Serta Properties Sdn Bhd v 1. ) Wisma Cosway Management Corporation (WA-22NCvC-809-12/2020)

(No. Buku Daftar Strata: 1152) 2

STEPHEN PROPERTIES SDN BHD (No. Syarikat: 15721-K) … DEFENDAN-DEFENDAN (Melalui Tindakan Asal) DAN ANTARA (No. Buku Daftar Strata: 1152) … PLAINTIF (No. Syarikat: 33891-T) … DEFENDAN (Melalui Tuntutan Balas) GROUNDS OF JUDGEMENT [Enclosure (30) – Interlocutory – Order 14 – Summary Judgement – First Defendant’s Application for its Counter Claim against the Plaintiff] A. INTRODUCTION [1] The Plaintiff is a parcel owner of Wisma Cosway, who is suing the First Defendant being the Management Corporation and the Second Defendant being the Developer and former owner for negligence and 3 neglect amongst others, as a Management Corporation. The First Defendant had also filed a counter claim against the Plaintiff for debt due (maintenance charges). [2] Vide Enclosure (30), the First Defendant has filed for a summary judgement to be entered against the Plaintiff for its counter claim for the outstanding maintenance fees due to the First Defendant of RM225,677.38 as at 6.1.2021 beginning from 6.7.2019 to 6.1.2021. [3] After hearing submissions from parties, this Court had allowed the application with costs of RM3,500.00. [4] Dissatisfied, the Plaintiff had filed an appeal to the Court of Appeal. [5] Herewith are the grounds for that decision. B. BRIEF FACTS [6] The Plaintiff is the parcel owner or Proprietor of two commercial business premises at Unit No. 4.01 and 4.02, 4th Floor (“Units”) in Wisma Cosway, 88 Jalan Raja Chulan, 50200 Kuala Lumpur (“Building”). [7] The First Defendant is the Management Corporation (“MC”) for Wisma Cosway whilst the Second Defendant is the Developer and an investment holding company which formerly owned the entire Building. 4 [8] The Plaintiff acquired the Units from the Second Defendant pursuant to a Sale and Purchase Agreement (SPA) dated 6.4.1979. The Units comprised of a restaurant and a coffee house on the 4th floor of the Building. [9] The Plaintiff has filed the present action against the First Defendant, inter alia, for the following reasons:

9.1 that the First Defendant has failed, neglected and refused to discharge its duties and powers as a Management Corporation, among others, by:

9.1.1 failing to implement the same rate for maintenance charges and sinking fund with others units/parcel owned by the Second Defendant;

9.1.2 failing to properly formulate and/or enforce By-laws/House Rules of the said Building;

9.1.3 failing to issue accurate and correct invoices to the

9.1.4 failing to act in the interest of the Plaintiff;

9.1.5 failing to provide, properly maintain and manage the common property and keep it in a state of good and serviceable repair; 5

9.1.6 failing to provide proper and/or adequate security services to the said Building;

9.1.7 the First Defendant has through its MC members abused its power, acted in conflict of interest and/or bad faith; and

9.1.8 the First Defendant is negligent in the discharge of its duties and obligations. [10] The First Defendant has filed the present counter claim against the Plaintiff for an amount of RM225,677.38 being unsettled service charge, sinking fund and utility charges (maintenance fees). [11] However, the Plaintiff vigorously denied the counter claims. [12] Vide Enclosure (30), the First Defendant had made an application for the counter claims to be determined and allowed summarily under Order 14 of the Rules of Court 2012. [13] After hearing submissions by both parties and considering all the cause papers, this Court had allowed the First Defendant’s counter claim with costs. C. THE LAW ON ORDER 14 - SUMMARY JUDGEMENT The Law on Order 14 Rule 1 ROC 2012 6 [14] Order 14, Rule 1 reads as follows: “Rule

Application by plaintiff for summary judgment. (O. r. 1)

Where in an action to which this rule applies a statement of claim has been served on a defendant and that defendant has entered an appearance in the action, the plaintiff may, on the ground that defendant has no defence to a claim included in the writ, or to a particular part or such a claim. or has no defence to such a claim or part except as to the amount of any damages claimed, apply to the Court for judgment against that defendant.” [15] In National Company For Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1 CLJ (Rep) 283, George Seah FJ at p. 285 stated: “We think it appropriate to remind ourselves once again that in every application under Order 14 the first considerations are (a) whether the case comes within the Order and (b) whether the plaintiff has satisfied the preliminary requirements for proceeding under Order 14. For the purposes of an application under Order 14 the preliminary requirements are:

the defendant must have entered an appearance;

