Sime Darby Brunsfield Damansara Sdn. Bhd. v Oasis Corporate Park Jmb (BA-24NCvC-1335-08/2022)

The amount of the Charges to be paid under subsections (1) and (2) shall be determined by the joint management body from time to time in proportion to the allocated share units of each parcel.

The amount of contribution to the sinking fund to be paid under subsections (1) and

shall be a sum equivalent to ten per cent of the Charges unless otherwise determined by the joint management body from time to time at a general meeting which shall not be less than ten per cent of the Charges. (Emphasis is mine) [16] The pith and substance of the above legal provision was confirmed by the Court of Appeal in the case of Ekuiti Setegap Sdn Bhd v Plaza 393 Management Corporation (2019) 2 CLJ 592, where it was decided that all charges and contribution to the sinking fund that were imposed by the Management Corporation were unlawful as they were imposed on a per square foot basis. Tengku Maimun JCA (as she then was, now our Chief Justice) said: This court in Endah Parade (supra) held that a management corporation can only levy payments which are mandated by the statute and that it will be ultra vires its powers for the management corporation to levy payments which are not sanctioned by the statute. Similarly, in the instant case, we find that the STA mandated that contributions to the management fund be determined on a share unit basis. Any other basis to determine the quantum of contribution would be contrary to the STA and thus illegal. The fact that the charges levied on the square foot basis are in accordance with the resolutions passed at the plaintiff’s general meeting is immaterial, given that the plaintiff cannot act beyond the provisions of the STA. (emphasis is mine) [17] Therefore, pursuant to Act 757, the rate of charges and contribution to the sinking fund imposed by the defendant shall be on a share unit basis and not on a per square foot basis, as imposed by the defendant JMB in the present case against the plaintiff. Legal duty of the defendant [18] The defendant as the Joint Management Body (JMB), has a duty under the law pursuant to section 21 (1) (b) and (c) of Act 757 to determine and impose charges and contribution to the sinking fund which are to be deposited into the maintenance account for the ultimate purpose of proper management and maintenance of the buildings intended. It reads as follows:

The duties of a joint management body shall be as follows:

…

to determine and impose the Charges to be deposited into the maintenance account for the purpose of the proper maintenance and management of the buildings or lands intended for subdivision into parcels and the common property;

to determine and impose the contribution to the sinking fund to be deposited into the sinking fund account for the purpose of meeting the actual or expected expenditure specified under subsection 24(2); … [19] Pursuant to section 21 (2) (a) which has to be read together with section 25 (3) and (4) of Act 757, the JMB is entitled to collect the charges from the parcel owners in proportion to the allocated share units of their respective parcels and contribution to the sinking fund from the parcel owners. [20] Flowing from that, the rates of charges and contribution to the sinking fund shall be made proportionate to the common property, common facilities and common services made available to the particular group of parcel owners in the component of the development. Material issues raised by the plaintiff

Failure to call for an AGM [21] As the narrative unfolds, the defendant has failed to perform their statutory duty to call for an AGM once each year, provided that not more than 15 months had lapsed between the date of one AGM and the next. The last AGM was held on 30.12.2019 and the proposed AGM was next to be on 20.8.2022, which has been put on hold pending determination of this OS. [22] Regulation 13 and Form 5A of Act 757 provides that within twenty-eight days after each general meeting of the joint management body at which the Charges are confirmed or varied, the joint management body shall issue a notice in Form 5A to all purchasers to inform the purchasers of the amount of Charges, contribution to the sinking fund and the rate of interest in respect of any late payment imposed by the joint management body in that annual general meeting and a copy of Form 5A shall be displayed on the notice board of the joint management body at a conspicuous part of the development area. Thus, the rate of charges and contribution to the sinking fund can only be determined at a general meeting of the defendant JMB, which is to be attended by the developer and purchasers for a collective decision. (See also the case of Muhamad Nazri Muhamad v JMB Menara Rajawali (2019) 10 CLJ 547). [23] Thus, it is the sole responsibility of the defendant being the JMB to hold a general meeting to ensure that the determination of rates of charges and contribution to the sinking fund is on a per share unit basis. It cannot rely on a previously imposed rate on a per square foot basis or the plaintiff as the developer in order to determine the rate. It is now the duty and responsibility of the defendant as JMB to comply with Act 757 and determine the rates of charges and contribution to the sinking fund proportionately to the common property, common facilities and common services made available to the particular group of parcel owners in the component of the development and not otherwise as charged on to the plaintiff. The provisions of Act 757 are meant for the defendant to comply with and not to pass the buck on to the plaintiff by relying on their past conduct. The buck stops at the defendant, to be ultimately responsible as the JMB.

