Court of Appeal: Joint Management Committee has no power to determine rates of charges, which must be determined at an AGM

Case update: Badan Pengurusan Bersama Tropicana 218 Macalister v Tropicana Macalister Avenue (Penang) Sdn Bhd, Civil Appeal No.: P-02(NCvC)(A)-1043-06/2023

Facts

This appeal originated from a High Court originating summons filed by a parcel owner, Tropicana Macalister Avenue (Penang) Sdn Bhd [“TMASB”], who held approximately 60% of the aggregate share units of a stratified mixed development.

No rates of charges were determined at the Annual General Meeting [“AGM”] of the Joint Management Body [“JMB”] and the Joint Management Committee [“JMC”] then decided that TMASB was a defaulter based on rates of charges determined by the JMC at a JMC meeting.

At the 3^rd AGM of JMB, TMASB being a purported defaulter was not allowed to vote, not allowed to elect and nominate members of the JMC, and motions requisitioned by TMASB were not tabled for consideration of the floor.

High Court

Dissatisfied, TMASB initiated an action against the JMC in the High Court, which made, amongst others, the following determinations:

1. The JMC does not have the power to determine rates of charges and sinking fund contributions at a JMC meeting, which must be determined at an AGM;
2. The JMB cannot reject the inclusion of a parcel owner’s motion into the agenda of an AGM;
3. TMASB can elect and nominate its candidates to be members of the JMC, even from the floor on the day of the AGM; and
4. The 3^rd AGM of JMB is therefore null and void for being wrong in law.

Court of Appeal

The JMB appealed and the Court of Appeal on 6.10.2023 affirmed the decision of the High Court. The Court of Appeal panel of 3 judges emphasised that only a JMB has the power to determine rates of charges, as it was not the intention of the Strata Management Act 2013 to allow a minority group of parcel owners sitting in the JMC to decide the rates of charges for all parcel owners.

The Court of Appeal ordered that the AGM of the JMB be reconvened, and for all motions to be tabled and deliberated on by all parcel owners in attendance.

TAKEAWAY

The courts have made an attempt to curtail the misuse of power of joint management committee members, which is a welcome development in the area of stratified management.

Decisions which affect the interests of all parcel owners must be tabled at an AGM, and parcel owners must be given an avenue to deliberate and vote on such proposals. Failure to convene a lawful AGM will result in an invalidated AGM.