(ii) the statement of claim must have been served on the defendant; and 7

(iii) the affidavit in support of the application must comply with the requirements of rule 2 of the Order 14. It is to be observed that a case is not within Order 14: (a) where no statement of claim has been served on the defendant; (b) where the indorsement on the writ includes a claim or claims outside the scope of Order 14 as coming within r. 1 (2); (c) where the affidavit in support of the application is defective, e.g. in omitting to state the deponent's belief that there is no defence to the claim or part to which the application relates; (d) where the application is made in an action against the Government [Order 73 rule 5 (1)]. If the plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If, however, these considerations are satisfied, the plaintiff will have established a prima facie case and he comes entitled to judgment. The burden then shifts to the defendant to satisfy the Court why judgment should not be given against him [see Order 14 rule 3 and 4 (1)].". ................... “In Gold Ores Reduction Co. v. Pain [1892] 2 QB 14 it was held that for the purpose of Order 14 application the statement of claim must be complete and good in itself; any defect or omission cannot be corrected or supplemented by the plaintiff's affidavit. Furthermore, if the defect is one of substance, the application for summary judgment will be dismissed (See Sheba Gold Mining Co. v. Trubshawe [1892] 1 QB 674).” 8 [16] On the part of the Defendant, the Court of Appeal in Chen Heng Ping @ Tian Seow Hock & 5 Ors v. Intradagang Merchant Bankers (M) Berhad [1995] 3 CLJ 690, Mahadev Shanker JCA held at p.693: “When an application is made for summary judgment under Order 14 supported by an affidavit which goes to show that there is no defence, the defendants must show cause why leave to defend must be given. This means that the defendants must provide answers on oath which constitute evidence that they have a defence which is fit to be tried. Denials in a defence do not constitute evidence. They are challenges to the other side to show proof. In the present case the guarantors do not appear to have appreciated this. Their affidavits merely relied on the defence they pleaded, which consists of bare denials and points of law which they could not sustain.” [17] In Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 CLJ Rep 14 [1992] 1 MLJ 400, Mohamed Azmi SCJ said at page 408: “In our view, basic to the application of all those legal propositions, is the requirement under Order 14 for the court to be satisfied on affidavit evidence that the defence has not only raised an issue but also that the said issue is triable. The determination of whether an issue is or is not triable must necessarily depend on the facts or the law arising from each case as disclosed in the affidavit evidence before the court. On the treatment of conflict of evidence on affidavits, Lord Diplock speaking in the Privy Council on Eng Mee Yong & Ors v. Letchumanan 5 had this to say at p 217…” 9 D. ANALYSIS AND FINDING OF THIS COURT [18] The First Defendant in its counter claim is now claiming the sum of RM225,677.38 as at 6.1.2021 for the outstanding maintenance charges owed by the Plaintiff for the period beginning from 6.7.2019 to 6.1.2021. [19] After hearing submissions by parties, and perusing all the cause papers (including Affidavits and Statements of Claim and defence), this Court ruled that the application should be allowed for the following reasons: [20] Firstly, this Court was satisfied that all the pre-requisites for this application have been satisfied as decided in the case of National Company for Foreign Trade v. Kayu Raya Sdn Bhd (supra) and under Order 14 rule 1, Rules of Court 2012. [21] Secondly, on the part of the First Defendant being the Management Corporation for the building, it is authorized, and duty bound to determine and impose charges as well as sinking fund to be deposited into the maintenance account and sinking fund for the purposes of proper maintenance, management and expenditure of the buildings/properties. (See Section 59 (1) (b) and (c) of the Strata Management Act 2013) 10 [22] Thirdly, the Plaintiff has been a proprietor/owner in Wisma Cosway for 42 years and as such it is fully aware of its obligations to pay monthly service charges throughout. The First Defendant has held a total of 12 AGMs and as a long-standing proprietor, the Plaintiff therefore has knowledge and ought to have known of all the 12 AGMs among which the issue of proprietors having to pay maintenance charges have always been a life issue and have been discussed. [23] Fourthly, the Plaintiff cannot claim ignorance of the sum claimed because the First Defendant has been issuing invoices every month for its services to the Plaintiff. Lest we forget, the accounts of the First Defendant was audited by an external auditor. [24] Fifthly, the Plaintiff cannot claim ignorance of the obligations to pay maintenance fees to the Plaintiff every month. This is because the Plaintiff has been sued many times by the First Defendant as the following paragraphs would show:

Suit No.: WA-B52NCVC-86-02/2017 (“Suit 86”) [25] The First Defendant had filed the above suit against the Plaintiff for the outstanding charges for an amount of RM396,834.66 as at 11.1.2017. [26] The Sessions Court Judge has entered judgment against the Plaintiff vide an Order dated 28.7.2017. On appeal to the High Court, the 11 Learned High Court Judge vide Court Order dated 8.2.2018 had dismissed the appeal.

