COURT OF APPEAL AT PUTRAJAYA
[CIVIL APPEAL NO: W-02(NCVC)(A)-2057-10/2018]

MUHAMAD NAZRI BIN MUHAMAD (APPELLANT)
JMB MENARA RAJAWALI (1ST RESPONDENT)
DENFLOW SDN BHD  (2ND RESPONDENT)

VERNON ONG LAM KIAT JCA
SURAYA BINTI OTHMAN JCA
HAS ZANAH BINTI MEHAT JCA

4 OCTOBER 2019

Strata Management Act 2013 – Strata Titles Act 1985 – Maintenance Charges Rates – Whether JMB Can Determine Different Rates – Whether JMC Can Determine Maintenance Charges Rates –  In Proportion –  Share Units – Calculation of Share Units –  Weightage Factors –  Statutory Interpretation

Headnote

The Appellant/Plaintiff is the owner of a residential parcel in a mixed condominium development known as Menara Rajawali. The 1st Respondent/1st Defendant is the joint management body (“JMB”) of Menara Rajawali while the 2nd Respondent/2nd Defendant is the owner of all the car park parcels in Menara Rajawali. 

At the 1st Annual General Meeting, the 1st Defendant unanimously resolved to give mandate to the joint management committee (“JMC”) to fix the maintenance charges for residential parcels and retail shop parcels at a rate not exceeding RM3.26 per share unit; and car park parcels at a rate not exceeding RM1.68 per share unit (“JMB’s Resolution”). The JMC then fixed the maintenance charges at a rate of RM2.80 per share unit for residential and retail shop parcels and RM1.68 per share unit for car park parcels (“JMC’s Decision”). 

The Plaintiff filed an originating summons action in the High Court seeking declarations that both of the JMB’s Resolution and the JMC’s Decision are null and void. The learned High Court Judge dismissed the Plaintiff’s action and held that there is nothing in the Strata Management Act 2013 (“SMA 2013”) that prevents the JMB or the JMC from fixing different rates of charges for different types or parcels in a strata project, as long as this is approved in the Annual General Meeting. The learned High Court Judge then held that the unanimous resolution at the 1st Annual General Meeting was perfectly valid and legal. 

The appellant appealed to the Court of Appeal against the decision of the learned High Court Judge. 

Held, allowing the appeal:

(1) The criteria in determining the allotment of share units is based on weight differentiation for share units as illustrated by the three weightage factors. Sections 21 and 25 of the SMA 2013 require the JMB to determine the maintenance charges “in proportion to the allocated share units of each parcel.” The word “proportion” is defined as “to adjust in proper proportion to something else as to size, quantity, number etc.; to make proportionate.” (See para 24)

(2) In the light of the fact that the three weightage factors have been applied in the calculation of share units for car park parcels and which calculation is premised on equitable considerations, the JMB is only empowered to fix one rate which is applicable to all types of parcels. The owners of different types of parcels will then be paying maintenance charges in proportion to the allocated share units of their respective parcels because the rate per share unit is the same. The imposition of two different rates of maintenance charges for different types of parcels is incompatible with the meaning of “in proportion” in Sections 21 and 25 of the SMA 2013 since there is no comparative relation, ratio or harmony between the two different rates and the different allocated share units of each parcel. On the proper construction of the said Sections, the JMB is required to determine and fix only a single rate of maintenance charges to be applied to all types of parcels in proportion to the allocated share units. (See para 25 and 27)

(3) As a creature of statute, the powers of the JMB are limited and circumscribed by the SMA 2013 which regulate it. There is no provision in either the SMA 2013 or the STA 1985 which confers the JMC with power to decide on the rates; or which permits the JMB to delegate its decision-making duty under sub-s21(1)(b) of the SMA 2013 to the JMC. There is no provision under the SMA 2013 and STA 1985 which empowers the JMB to fix different rates for different types of parcels. (See para 36, 37 and 38)

