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Case Update: Different rates may be imposed for maintenance charges in stratified mixed development

by | Jul 2, 2024 | Featured, Law, Strata Management

Case Update : Different rates may be imposed for maintenance charges and sinking charges used for different purposes in stratified mixed development.

 

Aikbee Timbers Sdn Bhd & Anor v Yii Sing Chiu & Anor and another appeal

 

Decision – In delivering the landmark decision, the Court of Appeal has unanimously held that the SMA  2013 permitted a developer/MC to impose different chargeable rates for the maintenance charges for parcels used for significantly different purposes in a mixed development project.

 

In a mixed development, the expenses incurred to maintain and manage common facilities that were exclusively for the benefit, use and enjoyment of the residential parcel owners could not be included in the formula used to determine the chargeable rate to be imposed on the commercial parcel owners who had no right to enjoy the exclusive common facilities. Hence, it was not possible to impose a single chargeable rate to determine the maintenance charges for both the residential and commercial parcels. The formula to determine the chargeable rate for the maintenance charges in the Second Schedule of the SPA must be understood to apply to a group of common proprietors who had the same rights and enjoyed the same benefits of the same common facilities and common property.

 

Since the mixed development in this case consisted of parcels that were used for more than one type of purpose, namely residential and commercial, the MC was empowered by law to charge the different parcels different maintenance rates. Further, the test for determining the chargeable rates for different parcels was they must be ‘just and reasonable’. The sums charged must be just in the sense that one must pay for what one was entitled to enjoy and to share his responsibility with those who shared the same rights and benefits. And they must be reasonable in the sense that the identified expenses for the common property must not be excessive or unreasonable.

 

Key Takeaway – MC can impose different rates of charges for different types of property provided that certain requirements are met. The requirements, among others are,  proper budget, ensuring fairness and reasonableness and approved at the Annual General Meeting (AGM).

Norazalina Hairuddin

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