CASE UPDATE: PEARL SURIA MANAGEMENT CORPORATION v YII SING CHIU & 2 ORS (Court of Appeal, Civil Appeal No: W-02(NCVC)(A)-1389-07/2022) & AIKBEE TIMBERS SDN BHD & ANOR v YII SING CHIU & ANOR (Court of Appeal, Civil Appeal No: W-02(NCVC)(A)-1323-07/2022)
FACTS:
Two appeals were filed, one by Pearl Suria Management Corporation (MC) (vide Court of Appeal, Civil Appeal No: W-02(NCVC)(A)-1389-07/2022), and another by developer and car park owner (vide Court of Appeal, Civil Appeal No: W-02(NCVC)(A)-1323-07/2022) against a High Court order dated 23.6.2022 (HC Order). The HC Order granted the order in terms for an originating summons in favour of the proprietor, in essence: –
- The imposition of different rates of charges by the developer during the preliminary management period is declared illegal, null, and void;
- The imposition of different rates of charges by the MC during its management period is declared illegal, null, and void;
- The developer and car park owner are to pay charges to the MC at a purported uniform rate of RM2.22 and RM0.30 per share unit for the preliminary management period; and
- MC is to hold an extraordinary general meeting to determine the uniform rate of charges.
Court of Appeal Decision
In delivering a landmark decision, the Court of Appeal unanimously held that section 60(3)(b) of the Strata Management Act 2013 allows an MC to determine different rates of Charges to be paid in respect of parcels that are used for significantly different purposes. This may be done without tinkering with the share unit ratio and is subject always to approval at the AGM. There is no necessity to confine the application of Section 60(3)(b) of the Strata Management Act 2013 to only cases involving change of use of the parcels. Further, such charges imposed have to be fair and reasonable with reference to the actual or expected expenditure incurred. The High Court order is set aside.
TAKEAWAY:
We find resonance with the Court of Appeal’s landmark decision regarding the interpretation of Section 60(3)(b) of the Strata Management Act 2013. MC can indeed impose different rates of charges between different components, provided that certain requirements are met. These requirements encompass, among others, formulating a proper budget, ensuring fairness and reasonableness, and obtaining approval at the Annual General Meeting (AGM).
This also endorses the recent case decided by the High Court in Yong Kein Sin & Anor v. Perbadanan Pengurusan Springtide Residences [2023] 1 LNS 558 wherein it was held that MC is allowed to impose different rates of charges between different types of property within Springtide Residences.