(4) The fact that the JMB’s Resolution was carried out by a unanimous vote does not make it perfectly legal and valid for the JMB and JMC to fix and collect the different rates of the maintenance charges. It will be ultra vires the SMA 2013 for the JMB and the JMC to fix and impose the different rates which are not sanctioned by statute. The JMB does not have the inherent power nor can it arrogate to itself such power, even if the approval was obtained in a unanimous resolution at the AGM. (See para 40)

Cases referred to

Andrew Lee Siew Ling v United Overseas Bank (M) Bhd [2013] 1 MLJ 749 FC

Equiti Setegap Sdn Bhd v Plaza 393 Management Corporation [2019] 2 CLJ 592 (CA)

Hari Bhadur Gale v PP [2012] 6 MLJ 597 (FC) 

Kee Keng Mow v Setapak Garden Ltd [1975] 1 LNS 69

Lai Yak Kee v Pembinaan Alam Cemerlang Sdn Bhd [2012] 1 LNS 1464 (FC)

Magor & St Mellons Rural District Council v Newport Corporation [1952] AC 189

Malaysia Shipyard & Engineering Sdn Bhd v Bank Kerjasama Rakyat (M) Bhd [1985] CLJ Rep 206 (SC) 

Perbadanan Pengurusan Endah Parade v Magnificient Diagraph Sdn Bhd [2014] 5 CLJ 881 

PP v Tan Tatt Eek & other appeals [2005] 1 CLJ 713 

Sri Bangunan Sdn Bhd v Majlis Perbandaran Pulau Pinang & Anor [2007] 6 MLJ 581 (FC)

Tan Eng Choon v Tay Boon See [1980] 1 LNS 74; [1980] 2 MLJ 290, 2910 

Legislation referred to

Housing Development (Control and Licensing) Regulations 1989 

Interpretation Act 1948 and 1967, s 17A

Strata Management Act 2013, ss 7(2), 15, 17, 19, 21(1), 21(2), 22, 25(3), 59(1), 60(3)(b), 8(1) First Schedule, 22(2) Second Schedule, 

Strata Management (Maintenance and Management) Regulations 2015, Regulation 13, Form 5A 

Strata Titles Act 1985, ss 4, 36(a), 36(b), 36(c), 39(1), 45, 63, 66 

Counsel

For the appellantRaymond Mah (Joy Appukuttan, John Chan, Esther Ong, Etrus Tan and Masha Sylverster with him); M/s Esther Ong, Tengku Saiful & Sree

For the respondents – HP Chuah, A. Onn; M/s Onn & Partners 

Grounds of Judgment

Vernon Ong Lam Kiat, JCA

INTRODUCTION

(1) Can a Joint Management Body (JMB) impose different rates of maintenance charges for different types of parcels in a condominium development? That was the issue which presented itself at the High Court concerning the imposition of maintenance charges in a mixed condominium development comprising of residential, retail shop and car park parcels.

(2) In this case there are no facts in issue to be determined. However, one question of law emerges clearly and it is this: Whether the Strata Management Act 2013 (SMA 2013) limits the power of the JMB to determine different rates of maintenance charges for different types of parcels?

THE SALIENT FACTS

(3) The mixed condominium development in question is known as Menara Rajawali. The plaintiff is the owner of a residential parcel. The JMB is the 1st defendant. The 2nd defendant is the owner of all the car park parcels in Menara Rajawali.

(4) The dispute can be tracked back to the 1st Annual General Meeting of the JMB on 25.6.2016 where it was unanimously resolved, inter alia that mandate be given to the Joint Management Committee (JMC) to fix the maintenance charges for:

        i. Residential parcels and retail shop parcels at a rate not exceeding RM3.26 per share unit; and

        ii. Car park parcels at a rate not exceeding RM1.68 per share unit.

        (JMB’s Resolution)

(5) Pursuant thereto, the JMC fixed the maintenance charges for:

        i. Residential and retail shop parcels at a rate of RM2.80 per share unit; and

        ii. Car park parcels at a rate of RM1.68 per share unit.

