Service charges under strata title property in Malaysia
Criminalising non-payment of service charge under the Strata Management Tribunal
A recent conversation with a relative on urban living raised a couple of interesting issues. One led to suggest that many high-rise buildings in Malaysia were fast becoming urban slums, of which I agreed, having noticed that although Malaysians have started living in stratified development properties, they express the devil-may-care attitude and expect “free lunch”. Clearly, there is a huge need for a paradigm shift in responsibilities with regard to community living.
This so-called freedom of not paying of service charges will come to an end with the establishment of the Strata Management Tribunal (SM Tribunal). It states that any parcel owner or tenant who fails to pay service charges, can be brought before the SM Tribunal with the implementation of the Strata Management Act 2013, Strata Management (Maintenance & Management) Regulations 2015 (June 2, 2015) and Strata Management (Strata Management Tribunal) Regulations 2015 (July 1, 2015). It is interesting to note that limitation is not applicable to the SM Tribunal and the maximum that can be claimed is RM250,000 per claim. Any non-compliance of an award (decision) of the SM Tribunal is now a criminal offence.
“Any person who fails to comply with an award made by the Tribunal commits an offence and shall, on conviction, be liable to a fine, not exceeding RM250,000 or to imprisonment for a term not exceeding three years, or both, in the case of a continuing offence, to a further fine not exceeding RM5,000 for every day or part thereof during which the offence continues after conviction.” (Section 123)
The Tribunal shall consist of the following members who shall be appointed by the Minister:
(a) a Chairman and a Deputy Chairman to be appointed from among the members of the Judicial and Legal Service; and
(b) not less than 20 other members
to be appointed from among:
(i) the persons who are members of or who have held office in the Judicial and Legal Service; or
(ii) the persons who are admitted as advocates and solicitors under the Legal Profession Act 1976 [Act 166], the Advocates Ordinance of Sabah [Sabah Cap. 2] or the Advocates Ordinance of Sarawak [Sarawak Cap. 110], and who has no less than seven years’ standing, each appointed for a period of three years.
JURISDICTION OF TRIBUNAL
The Tribunal shall have the jurisdiction to hear and determine any claims where the total amount in respect of which an award of the Tribunal is sought, does not exceed RM250,000 or such other amount, as may be prescribed to substitute the total amount.
Claim can be filed in relation to the following:
1. A dispute or complaint concerning an excercise or the performance of, or the failure to exercise or perform, a function, duty, or power conferred or imposed by Strata Management Act 2013 or the by-laws;
2. A dispute cost costs or repairs in respect of a defect in a parcel, building or landed intended for subdivision into parcels, or subdivided building or land, and its common property or limited common property;
3. A claim for the recovery of charges, or contribution to the sinking fund, or any amount which is declared by the provisions of this Act as a debt;
4. A claim for an order to convene a general meeting;
5. A claim for an order to invalidate proceedings of meeting where any provision of the Act has been contravened;
6. A claim for an order to nullify a resolution where voting rights has been denied or where due notice has not been given;
7. A claim for an order to nullify a resolution passed at a general meeting;
8. A claim for an order to revoke amendment of by-laws having regard to the interests of all the parcel owners or proprietors;
9. A claim for an order to vary the rate of interest fixed by the joint management body, management corporation or subsidiary management corporation for late payment of charges, or contribution to the sinking fund;
10. A claim for an order to vary the amount of insurance to be provided;
11. A claim for an order to pursue an insurance claim;
12. A claim for compelling a developer, joint management body, management corporation or subsidiary management corporation to supply information or documents;
13. A claim for an order to give consent to effect alterations to any common property or limited common property; or
14. A claim for an order to affirm, vary or revoke the Commissioner of Building’s decision.
The Orders that the SM Tribunal can make are:
1. Pay a sum of money to another party.
2. Order the price or other consideration paid by a party to be refunded to that party.
3. Order the payment of compensation or damages for any loss or damage suffered by a party.
4. Order the rectification, setting aside or variation of a contract or additional by-laws, wholly or in part.
5. Order costs to or against any party to be paid.
6. Order interest to be paid on any sum or monetary award at a rate not exceeding eight per centum per annum.
7. Dismiss a claim which it considers to be frivolous or vesatious.
8. Any other order as it deems just and expedient.
9. Make such ancillary or consequential orders or relief as may be necessary to give effect to any order made by the Tribunal.
EXCLUSION OF JURISDICTION OF COURT
Where a claim is filed with the SM Tribunal and the claim is within the Tribunal’s jurisdiction, the issues in dispute in that claim, whether as shown in the initial claim or as emerging in the course of the hearing, shall not be the subject of proceedings between the same parties in any court unless:
(a) the proceedings before the court were commenced before the claim was filed with the Tribunal; or
(b) the claim before the Tribunal is withdrawn, abandoned or struck out.
This means that a claimant has to decide in advance as to which forum he has to file a case because having filed a case in the SM Tribunal means he cannot file the proceed in the same courts or vice versa.
PERSONS ENTITLED TO FILE A CLAIM
This is a free for all Tribunal with many claimants and they are:
(a) a developer;
(b) a purchaser;
(c) a proprietor, including an
(d) a joint management body;
(e) a management corporation;
(f) a subsidiary management
(g) a managing agent; and
(h) any other interested person, with the leave of the Tribunal. Filing procedure is inexpensive, pay only RM20 and simply fill in the required forms. These forms have not been uploaded yet on the KPKT web site but requests can be made by email.
RIGHT TO APPEAR AT HEARINGS
At the SM Tribunal, no party shall be represented by an advocate and solicitor at a hearing unless, in the opinion of the Tribunal, the matter in question involves complex issues of law and one party will suffer severe financial hardship if he is not represented by an advocate and solicitor. A corporation or unincorporated body of persons may be represented by a full-time paid employee of the corporation or body. The Tribunal may conduct the proceedings in such manner as it considers appropriate, necessary or expedient for the purpose of ascertaining the facts or law in order that it may determine a claim.
FAST DISPOSAL OF CASES
The SM Tribunal shall make its award without delay and, where practicable, within sixty days from the first day of the hearing before the Tribunal commences. In making an order under subsection (3), the Tribunal shall have regard to:
(a) the relevant provisions of this
(b) the interest of all parcel owners or proprietors in the use and enjoyment of their parcels or the common property or limited common property. The award given are final and binding on all parties to the proceedings and are be deemed to be an order of a court and be enforced accordingly by any party to the proceedings. However, any person dissatisfied with the decision of the SM Tribunal can, apply to the High Court challenging the award in the proceedings on the ground of serious irregularity affecting the awards which means an irregularity of one or more of the kinds which the court considers has caused substantial injustice to the applicant.
With the establishment of the SM Tribunal there is hope for better maintenance and management culture to spur our quest to become a developed nation and zero nonpayment issues.