On the objection made by defendant [24] The defendant as the JMB is regulated by Act 757 and it is their bounden duty to have the law enforced and applied fairly and equitably in the interest of all parcel owners. [25] The plaintiff did not sit on their rights but had objected to the charges imposed as demonstrated vide their letter dated 6.5.2022, as referred to above. [26] In view of the objection raised, the defendant has to ensure it determines and fix the charges and contributions to the sinking fund on a per share unit basis and not to collect maintenance charges and contribution to the sinking fund on a per square foot basis, as it is not entitled to do so under Act 757. By such imposition of rates and charges, it is simply disproportional and also against the interest of the plaintiff as a parcel owner. [27] In accordance with same law, to wit Act 757, the plaintiff is at liberty to only pay the rates and charges levied by the JMB and contribute to the sinking fund, purely on a share unit basis.

Charges to be made proportionate in accordance with the law [28] The charges and contribution to the sinking fund are paid into the account of the JMB for the purpose of maintaining and managing the common property in the development. As alluded to above, it is so provided in section 23 (2) and (3) of Act 757. The rationale being, rate of charges must be made equitable to all parcel owners. It also syncs with the existence of OCP, wherein when it was launched, all potential purchasers were informed that, there would be common property in the development and common facilities and services provided by the plaintiff, specific to the parcel in the respective components. [29] It has to be stressed that OCP is not a single building but a development of different components with common property, common facilities and common services which are specific to a particular component in the development. Flowing from that, the rate of charges and contribution to the sinking fund should be made proportionate to the common property, common facilities and common services made available to the particular group of parcel owners in the component. [30] Proportionality of the charges levied is also justified by the application of section 32 (3) (b) of Act 757 which renders that a JMB may, by a special resolution, make additional by-laws or make amendments to such additional by-laws, not inconsistent with the by-laws prescribed by regulations made under section 150, for regulating the control, management, administration, use and enjoyment of the building or land intended for subdivision into parcels and the common property, including the details of any common property of which the use is restricted. [31] On the use and enjoyment of the various common property, is to be catered by the additional by-laws, as provided for in section 32 (3)

of Act 757. With the additional by-laws, provision can be made for rates of charges that apply to all parcel owners and also additional rate of charges which would apply equitably to parcel owners who enjoy the benefit of the common property used by that parcel owners only. Such, was also the approach taken by the Court of Appeal in the case of 3 Two Square Sdn Bhd v Perbadanan Pengurusan 3 Two Square (2021) 1 LNS 116, wherein the issue was on the item “Chiller” which was located on the common property in the development. It provided centralised air conditioning exclusively to the defendant, as owner of all the parcels in Block F. Additional utility charges were imposed on the defendant’s parcels in Block F, and it was for maintenance fees and sinking fund charges towards the maintenance and management of the Chiller, benefited by them solely. Since the extra charges were imposed on the defendant for the specific purpose of maintaining and managing the Chiller, the court agreed that the defendant must pay for the additional utility charges for the Chiller. The additional charges imposed was upheld by the COA, which had decided that it would be unreasonable and unequitable if the defendant was not paying extra for the Chiller which was for their exclusive use. Ultimately, it would also be unequitable for the other proprietors to pay for the defendant’s Chiller. [32] Likewise, on the facts and circumstance of the present case, as there is restricted use of common property in the mixed development, parcel owners of the different components should be entitled to pay multiple rates based on the actual or expected general or regular expenditure necessary for maintaining the common property for the use and benefit of the parcel owners specifically in the different components. It cannot be one rate applicable to all parcel owners, unless all parcel owners of all components of the mixed development are able to use and enjoy all the common property. [33] Therefore, simply put, the JMB is never in a position to impose and collect charges from the parcel owners arbitrarily, without complying with Act 757 and then to wait for the AGM in order to determine the correct charges to be paid by parcel owners, when the imposition of charges and its collection was illegal at the outset. It is also erroneous for the JMB to state now that it could offset the outstanding charges paid once a decision is made that the charges collected were more than what would be decided at the AGM. The defendant is estopped from doing so, simply because, to emphasise, it has the comply with the provisions of Act 757 as referred to above on the mode and manner by which the charges are to imposed.

Right to vote [34] As the defendant is blameworthy for imposition of illegal charges, it is wrong for the defendant JMB to deny the plaintiff their right to vote at the AGM. To say that they are only allowed to vote at the AGM, if all the outstanding charges imposed on them are paid and settled, is erroneous, since the charges imposed is illegal, and not in compliance with the statutory mandate in Act 757. The plaintiff has to be allowed its right to vote at the AGM, which is sacrosanct and well preserved by Act 757. [35] Moreover, in view of the imposition of illegal charges, there would be no money due and payable by the plaintiff to the defendant. As such, it would also be wrong for the defendant to prevent the plaintiff from exercising its right to vote at the upcoming AGM. Justifying its refusal by relying on paragraph 21(2) of the Second Schedule to Act 757 which renders that a proprietor shall not be entitled to vote if, on the seventh day before the date of the meeting, all or any part of the Charges, or contribution to the sinking fund, or any other money due and payable to the management corporation in respect of his parcel are in arrears is again erroneous, as that provision denotes that the charges to be paid must have been lawfully imposed for the plaintiff to be liable to pay and it would not include illegal charges, like that imposed on the plaintiff in the present case. Right to vote has to be accorded to the plaintiff at the AGM, as a parcel owner with a share unit entitlement of 35248 share units in OCP and not having any outstanding payment legally due to the defendant. (See also the decision in the case of Ekuiti Setegap Sdn Bhd v Plaza 393 Management Corp (Ekuiti Setegap 2) (2019) 8 MLJ 549 a decision by Her Ladyship Faizah Jamaludin JC (now Judge), which was affirmed by the Court of Appeal on 16.4.2019.

