1. ) PERBADANAN PENGURUSAN THE USJ 19 CITY MALL 2. ) PALAZZO EMPIRE SDN BHD v 1. ) TIOW WENG THEONG 2. ) RAVANDIRAN A/L RAMAN KUTTY 3. ) CHONG WENG HONG 4. ) POTENSI TERUS INDUSTRIES SDN BHD

Case Significance

Illustrates the accountability of persons who assume the functions of a strata management body's office bearers without proper authority, and the courts' readiness to give effect to the protective purpose of the Strata Management Act 2013 for proprietors in a strata development.

This High Court decision at Shah Alam concerns two consolidated suits brought by the management corporation of a shopping mall, and a related company, against individuals who had purported to act as its office bearers. The management corporation alleged that three individuals had held themselves out as bearers of office in the joint management body without the legal authority to do so, and had, in that assumed capacity, unlawfully collected and applied funds and entered into contracts, causing loss. The case was framed around the Strata Management Act 2013, including its provisions governing the management body and its committee, and the court treated that Act as social legislation designed to protect the innocent proprietors within a strata development. The central questions were whether the individuals could be regarded as holding office de facto and whether they were answerable for the collection and misuse of funds and for contracts entered into beyond any lawful capacity. The court found against them. It held that the first to third defendants were jointly and severally liable for the unauthorised collection and misuse of funds and for entering into contracts beyond their lawful capacity, observing that to permit such conduct would be to neglect the protective function that the Strata Management Act 2013 is intended to serve for proprietors. It rejected any suggestion that a de facto assumption of office could clothe their dealings with the authority that only proper appointment could confer. The court accordingly allowed the management corporation's claim, with costs. In holding the individuals personally accountable, the court signalled that the machinery of strata management — the collection of maintenance charges and the sinking fund, and the contracting on behalf of proprietors — must be operated only by those properly clothed with authority, and that unauthorised dealings with such funds attract liability to make good the loss. The judgment illustrates the accountability of persons who assume the functions of a strata management body's office bearers without proper authority, and the courts' readiness to give effect to the protective purpose of the strata management legislation.