Suit No.: WA-B52NCVC-118-03/2019 (“Suit 118”) [27] In Suit 118, a claim was filed by the First Defendant against the Plaintiff for the outstanding charges for the sum of RM384,790.94 as at 29.10.2018 for the period from 1.2.2017 to 29.10.2018. [28] The Sessions Judge had on 17.7.2019 entered judgment against the Plaintiff. On appeal to the High Court, the Learned High Court Judge vide Court Order dated 5.8.2020 had dismissed the appeal.

Suit No: WA-A52NCVC-828-09/2019 (“Suit 828”) [29] The First Defendant in Suit 828 claimed against the Plaintiff for the outstanding charges for the sum of RM146,953.65 as at 5.7.2019 for the period of 1.11.2018 to 5.7.2019. [30] The Sessions Judge after a full trial vide Order dated 30.9.2020, has allowed the First Defendant’s claim against the Plaintiff. [31] On appeal to the High Court, the High Court Judge on 6.7.2021 had dismissed the appeal. [32] As such, this Court opined that the Plaintiff knew or ought to have known that the maintenance charges are mandatorily payable by 12 every owners/proprietors just like the current suit, which amounted to RM225,677.38 as at 6.1.2021. [33] Sixthly, this Court observed from the Affidavit, that the facts are straight forward and the evidence are very clear and there exist no bona fide triable issues. Hence, there is no necessity for a trial and that these claims can be disposed-off summarily. [34] Further, after perusing the cause papers and considering the submissions by parties, this Court ruled that there are no meritable defences successfully raised, see Bank Negara Malaysia v. Mohd Ali Ismail (supra) as followed in the case of Kuwait Finance House

(M) Bhd v. Koperasi Perkhidmatan Bhd [2016] 1 LNS 729. The defence raised are the same as that raised in Suits “86”, “118”, “828” which they failed. Further, the Plaintiff should be estopped from raising this defences as res judicata prohibits it. The Plaintiff is a proprietor in a stratified development and the Plaintiff is statutorily obligated to make payments for the monthly maintenance charges to the First Defendant. This will be explained in the later part of this judgement. E. OTHER ISSUES [35] For completeness, this Court will deal with other issues raised. [36] The Plaintiff also argued that there are various issues involved that can be resolved only through a full trial. The first issue is whether the 13 First Defendant has implemented the same rate for maintenance charges and sinking fund with other units/parcels. This Court ruled that the charges were tabled in the AGM and was approved. For the purposes of this claim i.e for the period commencing from 6.7.2019 to 6.1.2021, the 11th and 12th AGM minutes confirms the rate approved. (See Exhibit “KAM-9” and “KAM-10”). Pursuant to Subsection 7 (5) of the Second Schedule of the Strata Management Act 2013, the 11th and 12th AGM minutes are prima facie evidence in any legal proceedings. Hence, the Plaintiff is estopped from challenging it now. [37] Section 7 (5) of the Act reads as follows: “The minutes of the meeting signed by the chairman of the meeting or the secretary shall be admissible in any legal proceedings as prima facie evidence of the facts stated in them without further proof.” [38] The other issue raised by the Plaintiff is whether the First Defendant has failed to issue accurate and correct invoices to the Plaintiff? This Court observed that this issue has been raised by the Plaintiff in all the 3 previous suits and the same has been ventilated and been determined. In fact, the 11th and 12th AGM minutes confirmed the charges that have been levied. Again, the Plaintiff is estopped from raising it as res judicata prohibits it. [39] The next issue raised is whether the First Defendant’s charges are correct, accurate, justifiable and reasonable? This Court ruled that 14 this is a non-starter. All the proprietors/owners are aware what are the charges that have been approved at the 11th and 12th AGM after being deliberated. The decision was a collective one, and as such the notion that charges are not accurate is devoid of merit and untenable. [40] As the Plaintiff had questioned regarding its obligations, this Court will now deal with the Act (SMA 2013) which was alluded to earlier which all proprietors are bound by it. [41] It is germane to note that the Act imposed a statutory duty on the Plaintiff to pay all maintenance charges of which the Plaintiff knew and ought to have known. Section 60 (4) and (5) of the Strata Management Act 2013/729 reads as follows: “60 (4) Any Charges imposed under subsection (3) in respect of a parcel shall be due and payable on the passing of a resolution to that effect by the management corporation and in accordance with the terms of that resolution, and may be recovered in the manner set out in section 78 from the proprietor of, or his successor-in-title to, the parcel, or the person for the time being receiving the rent of the parcel, whether as an agent or a trustee or a receiver, and who would receive the same if the parcel were let to a tenant. 15 60 (5) Any Charges imposed under subsection (3) in respect of a provisional block shall be due and payable on the passing of a resolution to that effect by the management corporation and in accordance with the terms of that resolution, and may be recovered in the manner set out in section 78 from the proprietor of the provisional block or, where the building to which the provisional block relates has been subdivided, from the proprietors of the parcels in the building, or their successors-in-title, in proportion to the share units of their respective parcels.” [42] Further, Section 77 (1) of the Strata Management Act 2013 also specifically provides that the outstanding charges shall be the guarantee sum by the proprietors. It reads as follows: “(1) The payment of any amount lawfully incurred by the management corporation or the subsidiary management corporation in the course of the exercise of any of its powers or functions or carrying out of its duties or obligations shall by virtue of this section be guaranteed by the proprietors for the time being constituting the management corporation or the subsidiary management corporation.” [43] Lest we forget, Section 77 of the Act, also facilitates Management Corporations in that the non-payment of management fees automatically creates an UNDISPUTED DEBT as in this case. In a quite recent Federal Court case of Dubon Berhad v. Wisma 16 Cosway Management Corporation [2020] 6 CLJ 589 the Federal Court ruled as follows: “(4) Section 77 serves to statutorily provide that the non-payment of management fees creates an undisputed debt. The term ‘guaranteed’ ensures the fact of the existence of such a debt. It ensures that parcel proprietors do not evade their obligations to make such payments. The recovery of such debts is thus assured and could simply be affected under the section. …

