“If Co-Owners of a property cannot agree on how to distribute the proceeds of sale of the property, can the property then be sold? And if yes how would the proceeds of sale be distributed?”
CASE:
BRIEF FACTS:
- Lee Bee Kiow (Bee Kiow) and Lee Bee Hong (Bee Hong) are sisters who jointly purchased a double-storey terrace house in Klang in 2009.
- Both parties contributed equally towards the down payment for the purchase of the house and jointly obtained a housing loan.
- With Bee Kiow’s consent, Bee Hong lived in the house rent-free, but all related expenses for the house is borne by the Bee Hong.
- Over the years, Bee Kiow paid approximately RM193,000.00 to partially repay the housing loan, while Bee Hong claimed that she spent about RM157,714.54 on renovation and maintenance works for the house.
- In May 2024, both parties agreed for the house to be sold for a price of RM720,000.00. However, they disagreed on how the sale proceeds should be divided between them.
- Bee Kiow claimed that since she had paid some amount of money to partially settle the housing loan, she should be reimbursed and also that Bee Hong should pay rent to her.
- Bee Hong, on the other side argued that she should be reimbursed for renovation and maintenance expenses, and she should not have to pay rent as she is the co-owner of the house.
- Bee Kiow then filed a court case seeking orders for the sale of the property and distribution of the proceeds.
DECISION OF THE HIGH COURT
- On the issue of rent, the HC dismissed Bee Kiow’s claim for rent and held that as a co-joint owner, Bee Hong had the right to stay in the house rent free.
- The HC found that Bee Kiow only had asked Bee Hong to pay the rent to her after Bee Hong disagreed with Bee Kiow’s proposed division of the sale proceeds.
- In regards to the distribution of sale proceeds, the HC held that certain necessary sale and purchase expenses related to the property should be taken into account before it is divided between the parties.
- However, the HC did not decide or explain on how these expenses should be shared between the parties.
- Bee Kiow contended that the HC order is uncertain and vague, and then appealed the HC decision to the COA.
DECISION OF THE COURT OF APPEAL
- The COA held that the HC was correct in deciding that Bee Hong did not need to pay rent, as under Malaysian law, co-owners have equal rights to occupy and use the entire property and it would be unfair for Bee Kiong to claim rent after allowing the Respondent to stay rent-free for almost 13 years.
- The COA also held that rent should only be paid in situations where there is an agreement to pay rent, or one of the co-owner prevents the other from using the property, which did not happen in this case.
- The COA held that the loan repayment made by Bee Kiow benefitted both parties as it reduces the debt on the property, hence both parties must share the cost equally.
- The COA held that the same principle goes for renovation and maintenance costs, but only if Bee Hong can provide documentary evidence for the renovation and maintenance.
- Additionally, expenses such as assessment tax and quit rent must also be shared equally as it is necessary to maintain ownership of the property, but utility bills should not be shared as it only benefits Bee Hong who is living there.
- The COA held that for the final distribution, after deducting and sharing all relevant expenses, the remaining sale proceeds of the property must be divided equally between both parties.
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