        (JMC’s Decision)

(6) On 26.1.2018, the plaintiff filed an action in the High Court seeking declarations that both the JMB’s Resolution and the JMC’s Decision are null and void ab initio. The plaintiff contended inter alia, that the different rates of maintenance charges discriminated against retail shop and residential parcels and were unlawful in that it went beyond the JMB/JMC’s legal power or authority. The High Court dismissed the plaintiff’s action. This is the plaintiff’s appeal. In this judgment the parties shall be described as they were in the court below.

FINDINGS OF THE HIGH COURT

(7) The key findings of the learned judge are as follows:

i. The words “share units” in the SMA 2013 is what would ordinarily be described as the ‘multiplier’ for purposes of determining the maintenance charge payable, whereas the rate payable as determined by the JMB via the JMC is the ‘multiplicand’. The share unit or multiplier is fixed, whereas the multiplicand or rate can vary depending on what the JMB decides at the AGM;

ii. The phrase “in proportion to the allocated share units” of each parcel (per s25(3)) or “in proportion to the allocated share units of their respective parcels” (per s21(2)) cannot be read or construed as fettering the ambit of the JMB’s power (as approved by the AGM) to determine such rate of maintenance fee or sinking fund contribution as is deemed appropriate in the circumstances;

iii. There is nothing in the SMA 2013 which prevents the JMB/JMC from fixing different rates of charges for different types or categories of parcels in the strata project, as long as this is approved by the AGM;

iv. It is for the AGM comprising of the owners to decide whether the rate for maintenance charges for all types of parcels should be uniform or otherwise; and

v. As the approval was given by a unanimous resolution at the 1st AGM, it was perfectly valid and legal for the JMB to fix differing rates of charges for the residential/retail parcels and car park parcels.

SUBMISSION OF PARTIES

(8) Five main points were canvassed by learned counsel for the plaintiff. The first is that the JMB’s Resolution and the JMC’s Decision are outside of their powers conferred by the SMA 2013, and therefore are ultra vires the SMA 2013, null and void ab initio. The words “in proportion” appearing in ss 21 and 25 clearly requires the JMB/JMC to determine and fix only one rate to be applied to all types of parcels (Kee Keng Mow v Setapak Garden Ltd [1975] 1 LNS 69; Tan Eng Choon v Tay Boon See [1980] 1 LNS 74). The JMB being a creature of statute cannot do anything that is not permitted by the statute under which it is incorporated (Malaysia Shipyard & Engineering Sdn Bhd v Bank Kerjasama Rakyat (M) Bhd [1985] CLJ Rep 206 (SC); (Ekuiti Setegap Sdn Bhd v Plaza 393 Management Corporation [2019] 2 CLJ 592 (CA)).

(9) The second point is that the SMA 2013 only allows a Management Corporation (MC) to determine different rates of charges for different parcels. In contrast, s 21 does not permit the JMB to determine different rates for different parcels. That power cannot be implied by the JMB in the absence of such express provision.

(10) The third point related to the legislative framework for the calculation of share units. The SMA 2013 provides weight differentiation, which acts as discounts, for the calculation of the share units of each parcel. Under the First Schedule, a car park (whole floor parcel) owner already enjoys a discounted weightage factor compared to a residential or retail parcel owner. As the rate per share unit for the respective parcels are different, the owners of residential, car park and retail parcels will be paying different maintenance charges which are not in proportion to the allocated share units.

(11) The fourth point is that the one rate requirement in the SMA 2013 is consistent with the provisions of the Housing Development (Control and Licensing) Regulations 1989 (HDR) which prescribes the maintenance charges which is calculated by dividing the total expenses with the total number of proposed share units assigned to all parcels.

(12) The fifth point for the plaintiff is that no proper implication within the express words of ss 21 and 25 and the First Schedule of the SMA 2013 can arise to introduce the JMB/JMC’s discretion to determine different maintenance charges rates for different categories of parcels. In deciding that there is nothing in the SMA 2013 which prevents the JMB/JMC from fixing different rates of charges for different types of units so long as this is approved by the AGM, the learned judge erroneously filled in the purported gaps in the SMA 2013 and effectively exceeded the limit of his duty and power in interpreting the SMA in that manner (Hari Bhadur Gale v PP [2012] 6 MLJ 597 (FC); Lai Yak Kee Pembinaan Alam Cemerlang Sdn Bhd[2012] 1 LNS 1464 (FC); Magor & St Mellons Rural District Council v Newport Corporation [1952] AC 189).

(13) The remaining subsidiary points taken by the plaintiff may be summarized as follows. One, the fact that the resolution was passed at the 1st AGM is immaterial as the JMB’s Resolution and the JMC’s Decision are still ultra vires the SMA and therefore null and void ab initio (Ekuiti Setegap, supra). Two, as a parcel owner’s number of votes corresponds with the number of share units the amount of maintenance charges to be paid should be in proportion to the number of share units allocated to a parcel owner. In this case, the owner of the car park possesses a substantially high number of share units (and voting power) but enjoy a significantly lower maintenance charges rate of RM1.68 per share unit. This is compared to owners of much smaller residential and retail parcels who have to pay a higher rate of RM2.80 per share unit. Three, permitting the JMB/JMC to determine different maintenance charges rates for different parcels is open to abuse. In this case, the JMB/JMC comprised of 4 committee members of which 3 are shareholder/directors of the 2nd defendant, the car park owner. Conveniently, the JMC determined the maintenance charges rate for the car park parcels shall be significantly lower than the rate for residential and retail parcels. The final point was that the SMA 2013 requires the JMB to determine the specific and final maintenance charges rate for all parcels (s 19 SMA 2013). The SMA 2013 does not confer any power on the JMB to fix a ceiling rate or to delegate the determination of the rates to the JMC (ss 21 and 25 SMA 2013; Regulation 13 and Form 5A of the Strata Management (Maintenance and Management) Regulations 2015; Perbadanan Pengurusan Endah Parade v Magnificient Diagraph Sdn Bhd [2014] 5 CLJ 881).

(14) In his short reply, learned counsel for the 1st and 2nd defendants argued that the rates of maintenance charges were determined in accordance with ss 21 and 25 of the SMA 2013. There is nothing in the SMA 2013 to fetter the JMB’s discretion to apply only one rate for all types of parcels. The plaintiff’s argument which is premised on proportionality is without merit. The weightage factor is not the sole factor in determining the rate of maintenance charges. The JMC had in fact decided to retain and charge the full ceiling rate payable by the car park owner while charging below the ceiling rate payable by the residential and retail parcels. The learned judge was correct to hold that the car park facility is a service to the owners, and that the car park enjoys no maintenance services like security and cleaning.

DECISION

(15) The main thrust of the plaintiff’s argument is twofold. One, the 2nd defendant is enjoying a double discount on his share of contribution of the maintenance charges. This argument is premised on the ground that the allocation of share units to every parcel owner has already taken into account the types of parcels, frequency of usage and general maintenance of the common property, whole floor parcel including or excluding area of vertical transportation core, and accessory parcels inside or outside the building. Since the share value of the 2nd defendant has already factored in the weightages, fixing a lower rate of maintenance charges for the car park units as opposed to a standard rate for all types of parcels would in effect be giving the 2nd defendant a double discount. Two, the provisions of the SMA 2013 cannot be read as giving the JMB and the JMC the power to determine different rates of maintenance charges for different parcels.

[First Point]

(16) In this instance, the share units have already been allocated for all the parcels in Menara Rajawali. As the notion of ‘share units’ is significant in this appeal, we think it is necessary to have a proper appreciation of the concept of “share unit” in the context of strata development like Menara Rajawali.

What are ‘share units’?