The use of the word 'guaranteed' in the SMA ensures and assures straightforward recovery of the debt claimed by the MC. The fact of the existence of a debt is easily established and payment due ‘guaranteed’. [44] In the case of Perbadanan Pengurusan Megan Avenue 1 v. Harcharan S Sidhu & Anor [2017] 9 CLJ 563 referred by the First Defendant, the Court held that the proprietors are liable to the outstanding charges without the need for the management corporation to prove for the services renderred: “The outstanding charge is a sum guaranteed by the respondents as a proprietor of the parcel under s. 77 of the SMA 2013. Accordingly, the appellant can claim for the outstanding charges from the respondents and file a summons or a claim with a court of competent jurisdiction or with the strata management tribunal for recovery of the outstanding charges from the respondents. This court has to 17 respectfully disagree with the finding of the learned Magistrate and holds that the appellant does not have to prove that the services were rendered to the respondents. It is sufficient for the appellants to show that the outstanding charges were incurred by them "in the course of the exercise of any of its powers or functions or carrying out its duties or obligations" as a management corporation of the building.” [45] Hence, the Act has expressly provided that the Plaintiff, as the proprietor/owner of the said unit shall be liable for all the outstanding maintenance charges owed to the First Defendant. There is no provision that allows the Plaintiff not to pay the same. On that note, it is hence crystal clear that the Plaintiff has no triable defence and hence no necessity for this case to go for a full trial. Consequently, the claims can be determined summarily. Hence this Court has allowed a summary judgement to be entered against the Plaintiff. F. CONCLUSION [46] For the aforesaid reasons, in the upshot, the First Defendant’s application vide Enclosure (30) is allowed with costs. Dated: 22 July 2023 (DATO’ AHMAD BIN BACHE) Judge Civil High Court NCvC 3 Kuala Lumpur 18 Parties: Appellant’s/Plaintiff’s : Ms. Anne Gomez Solicitors TETUAN KAMARUDIN & PARTNERS No. 10-1, Jalan 30/70A Desa Sri Hartamas 50480 KUALA LUMPUR (Ref. No.: DSH/600/912/WP) [Email: kp.hartamas@gmail.com.my] Respondent’s/First Defendant’s : Mr. Sivabalan Solicitors (Ms. Goh Wan Ping with him) TETUAN MASTURA PARTNERSHIP K-5-3, Solaris Mont’ Kiara Jalan Solaris Mont’ Kiara 50480 KUALA LUMPUR