INTRODUCTION
The following motions filed in the Federal Court stemmed from an originating summons commenced by the Management Corporation (“MC”) pursuant to the amendment to the Gas Supply Act 1993 via the Gas Supply (Amendment) Act 2016:
(a) Gas Malaysia Berhad v Perbadanan Pengurusan Solaris Dutamas v Suruhanjaya Tenaga Malaysia – Civil Application No. 08(f)-526-10/2021(W) (“Motion 526”); and
(b) Suruhanjaya Tenaga Malaysia v Perbadanan Pengurusan Solaris Dutamas and Gas Malaysia Berhad- Civil Application No. 08(f)-529-10/2021(W) (“Motion 529”).
Following the said amendment, the new gas supply licensing regime requires the MC to obtain a retail license and take over the duty from Gas Malaysia Berhad to supply gas to the end-users such as the tenants and proprietors at its development area. In this case, Gas Malaysia Berhad has always been the entity to supply natural gas directly to the premise owners and/or tenants under a distinct Gas Supply Agreement entered into between the premise owners and Gas Malaysia Berhad.
The crux of the issue is whether the MC has the power to supply natural gas to the Development Area?
HIGH COURT
The originating summons was first heard before the learned judge, Dato’ Sri Latifah Binti Haji Mohd Tahar. On 27.8.2020, her Ladyship dismissed the MC’s originating summons and in essence held that the MC is required to comply with the notice issued by Energy Commissions of Malaysia to supply natural gas under the Strata Management Act 2013 (“the SMA”). According to her Ladyship, the SMA confers wide obligation and powers on the MC. References were made to Section 59 (1)(e) and (i) as well as Section 59(2)(d) of the SMA.
COURT OF APPEAL
Dissatisfied, the MC then filed an appeal in the Court of Appeal against the High Court decision. On 1.10.2021, the Court of Appeal allowed the MC’s appeal in part and ruled that:
- The MC has a statutory role to perform its duties and exercise powers under Section 59 of the SMA, which cannot be expanded and/or varied without an amendment to the statute itself.
- MC being a statutorily incorporated body is required to act strictly within the legal confines of the statute concerned and is permitted to levy payments only as mandated by the statute and nothing else.
As such, it is ordered that original position be maintained wherein the supply of natural gas and the maintenance of the equipment relating to the supply of natural gas continue to lie with Gas Malaysia Berhad.
FEDERAL COURT
On 29.6.2022, the Federal Court granted leave to appeal in favour of Gas Malaysia Berhad and the Energy Commission of Malaysia collectively, on 9 questions of law as follows:
Motion 526:
Question 1
“Does the responsibility to maintain and/or repair the gas pipes fall on the Joint Management Corporation and/or Management Corporation (as the case may be) in line with Item 3(2) of the Third Schedule (Functions of the Management Corporation) of the Strata Management (Maintenance and Management) Regulations 2015 read together with Rule 128 of the Gas Supply Regulations 1997 and the ST Guidelines issued by the Energy Commission?”
Question 2
“Can an entity other than the Joint Management Body or the Management Corporation of a development be compelled and/or ordered to maintain the gas pipelines in the development when the entity did not build the gas pipelines and does not own, control, have any legal rights and/or has never performed the maintenance obligations over the gas pipelines in the development in question?”
Motion 529:
Question 3
“Whether Section 11 of the Gas Supply Act 1993 brought by the Gas Supply (Amendment) Act 2016 contradicts and/or ultra vires Strata Management Act 2013?”
Question 4
“Whether Section 59(1)(e) and 59(1)(i) of the Strata Management Act 2013 empowers Management Corporation to apply for license as required under Section 11 of the current Gas Supply Act 1993?”
Question 5
“Whether the main gas pipes built and situated in the Development Area which is within the Management Corporation’s control fall within the definition of “common property” under Section 2 of the Strata Management Act 2013?”
Question 6
“Whether Section 59(2)(a), (d) and (j) of the Strata Management Act 2013 empowers the Management Corporation to charge and collect payment for gas supply from the owner and/or tenant of the strata units who receives the supply of gas?”
Question 7
“Whether Section 50(2) and 60(2) of the Strata Management Act 2013 allows the Management Corporation to deposit the charges or payment received from the owner and/or tenant for the strata units for supply and utilization of gas into the Maintenance Account?”
Question 8
“Whether the Management Corporation is allowed to utilize the Maintenance Account for payment towards all gas supply related activities provided by the 2nd Respondent or third party by virtue of Section 50(3) of the Strata Management Act 2013?”
Question 9
“Whether Section 59(2)(f) of the Strata Management Act 2013 allows the Management Corporation to appoint third party contractor for maintenance, repair, management or supply of gas into the area under the control of the Management Corporation?”
TAKEAWAYS
It will be interesting to see the approach (restrictive or otherwise) taken by the Federal Court with respect to the above issues, particularly on how the new gas supply licensing regime fits into the framework of the SMA, being the golden piece of legislation governing the strata management regime in Malaysia.
It is anticipated that the Federal Court’s decision on the aforesaid issues will shed light and provide clarity with respect to:
- the powers of the MC in taking over the management of natural gas supply in a stratified development area; and
- the mechanism in implementing the same, particularly in relation to the collection of charges other than the statutorily prescribed maintenance charges and sinking fund under the SMA.