(17) The notion of ‘share units’ is a feature peculiar to strata developments. It is based on a concept of a single, easily applied, method of determining each parcel owner’s (i) voting rights, (ii) share in the common property, (iii) contribution to maintenance and administrative expenses, and (iv) proportional liability for the debts of the JMB or MC, as the case may be (ss 36(a), (b) & ©, ss 45, 63 and 66 of the STA 1985).

(18) The total number of share units allocated to the parcel is that parcel’s share value. Each parcel owner shall have one vote on the show of hands at a general meeting of the JMB or MC. However, on a poll, each parcel owner shall have such number of votes as that corresponding with the number of share units (sub-s 22(2); Second Schedule SMA 2013). In other words, parcel owners with higher share value will enjoy more voting power on a voting on a poll. On the flip side, the higher share value will also translate to the liability to pay higher aggregate maintenance charges and contributions to the sinking fund.

Meaning of ‘Share Units’ under the STA 1985 and SMA 2013

(19) The words ‘share units’ mean the share units determined for that parcel shown in the schedule of parcel owners: s 4 of the STA 1985. Put simply, the share units of a parcel are the area of that parcel multiplied by the weightage factor for that type of parcel and the weightage factor for the entire floor parcel. If there is any accessory parcel, the area of the accessory parcel is multiplied by a weightage factor for that accessory parcel. If there is more than one accessory parcel, the formula for calculation shall be applicable to each accessory parcel and it shall then be added accordingly. Both the value of the parcel and accessory parcel are then added to determine the total share units for each parcel.

(20) Share units are calculated according to the formula provided under the First Schedule of the SMA 2013: sub s-8(1) SMA 2013. As will become clear the calculation of allocated share units takes into account three weightage factors: WF1, WF2 and WF3. The formula for the computation of allocated share units is as follows:

Allocated share units of a parcel = (area of parcel x WF1 x WF2) + (area of accessory parcel x WF3)

(21) The allocated weightage factors are based on different sets of criteria. In the case of the weightage factor WF1, Table 1 makes three main differentiations: (i) the different types of parcels; (ii) between parcels with or without air-conditioning to the common areas or corridors, lobbies and foyers; (iii) between parcels having benefit or no benefit of common lift/escalator facility. The following examples are illustrative of the general scheme of the First Schedule:

  1. The weightage factor of an apartment with air-conditioning to common areas of corridors, lobbies and foyers having benefit of common lift/escalator facility is 1.30; whereas the weightage factor for a similar apartment having no benefit of common lift/escalator facility drops to 1.15.
  2. An apartment without air-conditioning having benefit of common lift/escalator facility is accorded a factor of 1.00; whereas the weightage factor for a similar apartment having no benefit of common lift/escalator facility is only 0.85.
  3. A car park (whole floor area) with air-conditioning to common areas of corridors, lobbies and foyers having benefit of common lift/escalator facility is 0.85; whereas the weightage factor for a similar car park having no benefit of common lift/escalator facility drops to 0.75.
  4. A car park (whole floor area) without air-conditioning having benefit of common lift/escalator facility is accorded a factor of 0.75; whereas the weightage factor for a similar car park having no benefit of common lift/escalator facility is only 0.65.

(22) Weightage factor WF2 include a whole floor or a block of contiguous whole floors of car parks in a complex. Table 2 provides a weightage factor of 0.85 for a car park (whole floor area) excluding area of vertical transportation (lifts/escalators) as compared to 0.80 for a car park including area of vertical transportation. Weightage factor WF3 allocates a factor of 0.25 for outside building and 0.5 for within building.

(23) The allocation of weightage factors for whole floor parel (WF2) and accessory parcel (WF3) in particular, is premised on equitable considerations. This is reflected in sub-paragraph 4(3) of the First Schedule in relation to WF2 which states that “In order to be equitable to other parcels which form the majority and comprise only net lettable areas, a whole floor must be adjusted to its equivalent net lettable area by taking into account its large circulation area or vertical transportation core in the whole floor parcel. “ And in relation to WF3, sub-paragraph 5(4) of the First Schedule states that “In order to be equitable before incorporating into the allocated share units of a parcel, the area of an accessory parcel must be adjusted to reflect that it is non-habitable and generally of lower construction cost.” (Emphasis added)

(24) Accordingly, the criteria in determining the allotment of share units is based on weight differentiation for share units as illustrated  by the three weightage factors WF1, WF2 and WF3. In addition to the above, ss 21 and 25 of the SMA 2013 requires the JMB to determine the maintenance charges “in proportion to the allocated share units of each parcel.” The word ‘proportion’ is defined as “to adjust in proper proportion to something else as to size, quantity, number etc.; to make proportionate” (Oxford English Dictionary, Vol. VIII). The word ‘in proportion’ was explained in Tan Eng Choon v Tay Boon See [1980] 2 MLJ 290, 2910 as “A thing is said to be in proportion to another when there is a comparative relationship or ratio between the two. The relationship is such that any increase or decrease in one will involve a relative adjustment of the other so as to maintain the existing harmony between them.”

(25) In light of the fact that three weightage factors have been applied in the calculation of share units for car park parcels and which calculation is premised on equitable considerations, it would appear that the JMB is only empowered to fix one rate which is applicable to all types of parcels. If that course is adopted, then the owners of different type of parcels will be paying maintenance charges in proportion to the allocated share units of the respective parcels because the rate per share unit is the same. We are therefore inclined to agree with the plaintiff’s argument that since the car park unit (whole floor parcel) is already enjoying a 40% discount by way of the calculation of its share units pursuant to the WF formula in the First Schedule, it will enjoy a further 42% discount given the lower rate of maintenance charges for the car park units. This additional discount would, in our view, run counter to the legislative framework which is intended to avoid inequitable, unfair and discriminatory practice in determining maintenance and maintenance charges rate. Therefore, the imposition of two different rates of maintenance charges for different types of parcel is incompatible  with the meaning of “in proportion” in ss 21 and 25 of the SMA 2013 since there is no comparative relation, ratio or harmony between the two different rates and the different allocated share units of each parcel. In describing the share units as the ‘multiplier’ and the rate as the ‘multiplicand’, the learned judge did not appear to have given proper effect to the phrase “in proportion to the allocated share units” of sub-s 21(2) and sub-s 25(3) of the SMA 2013. Accordingly, we do not think that the description of the share unit as the ‘multiplier’ and the rate as the ‘multiplicand’ is apposite.

(26) It is therefore important to apprehend the general legislative scheme of the SMA 2013 and the STA 1985 which governs all strata development projects. Both statutes set up a comprehensive, transparent, equitable and uniform regime to allocate and calculate the share units of each parcel; which must be filed with the Commissioners of Buildings and approved by the Director of Land and Mines. It appears that the learned Judge did not appreciate that different weightage factors between the types of parcels have been taken into account in the First Schedule of the SMA 2013.

(27) We therefore take the view that on a proper construction of the said sections, the JMB is required to determine and fix only a single rate of maintenance charges to be applied to all types of parcels in proportion to the allocated share units. Accordingly, we do not think that the JMB’s Resolution in fixing different rates for different types of parcels is in conformity with ss 21 and 25 of the SMA 2013.

[2nd Point]

(28) We will now consider the question of whether the JMB’s Resolution and the JMC’s Decision is ultra vires the SMA 2013 and STA 1985. This is a question of law which turns on the proper construction of ss 21 and 25 of the SMA 2013. In this case the JMC’s Decision was made pursuant to the JMB’s Resolution; which resolution, it will be recalled, gave a mandate to the JMC to fix maintenance charges for different types of parcels subject to certain ceiling rates. The underlying reason for the learned judge’s decision is premised on (i) there was nothing in the SMA 2013 limiting the power of the JMB or JMC from fixing different rates of maintenance charges; (ii) it was a matter for the owners to decide at the AGM of the JMB; and (iii) The SMA 2013 did not proscribe any differentiation of the maintenance charges.

(29) It is important to comprehend the statutory role of the JMB against the backdrop of three stages of management in a strata development project. The initial period of management after the completion of a strata development is undertaken by the developer, followed by the JMB and the management is ultimately taken over by the MC. As such, the JMB plays a transitional role in the management of the building and common property in a strata development.

Developer’s Management Period

(30) Immediately after the delivery of vacant possession of a parcel to a purchaser in a strata development project the developer is required to maintain and manage the parcels and common property; this is known as the developer’s management period: sub-s 7(2) SMA 2013.

Joint Management Body

(31) A JMB is established at the first AGM of the JMB which must be convened within 12 months from the date of the delivery of vacant possession of a parcel to the purchaser: s 17 SMA 2013. Once a JMB is established, the developer is required to hand over to the JMB the monies remaining in the maintenance account and the sinking fund account and various other matters pursuant to s 15 of the SMA 2013. A JMB is a body corporate and it is comprised of the developer and the purchasers. A JMB is under a duty to, inter alia (i) maintain and manage the building or land intended for subdivision and the common property; and (ii) determine and impose the maintenance charges and the contribution to the sinking fund: sub-s 21(1) SMA 2013. In this connection, a JMB is empowered to, inter alia (i) collect the maintenance charges and contribution to the sinking fund, (ii) to do all things reasonably necessary for the performance of its duties.

(32) A JMC is the executive arm of the JMB and it is elected by the JMB at a general meeting. The JMC carries out and conducts the JMB’s duties and business subject to any restriction imposed or direction given by the JMB: s 22 SMA 2013. A JMC is also a creature of statute and as such its powers are those (i) expressly provided under the SMA 2013, and more particularly, (ii) those which may reasonably be implied as necessary and proper for the purpose of carrying out its duties, and the limit of its implied power is the object of its formation.

Management Corporation

(33) A MC is established after the opening of a book of the strata register; i.e. to say, after the documents of strata titles have been issued and a register of strata titles have been prepared by the Registrar of Titles: sub-s 39(1) of the STA 1985. The MC is required to inter alia, maintain and manage the subdivided building and common property, determine, impose and collect the maintenance charges and the contribution to the sinking fund, prepare and maintain a strata roll for the subdivided buildings: s 59(1) of the SMA 2013. The JMB is dissolved within 3 months from the date of the MC’s first AGM; the JMB is also required to conduct a handing over to the MC within a period of one month.

[Statutory interpretation]

(34) The question of whether the SMA 2013 limits the JMB’s power to fix different rates is ultimately a matter of statutory interpretation. The rules governing statutory interpretation are quite settled. In construing a statute effect must be given to the object and intent of the legislature in enacting the statute. Accordingly, the duty of the court is limited to interpreting the words used by the Legislature and to give effect to the words used by it. The court will not read words into a statute unless clear reason for it is to be found in the statute itself (Sri Bangunan Sdn Bhd v Majlis Perbandaran Pulau Pinang & Anor [2007] 6 MLJ 581 (FC)). Therefore, in construing any statute, the Court will firstly, look at the words in the legislation and apply the plain and ordinary meaning of the words in the statute. If there is any ambiguity to the words used, the Court is duly bound to accept it even if it may lead to mischief. Where the language used is clear and unambiguous, it is not the function of the Court to re-write the statute in a way which it considers reasonable. But if the words employed are not clear, then the Court may adopt the purposive approach in construing the meaning of the words used (see PP v Tan Tatt Eek & other appeal [20015] 1 CLJ 713). In Andrew Lee Siew Ling v United Overseas Bank (M) Bhd [2013] 1 MLJ 449 FC, the Federal Court enunciated on the application of s17A of the Interpretation Acts 1948 and 1967 which provides for a purposive approach in the interpretation of statutes.

