PERBADANAN PENGURUSAN PD1 v. SCP ASSETS SDN BHD [2025] CLJU 1646
Facts
This case concerns a mixed development area known as Pusat Perdagangan Phileo Damansara 1 (“PD1”). PD1 is a mixed development area consisting of:
a. Seven (7) blocks of shop/offices comprising 72 parcels of ground floor shops and 551 parcels of offices;
b. One (1) block of 7-storey Office Tower known as Bangunan Yin; and
c. Ground floor surface car park bays and three (3) levels of basement car park bays.
The Respondent, SCP Assets in this case is the proprietor of the Car Park Parcels whereby a Claim was filed against the Management Corporation (“MC”) for a declaration to render Private Motion No. 1 passed at the 1st AGM of the MC convened on 30.11.2017 unlawful, invalid and void whereby the said Private Motion was the increase in charges and contribution to the sinking fund with different rates to the different components in PD1 and SCP Assets further sought for an injunction to restrain the MC from enforcing the rates of charges passed vide Private Motion No. 1
It is pertinent to note in this case that while the nature of the components in PD1 are commercial in nature, it would appear that the parcels were used significantly different.
High Court
- The High Court had found that the reasoning of the increase in Charges and sinking fund contributions by the MC against the Car Park Owners, SCP Assets due to the inequitable share units (assigned pre SMA regime) was tainted with error as the impugned decision of the allocation of the share units ought to be challenged first;
- While Section 60(3)(b) of the SMA 2013 empowers the MC to implement different rates of charges for parcels of “significantly different purposes”, such powers ought to be exercised with discretion and must be just and reasonable;
- The MC’s failure of challenging the allocation of share units before implementing the increase and different rate of charges tantamounted to a collateral attack despite evidence of the tabling of the budget demonstrating the apportionment of costs and the exclusivity of the areas of each component in question and that said rates were passed by way of majority.
Court of Appeal
- The MC had appealed against the decision of the High Court
- The Issues for determination for the Court of Appeal were as follows:
a. Whether a Management Corporation is allowed in law to apply different rates of charges;
b. Whether the charges determined by the MC is just and reasonable irrespective of the fact that the rates were validly passed by way of majority.
- The Court of Appeal had decided as follows:
a. The MC’s resolution introducing different rates (Private Motion No. 1) was premature and invalid and that any inequity in share unit allocation could only be challenged by way of judicial review against the Director of Lands and Mines Selangor;
b. Although the Court accepted that the MC acted in good faith, it ruled that the imposition of different rates without first setting aside the share unit allocation was unlawful;
c. The High Court’s findings were affirmed and that the entire PD1 complex is solely commercial in nature, thus not qualifying the requirement of “significantly different purposes” under Section 60(3)(b) SMA 2013;
d. The MC’s budget computation method was hypothetical and arbitrary, as it was not based on actual maintenance costs;
e. Despite reliance and emphasis placed on another Court of Appeal case of Aikbee Timbers Sdn Bhd & Anor v. Yii Sing Chiu & Anor and another appeal [2024] 3 CLJ 177; [2024] 1 MLJ 948 which allows for the implementation of different rates of charges pursuant to Section 60(3)(b) of the SMA 2013, the principles were not applicable due to the matrix and factual circumstances of the present case; and
e. The MC’s Appeal was dismissed with costs
Federal Court
1. The MC , premised on the above decision had filed a Motion for Leave to Appeal based on the following clusters of Questions :
Cluster A
The Interpretation of Use of Parcels
Cluster B
Budgeting, Apportionment and Judicial Scrutiny
Cluster C
Judicial Powers vs. Self-Regulation of Management Bodies
Cluster D
Share units and allocations pre-SMA 2013
2. The Motion for Leave was however dismissed as the Court found that these questions of law were not novel in nature and not of public importance which therefore does not warrant the scrutiny of the Federal Court.
3. The Court of Appeal decision in other words, still stand as decided.
TAKEAWAY
- The ruling by the Court of Appeal blurred the line between parcel use and land category use.
- It effectively restricts the MC’s ability to impose and implement different rates of charges within a commercial development despite having significant different parcels use;
2. The votes results are not given due weight;
3. The Court’s approach suggests that it will scrutinize the computations, expenditure allocation, and budget apportionment;
4. The ruling places strain on the concept of strata schemes operating as self-regulating mechanisms, especially where the Courts appear prepared to intervene based solely on the grievance of one parcel proprietor.
Lai Chee Hoe and Deyvinah acted for MC in both the Court of Appeal and Federal Court
Full Grounds of Court of Appeal can be downloaded below
Report in the Edge Malaysia is extracted below:
