Introduction
As Malaysia continues its trajectory towards the rapid growth of high-rise and mixed developments, the issue of variation of maintenance charges in strata properties has come to the fore. Strata properties, which involve residential parcels such as flats, apartments and townhouses, or commercial parcels such as shophouses, office units, and car parks, are generally equipped with common facilities that are managed and maintained out of the maintenance charges from parcel owners.
However, disputes over the calculation of these charges and whether these charges may be varied among different parcels remain one of the most contentious legal issues within the last decade. In recent years, the Malaysian courts have shed some light on how maintenance charges can be varied, balancing statutory provisions with commercial practicality.
This article will examine the recent judicial developments on the variation of maintenance charges in strata properties, focusing on key cases, statutory interpretations, and their implications for parcel owners, developers, and management corporations.
Recent Judicial Developments
1. Aikbee Timbers Sdn Bhd & Anor v Yii Sing Chiu & Anor[1](“Pearl Suria”)
The strata properties involved in this 2024 case are known as Pearl Suria, which is a mixed development comprising residential units, a shopping mall, and a car park block. The first appellant is the developer of the development and the owner of the shopping mall. The second appellant is the owner of the car park block, while the third appellant is the management corporation (“MC”) of the development. The mall and the car park are the only commercial parcels (“Commercial Parcels”) in the development. The first respondent, on the other hand, is one of the owners of the residential units (“Residential Parcels”).
In January 2019, during the preliminary period, the respondent discovered that the developer had imposed higher rates for the maintenance charges and contributions to the sinking fund (“Contributions”) for Residential Parcels than the Commercial Parcels. In April 2019, after the preliminary period and after MC officially took over the management, the MC had increased the rates for Residential Parcels, but maintained the rates for Commercial Parcels. Dissatisfied with the different rates during both periods, the respondent brought an action by way of Originating Summons, and the High Court (“HC”) subsequently ruled that the different rates for the maintenance charges and contributions were illegal, as the rates for all parcels shall be the same.
However, the Court of Appeal (“CoA”) overturned this decision, allowing the different rates for both of the periods. In regards to the rates during the preliminary period, CoA firstly held that Section 52(2) of the Strata Management Act 2013 (“SMA 2013”) empowered the developer to vary the rates of maintenance charges and contributions, as the section expressly mentioned that “the charges shall be determined by the developer”. Secondly, Section 52(6) of the SMA 2013 stated that “any proprietor who is not satisfied with the sums determined by the developer may apply to the commissioner for a review”. The word “sums” here indicated that there could be more than one rate for the maintenance charges and contributions that can be imposed. Moreover, if the rate is meant to be fixed and cannot be varied, there would be no reason for the provision to allow the commissioner to review the charges or to appoint a property manager to recommend the sum payable for the charges.
Accordingly, in respect of the rates after the preliminary period, the CoA held that Section 60(3)(b) of the SMA 2013 empowered the MC with the power to impose different rates of maintenance charges and contributions for parcels which are “used for significantly different purposes”. The CoA further elucidated that the phrase “used for significantly different purposes” connotes the distinct use of the parcel, namely whether it is used as a residential parcel or a commercial parcel. Moreover, Section 65 of the SMA 2013 read together with Section 17A of the Strata Title Act 1985 recognised that there could be common property exclusively for the benefit of certain proprietors, and these proprietors are to share and contribute to those expenses to maintain the exclusive common property.
Similarly, in the present case, the exclusive common facilities or common property which were funded out of the maintenance charges and contributions are exclusively for the use of the Residential Parcels owners, and not Commercial Parcels owners. Therefore, it should be the responsibility of the Residential Parcels owners to share the expenses or estimated expenses for the maintenance and management of the exclusive common facilities.
Further, the test to determine the chargeable rates of the maintenance charges and contributions can be derived from Sections 12(8) and 52(7) of the SMA, which is by the principle of “just and reasonable”. This means 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.
Hence, since the Commercial Parcels owners were excluded from enjoying the exclusive common facilities, they were thus excluded from bearing the cost of expenses of these facilities, thereby justifying their different rates for maintenance charges and contributions to the sinking fund. The CoA’s decision to allow these varied rates was ultimately upheld in principle when the Federal Court dismissed the leave applications filed by the respondents, rendering the decision final and conclusive.
2. Perbadanan Pengurusan PD1 v SCP Assets Sdn Bhd[2]
The strata properties involved in this 2025 case are known as Pusat Dagangan Phileo Damansara 1, which is a mixed commercial development comprising seven blocks of shop and office parcels, one block of office towers, surface car park bays, and three levels of basement car park bays. The appellant is the MC of the development, whereas the respondent is the owner of the surface and basement car park bays.
In November 2017, following a vote by way of private motion, the MC had imposed new rates of maintenance charges that were different from the previous rates imposed by the developer. Dissatisfied with the different rates, the respondent brought an action in HC, and the HC ruled in favour of the respondent, holding that the different chargeable rates imposed by MC were unlawful.
The MC subsequently appealed to the CoA, and at this stage, the MC contended that the different rates are permissible based on direct cost allocation methodology, as the respondent’s car parks incurred higher maintenance expenditure and the original allocation of share units was inequitable. The MC relied on Section 60(3) of the SMA 2013 and its principle established in Pearl Suria’s case,[3] which allows the imposition of different rates of maintenance charges in respect of parcels that are “used for significantly different purposes”. However, the CoA had distinguished Pearl Suria’s case from the present case, as Pearl Suria is a mixed development, comprising Residential Parcels and Commercial Parcels, whereas in the present case, all parcels in the development are commercial parcels. Hence, since the parcels are not “used for significantly different purposes” as all the parcels are commercial, the CoA upheld the HC’s decision, holding that the different chargeable rates imposed by MC were unlawful.
Conclusion
In conclusion, the recent judicial developments have shown that variation of maintenance charges in strata properties is not inherently unlawful, but is subject to the statutory framework, particularly the SMA 2013. It is evident that the MC may vary or impose different chargeable rates for the maintenance charges and contributions to the sinking fund, provided that the parcels are “used for significantly different purposes”. The phrase “used for significantly different purposes” under Section 60(3) of the SMA 2013 can be further understood as parcels that are used distinctly, namely whether they are used for residential parcels or commercial parcels. The test to determine the chargeable rates shall be based on the principle of just and reasonable, which means 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. All in all, in light of these judicial developments, developers, MCs, and any other relevant bodies must ensure that any variation in maintenance charges shall be just, reasonable, and aligned with the established legal principles.
For further information, please contact:
Tengku Assila Maisara Tengku Adnan Mahadzir, Azmi & Associates
tengku.assila@azmilaw.com
- [2024] 1 MLJ 948.
- [2025] 6 MLJ 283.
- [2024] 1 MLJ 948.
