Can the Management Corporation apply different rates of Charges under the Strata Management Act 2013?

The Strata Management Act (SMA) 2013, which came into force on 1.6.2015, was enacted to, among others, govern the maintenance and management of stratified properties in Malaysia. The provisions of the SMA 2013 comprehensively address the duties, powers and liabilities of various bodies which come to manage the development area, including the Developer, the Joint Management Body (“JMB”) and the Management Corporation (“MC”).

With the introduction of mixed developments, i.e. developments comprising of residential and commercial parcels, the imposition of a single rate of Charges (Maintenance and Sinking Fund charges) across all parcels in the development becomes ever more difficult to justify. To this end, many have taken to the Courts to seek an outcome. The question is, is there an ultimate decision and finality to the matter?

The answer lies in section 60(3)(b) of the SMA 2013. Somewhat.

Section 60(3) SMA 2013 states:

Subject to Section 52, for the purpose of establishing and maintaining the maintenance account, the management corporation may at a general meeting:

1. determine from time to time the amount to be raised for the purposes mentioned in subsection 50(3);
2. raise the amounts so determined by imposing Charges on the proprietors in proportion to the share units or provisional share units of their respective parcels or provisional blocks, and the management corporation may determine different rates of Charges to be paid in respect of parcels which are used for significantly different purposes and in respect of the provisional blocks; and
3. determine the amount of interest payable by a proprietor in respect of late payments which shall not exceed the rate of ten per cent per annum.

It is trite from the provision above, the SMA 2013, and the Strata Titles Act (STA) 1985, that a JMB does not have the powers to impose different rates of Charges for different parcels. What is not expressly permitted under statute, is prohibited under the principles of ultra vires – as per the Court of Appeal decision in Menara Rajawali[1].

As for MCs, the three words worthy to be re-emphasised is “significantly different purposes”. In the case of Fitters Building Services[2], a proprietor sought to move a resolution for a different lower rate of Charges to be imposed on its parcels on the basis that it had been maintaining the parcels at its own costs. The High Court held that the express conditions of the master title clearly indicate that the units in that proprietor’s parcels and other similar units are to be used as ‘commercial buildings’ and to allow different rates of Charges for units of similar use would be unjust to other parcel proprietors. In SCP Assets Sdn Bhd v Perbadanan Pengurusan PD2[3], the Plaintiff had purchased all the car parks in the development. The Defendant MC passed a resolution for the imposition of different rates of Charges for different parcels. The Plaintiff sought reliefs from the High Court for, among others, the imposition of a single rate of Charges based on the allocated share units. The High Court held that the MC is not permitted to impose different rates of Charges on the same types of parcels and stated that:

[66] The expression “parcels which are used for significantly different purposes” is capable of being interpreted in several different ways including –

1. the use for different purpose can mean different category of land use, such as “commercial”, “industrial”, “residential”…;
2. the use for different purpose can mean a change in the use of the parcel subsequent to the original use when the parcel was completed and originally used, as is contended by the Plaintiff here;
3. the different purposes for the use of parcels in a mixed development according to the original intent and purposes of the design in the development, although there is no change in the purpose of use by the parcel owners subsequent to the completion of the development project, as is the contention of the Defendant here;
4. the “significantly different purposes” can be interpreted to mean the other parcels being used for significantly different purpose as compared with the provisional block.

While the High Court in Perbadanan Pengurusan PD2 had delivered its decision based on the facts before it, the Court refused to embark on a journey to find the answer to the, as His Lordship deemed, “tedious and complex question” before us.

The answer, for now, is in the Court of Appeal decision of Aikbee Timbers[4]. Pearl Suria is a mixed-development project with residences, a shopping mall, and a carpark. The residences are owned by individuals, the shopping mall by the Developer (Aikbee Timbers), and the carpark by a company known as Sit Seng & Sons Realty (Sit Seng). At the first Annual General Meeting (AGM), the MC passed a resolution that rates of Charges to be paid by owners of the residential parcel would increase, whilst the rates of Charges to be paid by owners of the commercial parcel would remain unchanged, as the residential parcel owners were exclusively using the common facilities in the development. A parcel proprietor from the residential unit mounted a challenge at the High Court for the imposition of a uniform rate of Charges. The High Court held in his favour and required Aikbee Timbers and Sit Seng to pay ‘back-charges’ of the Charges, i.e. the shortfall for all the years in which a different rate was applied. The Developer, Sit Seng, and the MC appealed to the Court of Appeal, and asked, amongst others, the following question:

‘Whether the MC is entitled under the law to fix different rates of maintenance charges and contribution to the sinking fund for parcels which are different in nature or purpose?’

The Court of Appeal took into consideration the dicta in Perbadanan Pengurusan PD2 and the High Court decision in Sodalite Sdn Bhd[5], which held, inter alia, that “the MC has the powers to differentiate the different type of charges to be imposed on proprietors subject to the condition that the said power must not exceed the two limitations above. The said charges must be proportional to the share units of each parcel and if any different rates are to be applied it must be shown that these parcels are used for significantly different purposes”.

The Court of Appeal in Aikbee Timbers ultimately held that “there are significantly different purposes in the use of the parcels for this development in that there are parcels used for residential purpose and there are parcels used for commercial (mall and car park) purposes” and that the “sums charged must be just in the sense that one must pay for what one is entitled to enjoy and to share his responsibility with those who share the same rights and benefits. The sums charged must be reasonable in the sense that the identified expenses for the common property must not be excessive or unreasonable”. Based on the facts of the case, the total expenditure for the residential parcels far exceeded that of the commercial parcels, and thus, it would be unjust and unreasonable for the commercial parcels to share the expenses. The Federal Court refused the application for leave to appeal this decision.

Nevertheless, the Court of Appeal in the recent decision of Perbadanan Pengurusan Springtide Residences[6] had taken a different approach from the ‘just and reasonable’ route enunciated in Aikbee Timbers and held that “if the legislature had intended for the application of the “just and reasonable” test in s 60(3)(b) SMA, such a test would have been easily inserted by Parliament in that provision”. Although, this case can be distinguished in that the different rates of Charges applied by the MC were for a development area with parcels that have the same use, i.e. for residential purposes only.

Can we, therefore, safely say that the test for “significantly different purposes” is that as enunciated by the Court of Appeal in Aikbee Timbers, i.e. that the imposition of different rates of Charges must be for parcels used for different purposes, and the difference must be significant, and that it must be ‘just and reasonable’ to do so?

This may only be the tip of the iceberg.

[1] Muhamad Nazri bin Muhamad v JMB Menara Rajawali & Anor [2020] 3 MLJ 645

[2] Plaza Pekeliling Management Corporation v Fitters Building Services Sdn Bhd [2017] 1 LNS 2231

[3] [2021] MLJU 623

[4] Aikbee Timbers Sdn Bhd & Anor v Yii Sing Chiu & Anor and another appeal [2024] 1 MLJ 948

[5] Sodalite Sdn Bhd & Ors v 1 Mont’ Kiara and Kiara 2 Management Corp & Ors [2021] 12 MLJ 116

[6] Yong Kein Sin & Anor v Perbadanan Pengurusan Springtide Residences and other appeals [2025] MLJU 1469