This article was written as an update pursuant to a previous article [https://cheehoe.com/does-a-management-corporation-have-power-to-supply-natural-gas/] that we wrote on 19.9.2022 with respect to 9 questions of law that were pending to be determined before the Federal Court.
The brief facts that revolve around the issue is also set out in this article [https://cheehoe.com/mc-has-no-power-to-supply-natural-gas/ ] that we wrote on 1.10.2021.
The following 2 appeals were heard together on 6.12.2022 wherein the Federal Court unanimously dismissed the 2 appeals in favour of the Management Corporation (“MC”):
(a) Civil Appeal No.: 01(f)-29-07/2022 (W) (“Appeal 29”) filed by Gas Malaysia Berhad; and
(b) Civil Appeal No.: 01(f)-30-07/2022 (W) (“Appeal 30”) filed by Suruhanjaya Tenaga Malaysia.
The crux issue of the 2 appeals is whether a MC has the power to supply natural gas in a stratified development area.
FEDERAL COURT’S DECISION
In arriving at its decision, the Federal Court decided to first deal with the following Question of Law in Appeal 30:
“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?”
The Federal Court answered the question in the affirmative and held that consequentially, the rest of the 8 questions need not be answered.
The Court of Appeal’s grounds of judgment as reported in Perbadanan Pengurusan Solaris Dutamas v Suruhanjaya Tenaga Malaysia & Anor  4 MLJ 397 are affirmed (A copy of the Court of Appeal’s grounds of judgment can be downloaded below). It follows that there is no need for the MC to now apply for retail license to supply natural gas in a stratified development area pursuant to Section 11 of the Gas Supply Act 1993 as the same is held to be ultra vires the Strata Management Act 2013 (“SMA 2013”).
The common thread that runs through a line of consistent legal authorities is that the powers of a MC is limited and that it should be construed within the four corners of the SMA 2013. The Federal Court’s decision with respect to the above appeals has once again fortified this cornerstone principle.
Imposing burden on the MC to undertake gas supply activity without clear mechanisms with respect to its operation within the SMA 2013 will only invite more issues in the future as the proprietors and/or end users will be left unguided with respect to how the MC handle the gas supply in the stratified development area.
This particularly so when the issue is viewed in light of the framework of a strata regime which envisages that:
- There can only be 1 maintenance account and 1 sinking fund account. MC is not allowed to open a new account to impose charges on gas users;
- MC is only allowed to levy charges (which is a fee payable by purchaser / parcel owner / proprietor and not a tenant who uses natural gas and does not include gas service charges) as provided for by the SMA 2013; and
- Collection of charges are to be based on share units (and not consumption or usage of gas /utilities).