FESTIVA MALL SDN BHD v PERBADANAN PENGURUSAN ZETAPARK

Case Significance

Holds that a Joint Management Body's duty under section 21 of the Strata Management Act 2013 to manage all common property in a mixed development is non-delegable and cannot be exempted by agreement, while applying limitation under section 6(1)(d) of the Limitation Act 1953 and a set-off for the owner's own maintenance expenditure.

This High Court decision concerns a mixed-development strata scheme comprising residential parcels stacked above a shopping mall, and the extent of a Joint Management Body's statutory duties towards the commercial component. The plaintiff, the owner of the mall, resisted the Joint Management Body's counterclaim for maintenance charges and sinking-fund contributions, relying on a recent decision, Badan Pengurusan Bersama Gurney Paragon Residential v Hunza Properties (Gurney) Sdn Bhd, in which another judge had wholly exempted a commercial-component owner from paying such charges and had left the management of the commercial common property with that owner. The judge respectfully declined to follow Gurney Paragon. He held that section 21 of the Strata Management Act 2013 confers on a Joint Management Body a non-delegable duty to manage, maintain and repair all common property within the development area, including the part serving the retail units, and that section 25(1) obliges every purchaser, and the developer in respect of unsold units, to pay maintenance charges and sinking-fund contributions. The court reasoned that neither the Act nor any other statute empowers a court to strip a Joint Management Body of its statutory duties or its power to collect the charges Parliament has expressly authorised it to collect, and that an arrangement exempting the mall owner would offend sections 148 and 149, which invalidate agreements contravening the Act. At the same time the court accepted that the plaintiff had itself incurred substantial expense in managing and maintaining part of the common property, so that allowing the counterclaim in full would unjustly enrich the Joint Management Body, and applied a set-off. The court also held that section 105 governs only claims before the Strata Management Tribunal and not civil-court claims, and that section 6(1)(d) of the Limitation Act 1953 barred the part of the counterclaim that accrued more than six years before the writ, subject to the running-account principle in section 26(2). The counterclaim was allowed subject to limitation and set-off, and, the plaintiff being a substantial net creditor rather than a defaulter, it was permitted to attend and vote at the first annual general meeting of the newly formed Management Corporation. The judgment is significant for insisting that a Joint Management Body's statutory management duty over common property in a mixed development is indivisible and cannot be contracted out.