The Landmark Menara Rajawali Case
In the Court of Appeal’s decision on October 4, 2019 in the case of Muhamad Nazri Muhamad v. JMB Menara Rajawali & Anor Civil Appeal No: W-02(NCVC)(A)-205710/2018, it was ruled that a Joint Management Body (the “JMB”) is required to determine and impose only a single rate of maintenance charges for all types of parcels in a mixed development project. The Federal Court has rejected an application for leave to appeal against the Court of Appeal’s decision and ruled that the Court of Appeal’s decision shall remain intact.
Fact Of The Case
In this case, the Respondent was a residential unit owner of a condominium project, Menara Rajawali which consists of residential units, retail shops and car park units. The 1st Appellant was the JMB for Menara Rajawali and the 2nd Appellant was the owner of all the car park units in Menara Rajawali.\xa0
In the Annual General Meeting (“AGM”) held on 25 June 2016, the JMB passed a unanimous resolution to allow the joint management committee (the “JMC”) to fix the maintenance fees for the residential units and retail shop units at a rate not exceeding RM3.26 per share units, and for the car park units at a rate not exceeding RM1.68 per share unit. Following that, the JMC fixed the rate of the maintenance fees for the residential units and retail shop units at RM2.80 per share unit and for the carpark units at RM1.68 per share unit.
Court of Appeal’s decision
The Court of Appeal, in the other hand, overturned the High Court decision and held that the JMB is required to determine and fix only a single rate of maintenance charges to be applicable for all types of parcels, to the allocated share units with the following reasons:
1 – To avoid inequitable, unfair and discriminatory practices which are incompatible with the SMA 2013.
The legislative framework in the First Schedule of the SMA 2013 provides weight differentiation which acts as a discount for the calculation of the share units of each parcel, namely the weightage attributed to the types of the parcels, the weightage attributed to the parcel based on air-conditioning facilities in common areas, weightage differentiated for the whole floor parcel and weightage differentiated for an accessory parcel. It would therefore be unfair if a JMB further imposes different rates of maintenance charges for different types of parcels as that would result in car park units enjoying a further discount based on the lower rate of maintenance charges.\xa0
In light of the above, the Court of Appeal opined that the JMB is only empowered to fix one rate suitable for all types of parcels so that the owners of different types of parcels would be paying maintenance charges in proportion to their allocated share units. This is in line with the legislative framework of the SMA 2013 and Strata Title Act 1985 (the STA 1985) which is meant to avoid inequitable, unfair and discriminatory practices in the determination of the rate of maintenance charges.
2 – We also note from the decision of the Court of Appeal that a JMB cannot delegate, to the JMC, the power to decide the rate of maintenance charges.
Section 21(1)(b) of the SMA 2013 confers the JMB with the power to determine and impose the rate of maintenance fees. There is no provision in the SMA or the STA which confers the JMB to pass its decision-making power to the JMC. Therefore, follows that the JMB’s resolution, in this case, to delegate its duty to the JMC to determine the rate of maintenance charges, was in excess of its powers under a statutory duty, resulting in the mandate given to JMC being null and void.
Federal Court’s decision
The Federal Court has rejected the application for leave to appeal against the Court of Appeal’s decision by the Appellants and ruled that the Court of Appeal’s decision shall remain intact. With the refusal of leave to appeal, the Court of Appeal’s decision shall be binding and hence a JMB is not allowed to fix different rates of maintenance charges for different types of parcels in a mixed development.