Preparation of an annual budget [36] In the present case, determination of the rates of charges and contribution to the sinking fund on a per share unit basis has been listed in the agenda for the 4th AGM, but it does not contain the annual budget. Flowing from that, determination of the rates of charges and contribution to the sinking fund would not be possible as there is no annual budget to show the amount necessary for the maintenance of the different components in the mixed development. [37] Furthermore, considering the nature of a JMB, which comprises all the parcel owners in the development, it must be accountable to the parcel owners. Thus, an annual budget is required for the parcel proprietors to know and understand the expenditure accounted for. This is again stipulated in section 23(3) of Act 757, providing for the JMB’s accountability on allocation of the annual expenditure. [38] So, the defendant is statutorily bound to prepare an annual budget, as it is duty bound to maintain the common property of the different components in the mixed development. It has to be laid at the AGM for deliberation and final determination by way of a collective decision, on how the JMB would determine on the amount of funds required to maintain and manage the common property and importantly, how much would it be, based on the rate per share unit. Findings and conclusion [39] In sum total, premised on the following basis - • Legality of the charges imposed and contributions to be made to the sinking fund; • Proportionality of the charges levied and contribution to be made to the sinking fund which shall not be on a per square foot basis; • Openness, transparency and accountability in the operation by the defendant as the JMB; • Lack of reasonableness and equity in the imposition of charges; and • Denying the plaintiff on its right to participate and vote at the AGM. viewed cumulatively, tilts the balance in favour of the plaintiff. Thus, this court had allowed order in terms of the prayers prayed for by the plaintiff in its OS (as amended) with costs. Issue of costs [40] On the amount of costs to be paid by the defendant as the unsuccessful party, counsel for plaintiff had prayed for the said costs to be paid to the plaintiff on a solicitor and client basis. The amount claimed is RM100,000. The basis being that the matter has been long outstanding and the plaintiff had to resort to an action in this court in order to ventilate their rights and espouse its claim before it could obtain the requisite declaratory order from this court. Conversely, counsel for defendant had contended that a sum of RM100,000 is an alarming figure and it is unreasonable. This is because the defendant as the JMB is not a profit-making entity but only performing its duties. It is set up to ensure management and maintenance of the building. Therefore, a sum of RM5,000 to RM10,000 is suggested to be an appropriate amount of costs to be ordered. It was also contended by counsel for the defendant that the delay in the matter is not solely caused by the defendant. Therefore, the plaintiff is disentitled to claim costs on a solicitor and client basis. [41] Counsel for plaintiff had implored to this court that costs on a solicitor client basis, is prayed for in accordance with the Rules of Court (ROC), to wit Order 59, which allows the court a wide discretion to order so, so that the plaintiff would be entitled to claim for disbursement and remuneration by way of fees. It was emphasised that the matter in its entirety has taken up a great deal of time and also entailing much getting up. It is also stressed that the delay in disposal of the issues in the matter is attributed solely to the defendant. It was further contended that O59 rule 5 of the ROC, for the court to allow a higher sum of costs, is justified as the plaintiff has been put to great expense. To the contrary, counsel for defendant had contended that costs on a solicitor and client basis is discretionary and the plaintiff is not entitled to it automatically. It was also emphasised that there was no prayer by the plaintiff for such an order. It is reiterated that there has been no deliberate delay on the part of the JMB, thus the plaintiff is not entitled to such an order of costs. [42] After having perused the submission made by both parties, this court had decided that it is befitting, proper and also proportional to the facts and circumstance of the case, for this court to only order costs on a party to party basis. Thus, costs ordered to be paid by the defendant has to follow the event of success of the plaintiff against the defendant, and it has to be reasonable and appropriate. In arriving at that amount, the following factors were considered: • Non-compliance of the law to wit, Act 757 by the defendant JMB. • Denial of the right to vote by the plaintiff. • Illegal charges levied on the plaintiff. On that score, the amount of costs ordered has to also reflect the punitive element, where the defendant chose not to comply with Act

Getting-up done in order to enlighten this court on the myriad of issues raised, especially by counsel for the plaintiff is also accorded the utmost consideration. Flowing from that, an amount of RM50,000 is ordered as costs to be paid by the defendant to the plaintiff. Order in terms of OS allowed with costs to be paid by defendant. Dated 25 May 2024 SGD Muniandy Kannyappan Judge, High Court. Aimee Liew Sau Harn with Au Yong Wai Nyan of Messrs. YH Teh & Quek, counsel for plaintiff. Cheah Tian Eu of Cheah Law Chamber, counsel for defendant. Lock Jun Qi, counsel holding watching brief.