Badan Pengurusan Bersama Gurney Paragon Residential v Hunza Properties (Gurney) Sdn Bhd and others (CA) Full Grounds dated 3 February 2026 can be downloaded below:
Facts:
- The Development: Gurney Paragon is a mixed development in Penang consisting of residential towers, an office tower, a shopping mall, a heritage building, and car parks (p. 4).
- Establishment of the JMB: The Appellant (JMB) was established in October 2014 under the BCPA 2007 (p. 3).
- The Disputed Resolutions: At the 1st AGM, resolutions were passed to separate the management and accounts of the Residential Component from the Commercial Component (p. 5).
- Bifurcated Management: Following these resolutions (and clauses in the SPAs), the JMB managed only the residential towers, while the developer/commercial owners managed the mall and office components separately (pp. 6, 13).
- The Dispute: In 2017, the JMB demanded RM56.9 million in arrears for maintenance and sinking fund contributions from the Respondents for the commercial component (p. 10).
- The Respondents’ Defense: The Respondents argued they were not liable because they had been managing and paying for their own components independently, consistent with the AGM resolutions and an administrative decision by the Commissioner of Buildings (COB) (pp. 9-10).
Key Findings of the High Court
- No Liability for Arrears: The 1st and 2nd Respondents (the developer and original proprietor of the commercial parcels) were not liable to pay the charges and sinking fund contributions into the account managed by the Joint Management Body (JMB) for the residential component (pp. 11-12).
- Separate Management Allowed: The court allowed for separate maintenance and sinking fund accounts for the residential and commercial components (pp. 12-13).
- Segregation of Common Property: The High Court opined that common property in a mixed development could be segregated and managed separately from the JMB (p. 13). The 2nd Respondent was permitted to continue managing its own commercial component common property (p. 13).
- Dismissal of Surrender Request: The High Court Judge disallowed the JMB’s demand to surrender all common property to the JMB.
Decision of the Court of Appeal
The Court of Appeal unanimously set aside the High Court’s decision in its entirety, ruling that the separate management of residential and commercial components was ultra vires (beyond legal power) and void under the strata regime.
Key Findings of the Court of Appeal:
- Indivisibility of Management: The court ruled that both the BCPA 2007 and SMA 2013 only recognize a single Joint Management Body (JMB) for a development area (pp. 27-28). There is no statutory provision for a “bifurcated” management structure or separate maintenance accounts during the JMB period (p. 27).
- Invalidity of Resolutions: The resolutions passed at the 1st AGM to separate the management of the residential and commercial components were declared null and void (pp. 31-32). The court emphasized that parties cannot “contract out” of the law, even if the resolutions were passed unanimously or were part of the Sale and Purchase Agreements (pp. 29-30).
- Mandatory Handover of Common Property: The court ordered the respondents to surrender the management and maintenance of all common property within the commercial component to the JMB (p. 44). It held that because there is only one finalized strata plan for the lot, all common property must be administered by the JMB (p. 43).
- Retrospective Liability for Charges: The court found that the commercial parcel owners are statutorily obligated to pay maintenance charges and sinking fund contributions (p. 34). While the previous rates were void, the JMB must now convene a new general meeting to determine valid rates retrospectively (pp. 35-36).
- The JMB is allowed to apply different rates of charges for the Commercial Parcel Owners.
- Protection of Funds (No Refunds): To avoid “financial chaos,” the court ruled that residential owners cannot claim refunds for charges already paid (pp. 39-40). Instead, once new rates are determined, any overpayments or underpayments will be adjusted as credits or arrears against future charges (pp. 40-41).
- Social Legislation Approach: The court interpreted the SMA 2013 as social legislation intended to protect community interests (pp. 38, 41). It held that while different rates can be charged for different components if they are “just and reasonable,” those rates must be managed under one single JMB entity (pp. 35-36).
- the COB’s supervisory powers do not include the power to transform an illegal (ultra vires) resolution into a lawful one (p. 29). Even though the COB based its decision on a unanimous vote at the 1st AGM, a vote cannot override statutory requirements (pp. 28-29).
- No Power to “Contract Out”: The court emphasized that the COB cannot permit parties to “contract out” of the BCPA 2007 or SMA 2013 (p. 29). These acts mandate a single management body and single accounts for one development area (pp. 27-28).
- Repeal of Authority: The court noted that once the BCPA 2007 was repealed, the COB no longer had the specific power under section 16(5) to resolve disputes in the same manner (pp. 30-31).
Key Takeaways:
- Single Management Body is Mandatory: Under the BCPA 2007 and SMA 2013, there can only be one JMB and one set of accounts (maintenance and sinking fund) for a single development area. Bifurcating management into separate residential and commercial silos is ultra vires (illegal) (pp. 22, 27-28).
- Statutory Compliance Over Agreements: Parties cannot contract out of the law (p. 29). Even if a separate management structure was agreed upon in Sale and Purchase Agreements (SPAs) or passed by a unanimous resolution at an AGM, those arrangements are null and void if they contradict the statutes (pp. 6, 31).
- COB Powers are Limited: The Commissioner of Buildings (COB) does not have the authority to validate illegal resolutions (p. 29). Any administrative decision by the COB that is inconsistent with the SMA 2013 is invalid (p. 31).
- Retrospective Regularization: Because the original resolutions were void, the JMB must hold a new general meeting with all parcel owners (residential and commercial) to determine a valid, “just and reasonable” rate (pp. 36, 38). This rate can be applied retrospectively to calculate arrears or credits (pp. 35, 41).
- The JMB is allowed to apply different rates of charges (pp 85-85)
- Common Property Control: The developer/commercial proprietor must surrender the management of all common property (including commercial areas like facades and car parks) to the JMB (pp. 44-45).
The Appellant (JMB) is represented by Lai Chee Hoe, Deyvinah Ganesalingam and Low Yen How (Messrs Chee Hoe & Associates)
The Respondent is represented by Ashok Kumar and Lim Chin Lun of Messrs Skrine.
