance charges and sinking fund contributions, along with late payment interest.

According to the plaintiff, its claim consists of the following components, as outlined below:

64.1. Maintenance charges;

64.2. Contributions to sinking fund;

64.3. Late payment interest arising from those statutory charges.

The plaintiff states that all the above details are contained in the statement of account. The plaintiff contends that the statement of account is a financial record that records historical transactions, including all charges and payments made to the defendant’s account.

The plaintiff referred to PW2’s evidence in court that its claim is solely for maintenance charges, sinking fund contributions, and late payment interest for those charges mentioned earlier.

The plaintiff also referred to DW2’s testimony in court, which acknowledged this fact.

More importantly, the plaintiff asserts that this fact is not pleaded in the defendant’s defence. Therefore, under the principle established in the Federal Court case Samuel Naik Siang Ting v Public Bank [2015] 6 MLJ 1, this unpleaded defence should be disregarded, as contended by the plaintiff. Furthermore, the burden is on the defendant to prove its allegation against the plaintiff.

When the Strata Management Act 2013 is examined, Section 59(2)(a) and (b) are the provisions of law that empower the plaintiff to collect maintenance charges and sinking fund contributions.

No mention of the Management Corporation's authority to collect other charges, such as utility charges, electricity bills, and similar, in Sections 59(2)(a) and (b) of the Strata Management Act 2013.

The Court of Appeal in Perbadanan Pengurusan Endah Parade v Magnificient Diagraph Sdn Bhd [2014] 5 CLJ 881 and Perbadanan Pengurusan Solaris Dutamas v Suruhanjaya Tenaga Malaysia & Anor [2022] 6 CLJ 219 held that the Management Corporation may only impose charges that are specifically authorised by the statute.

Considering the established cases, I rule that the plaintiff cannot claim any charges beyond what is permitted by the statute.

Since the statement of account shows other utility charges included, whereas the plaintiff consistently asserts that its claim is only for maintenance charges, sinking contribution funds, and late payment interest accruing on the related charges, the plaintiff failed to substantiate this based on the statement of accounts submitted in court.

The plaintiff extracted details from the statement of accounts submitted in court concerning maintenance charges, sinking fund contributions, and late payment interest related to these charges. They then organised this information into a table within their amended statement of claim, categorising the data into Groups A to

I find this unacceptable because it does not align with what is stated in the statement of account.

Therefore, I conclude that the plaintiff did not sufficiently prove its claim, which is strictly limited to the maintenance charges and sinking fund contributions as permitted under the Strata Management Act 2013.

The plaintiff argued that the issue of the plaintiff’s practice of issuing a single consolidated invoice for all 17 parcels and the other utility charges included in the statement of account has not been pleaded and should be disregarded.

After reviewing the evidence, I rule that, based on the Federal Court case of Merong Mahawangsa Sdn Bhd v Dato’ Shazryl Eskay bin Abdullah [2015] 5 MLJ 619, the plaintiff’s conduct breaches the statutory provisions under the applicable law. Consequently, this conduct is deemed illegal and is not reliant on the pleadings. Therefore, I consider the said even though it has not been expressly pleaded.

The Court of Appeal case of Bank Bumiputra Malaysia Bhd v Emas Bestari Sdn Bhd & Anor and Another Appeal [2014] 2 MLJ 49 is also adopted, where it was decided that questions of law need not be specifically pleaded. Even when an issue involves both fact and law, it may still be raised if the relevant evidence has already been admitted and no party is taken by surprise. This applies to the current proceedings, where the combined invoices and the statement of accounts were included in the common bundle of documents. There is no mention of any objection being raised regarding its existence and contents.

Conclusion Considering all of the above, I rule that the plaintiff has failed to prove its case on the balance of probabilities against the defendant. The plaintiff’s case was dismissed with costs of RM20,000.00. Dated: 29th July 2025 (INDRA NEHRU SAVANDIAH) Judge High Court of Malaya Shah Alam Selangor Date of Decision: 30th May 2025 Counsels: For the Plaintiff : David Samuel & R. Thanasegar a/l Ramasamy Chambers of Firdaus For the Defendant : Raymond Mah, Dahpne Rethual & Muhammad Aqil Shah bin