Legal Update 5 of 2024

By jhjadmin | Legal Updates | 0 comment | 29 September, 2024 | 0

Two questions of law were posed before the High Court:

Whether the determination and imposition of the different rates of maintenance charges and contribution to the sinking fund between apartment parcels and commercial parcels by the developer, during the preliminary management period was valid in law i.e. the period between the delivery of vacant possession and the first AGM of the Management Corporation (“1st Question of Law”);
Whether the determination of different rates of the maintenance charges and contribution to the sinking fund by the Management Corporation, i.e. the MC, subsequent to the preliminary management period was valid in law (“2nd Question of Law”).

Case:

AIKBEE TIMBERS SDN BHD & ANOR V YII SING CHIU & ANOR AND ANOTHER APPEAL [2024] 1 MLJ 948

The dispute revolves around a mixed development comprising residential parcels, a shopping mall and a car park block.
The first Appellant is Aikbee Timbers Sdn Bhd (“the developer”) the developer of the development and is also the owner of a commercial parcel, namely the shopping mall. The Second Appellant is Sit Seng & Sons Realty Sdn Bhd (“SSSR”) also the owner of a commercial parcel, namely the car park. The Third Appellant is the Management Corporation (“MC”) of the development.
The Respondent, Yii Sing Chiu, is the owner of one of the residential parcels in the development. [Mr. Yii].
In January 2019, Mr. Yii discovered that the residential parcel owners and the commercial parcel owners were paying different rates for the maintenance charges and contributions to the sinking fund between 21 April 2016 and 25 January 2019 (“the preliminary management period”).
After taking over the management from the developer, the MC also imposed different rates between the residential parcel owners and the commercial parcel owners.
Mr. Yii filed an application in Court challenging the actions by the relevant parties during the preliminary management period and the period after the first AGM of the MC.

The Learned High Court Judge held that the different chargeable rates imposed by the Developer and the MC were illegal, null and void.
Consequently, the learned High Court judge held that rates for the maintenance charges and the contribution to the sinking fund must be the same for all parcels.
The Learned High Court Judge ordered the developer and SSSR to pay back to the MC the extra charges for the relevant periods.
The Court also ordered the MC to hold an Extraordinary General Meeting to determine a uniform chargeable rate effective from 25 February 2019.
The developer, SSSR and the MC appealed against the decision.

On appeal, the Court of Appeal considered the two questions of law posed to the High Court.
Based on the first question of law, the Court held that the expenditure for the common facilities in the residential area should not be included in the chargeable rate for commercial parcel owners who have no right to enjoy such exclusive common facilities.
The Court opined that the First and Second Appellants i.e. the developer and SSSR, were entitled in law to impose different chargeable rates during the preliminary management period.
On the 2nd question of law, the Court of Appeal also ruled that the MC was entitled to charge different rates for the residential parcel owners compared to the commercial parcel owners.
The Court answered both questions of law in the affirmative and allowed the appeal.

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