What JMBs and MCs Must Know About Imposing Charges : Insights from a Strata Property Dispute Lawyer
- Messrs Lui & Bhullar
- Jun 3
- 4 min read
BY MESSRS LUI BHULLAR
Landmark Case Review: Perbadanan Pengurusan Endah Parade v. Magnificient Diagraph Sdn Bhd – Clarifying Legal Boundaries for Management Corporations in Malaysia
In this landmark ruling, the Court of Appeal delivered an important judgment that has significantly shaped the legal framework governing management corporations (MCs) and joint management bodies (JMBs) under the Strata Titles Act 1985 (STA). The case clarifies what types of charges a management corporation can impose and the importance of adhering to statutory processes when levying fees on parcel owners.
This case is especially relevant for anyone seeking strata management lawyer Malaysia services or needing JMB legal advice Malaysia regarding disputes involving service charges, sinking funds, and other financial levies.
Background
The appellant, Perbadanan Pengurusan Endah Parade, served as the management corporation for a commercial strata complex, Endah Parade. The respondent, Magnificient Diagraph Sdn Bhd, owned two units in the complex, operating a supermarket on the premises.
The dispute arose when the management corporation imposed various charges on the respondent beyond standard service charges. While the respondent agreed to pay legitimate service charges, it disputed other levies, such as charges for signage and electricity during extended business hours.
High Court Ruling
The High Court ruled that under Sections 41, 43, 45, and 46 of the Strata Titles Act 1985, a management corporation can only impose one consolidated payment—typically referred to as the management fund contribution. Additional or separate charges, unless approved at a general meeting of parcel owners, are not legally enforceable.
Key findings included:
Only one fund and one payment are permissible under the law.
Contributions to a special account (commonly known as the sinking fund) must come from that single contribution.
The rate of contribution must be decided at a general meeting, not unilaterally by the MC council.
The trial judge permitted only the valid service charges, signage charges, and electricity charges for extended business hours. Claims for additional charges were disallowed.
Appeal and Judgment by Court of Appeal
The management corporation appealed, arguing that it had the right to distinguish between administrative and consumption-based expenses, citing Section 43 (maintenance duties) and Section 45 (insurance and related costs). The appellant also relied on Clause 4C of the Deed of Mutual Covenants, arguing it permitted the recovery of additional expenses paid on behalf of unit owners.
The respondent cross-appealed, stating that all charges had been fully paid and that no evidence supported overdue payments.
Judgment Highlights:
The Court of Appeal dismissed both the appeal and cross-appeal, upholding the High Court’s decision. The key takeaways were:
Statutory Compliance is Crucial: Management corporations must operate strictly within the powers granted under the Strata Titles Act. Only charges approved by unit owners at a general meeting are enforceable. This reinforces the importance of strata management lawyer in Malaysia expertise in advising MCs and JMBs.
Only One Fund and One Payment Permitted: Under Section 41(5)(ba), only a single contribution is allowed, from which the portion for the sinking fund is derived. The attempt to impose separate or additional charges was deemed void ab initio.
General Meeting Decisions Take Precedence: All levies, including the contribution rate to the special fund, must be decided by unit owners in a general meeting. The MC council cannot make unilateral decisions on these matters.
Deed of Mutual Covenants Cannot Override Statute: Any provision in a deed or private contract cannot override express statutory limitations. Therefore, reliance on Clause 4C to justify additional charges was rejected.
Trial Judge’s Findings Upheld: The Court found no reason to disturb the High Court’s findings regarding the signage and electricity charges, as the respondent had acknowledged liability in correspondence.
Legal Implications for Strata Property Stakeholders
This decision serves as a critical precedent in strata management and sets clear boundaries on the legal authority of JMBs and MCs. It underscores the need for:
Legal consultation before imposing any charges beyond the management fund contribution.
Strict compliance with statutory provisions and general meeting decisions.
Transparent, properly approved financial governance in strata developments.
For those involved in JMB vs MC legal issues, this case is a textbook example of the legal risks associated with overstepping statutory powers.
Need Help with Strata Disputes?
Whether you're a JMB, MC, or a unit owner, engaging a specialised strata property dispute lawyer can help you navigate these complex legal waters. Our firm provides comprehensive legal advice for JMB and MC on compliance, dispute resolution, and tribunal representation.
We also assist in:
Filing claims at the Tribunal for Strata Management Malaysia
Drafting and reviewing by-laws
Interpreting the Strata Titles Act 1985
Resolving service charge disputes
Advising on management fund and sinking fund contributions
Contact a Trusted Strata Law Firm in Malaysia
If you're facing disputes related to MC or JMB powers, overcharging, or service levies, don't wait for the situation to escalate. Consult an experienced MC dispute resolution lawyer or a strata law firm in Malaysia to get clarity on your rights and obligations under the law.
Need legal advice?
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