(35) Therefore, where the words of a statute are unambiguous, plain and clear, they must be given their natural and ordinary meaning. The statute should be construed as a whole and the words used in a section must be given their plain grammatical meaning (Hari Bhadur Gale v PP (supra). It is not the province of the Court to add or subtract any word; the duty of the Court is limited to interpreting the words used by the legislature and it has no power to fill in the gaps disclosed (Lai Yak Kee v Pembinaan Alam Cemerlang Sdn Bhd (supra)). Even if the words in a statute may be ambiguous, the power and duty of the Court “to travel outside them on a voyage of discovery are strictly limited.” (Magor & St Mellons Rural District Council & Newport Corporation (supra)).

(36) As a creature of statute, the powers of the JMB are limited and circumscribed by the SMA 2013 which regulate it, and extend no further than is expressly stated therein, or is necessarily  and properly required for carrying into effect the purposes of its establishment, or may be fairly regarded as incidental to, or consequential upon, those things which the legislature has authorised. What the SMA does not expressly or impliedly authorize is to be taken to be prohibited.

(37) Under the clear statutory provisions, the JMB is the decision making body, whereas the JMC is the executive arm responsible for the implementation of the JMB’s decisions and performance of the JMB’s duties. There is no provision in either the SMA 2013 or the STA 1985 which confers the JMC with power to decide on the rates; or for that matter, which permits the JMB to delegate its decision-making duty under sub-s 21(1)(b) of the SMA 2013 to the JMC. We do not think that in this case such powers can be implied. In our view the duty to make the decision is a duty imposed on the JMB and that duty is non-delegable. We say this because the decision to determine the maintenance charges is made by the JMB at a general meeting attended by the developer and purchasers; it is a collective decision. In short, the decision to fix the maintenance charges must be made by the JMB. It therefore follows that the JMB’s resolution to delegate its duty to the JMC is in excess of the JMB’s powers under statute.  As such, the mandate given to the JMC is invalid, null and void.

(38) There is also no provision under the SMA 2013 and the STA 1985 which empowers the JMB to fix different rates for different types of parcels. In contrast, such a power is expressly conferred on a MC in respect of 2 specific situations, (i) parcels which are used for significantly different purposes, and (ii) provisional blocks; sub-s 60(3)(b) of the SMA 2013. Therefore, if Parliament had intended for the JMB to have the power to fix different rates of maintenance charges, that intention would have been clearly reflected in the provisions of the SMA 2013; and because there is no such provision it must have been the Parliament’s presumed intention and wisdom not to confer such power on the JMB.

(39) In this connection, we think that an analogy can be drawn between the provisions in the SMA 2013 and the provisions of the HDR. Pursuant to clause 19(3) of the prescribed Sale and Purchase Agreement for strata development (Schedule H), the maintenance charges is based on the “Amount per proposed share unit”; and the charges are calculated by dividing the total expenses with the total number of proposed share units allocated to all parcels (see Note (iii) of Fifth Schedule in Schedule H). Under the HDR parcel owners will in fact be paying maintenance charges “in proportion to the allocated share units” of their respective parcels because the rate per share unit is the same.

(40) Be that as it may, does the fact that the JMB’s resolution was carried by a unanimous vote make it perfectly legal and valid for the JMB and JMC to fix and collect the different rates of the maintenance charges. The learned judge took the view that it would. However, we take a different view. The JMB as a body corporate under statute can only determine charges which are mandated under the SMA 2013. It will be ultra vires the SMA 2013 for the JMB and the JMC to fix and impose the different rates which are not sanctioned by statute. Further, the JMB does not have the inherent power nor can it arrogate to itself such power, even if the approval was obtained in a unanimous resolution at the AGM (Malaysia Shipyard & Engineering Sdn Bhd v Bank Kerjasama Rakyat (M) Bhd, (supra)).

(41) For the foregoing reasons, the JMB’s Resolution and the JMC’s Decision are hereby set aside for being invalid, null and void. The order of the High Court is set aside. We therefore allow prayers 1, 2, 3 and 4 of the Originating Summons. The appeal is allowed with costs.

Application to set aside JMB’s Resolution and JMC’s Decision allowed.

Reported by Raymond Mah, John Chan & Kar Men Fung; MahWengKwai & Associates

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