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2014 MarsdenLR 848

HIGH COURT MALAYA KUALA LUMPUR
MAGNIFICIENT DIAGRAPH SDN BHD – Appellant
Versus
PERBADANAN PENGURUSAN ENDAH PARADE – Respondent
[Originating Summons No: 24NCVC-2068-2011]



Service charge increases must adhere to procedural notice requirements and proper quorum calculations based on ownership shares to ensure validity in strata management decisions.

Headnote:(A) Strata Titles Act 1985 - Sections 10 and 46 - Management of strata-titled properties - Plaintiff, owner of distinct share units within a commercial complex, challenged the validity of service charge increases and right to vote at AGMs - Court held that notice of important matters must be provided, and quorums must be correctly calculated based on ownership share - Decisions at meetings lacking proper notice or quorum are invalid (Paras 1, 4).

(B) The Plaintiff was wrongfully deprived of participation in decision-making at the AGMs, leading to a significant financial burden contrary to statutory obligations (Para 4).

(C) Previous court rulings established that most charges claimed by the Defendant were ultra vires, further validating the Plaintiff’s position (Paras 4.2, 4.5).

(D) The Court’s interpretation of quorum reflects that the aggregate share units owned by attendees must be counted, affirming decisions made in analogous case law (Paras 4.3, 4.5). (E) The validity of resolutions passed without stringent adherence to procedural requirements was emphasized, reinforcing the need to respect legal norms (Paras 3.xi, 4.vi). (F) The Plaintiff's rights reinstated and resolutions deemed null and void due to lack of notice and improper quorum requirements - Appeal granted. (

Result: Originating summons granted with costs)

Table of Content
1. ownership of properties and management corporation details. (Para 1 , 1 , 2)
2. plaintiff's claim for rights and duties regarding management fund. (Para 3)
3. court required to respect previous judgments. (Para 4)
4. court orders and final resolutions granted. (Para 5)
5. mistakes in quorum calculations impact validity of resolutions. (Para 6 , 7 , 8 , 9 , 10)

[1] [i] The Plaintiff ["MDSB"] is the owner of property which comprises two lots that is Lot LG-001 and Lot NEW OFFICE ["Lots"] within the commercial complex known as Endah Parade Shopping Complex ["Complex"] and represents 65,636 shares units or 26.9% out of the total 243,524 share units of the entire Complex.

[ii] The Plaintiff had purchased the Lot LG-001 by way of a Sale and Purchase Agreement ["SPA"] dated 28 June 1996 between the Plaintiff and Alpha-Lab Sdn Bhd and Soon Teik Development Sdn Bhd ["Developers"]. It was registered as proprietor of Lot LG-001 on 6 March 2010.

[iii] The Plaintiff was at the material time, operating the chain of hypermarkets under the trade name "Carrefour" in Malaysia, including one outlet at Lot LG-001 at the Complex.

[iv] The Plaintiff purchased Lot NEW OFFICE and became the registered proprietor on 2 November 2009.

[v] The Defendant is the Management Corporation of the Complex. The Management Corporation was formed on 5 April 2007. Prior to the establishment of the Defendant, the Complex was managed by EP Management Services Sdn Bhd ["EPMS"] pursuant to a property management agreement between the original proprietor and developer. After the establishment of the Defendant, EPMS continued to manage the Complex as an agent of the Defendant.

[vi] Since the establishment of the Defendant, two AGMs of the Defendant have been held that is on 19 April 2010 ["1st AGM"] and on 7 July 2011 ["2nd AGM"] and the Plaintiff was already the registered proprietor of the Lot NEW OFFICE when the 1st AGM was convened and of Lot LG-001 when the 2nd AGM was convened.

[vii] On 21 April 2011, the Plaintiff received two notices dated 1 April 2011 from EPMC. The notices stated that pursuant to the 1st AGM, it was decided by majority votes by all eligible registered proprietors / parcel owners that the Council of the Defendant shall review the contribution to the Management Fund which was to be paid into a Special Account [Sinking Fund Account].

[viii] It was further stated that after such study and review, the said Council unilaterally determined that with effect from 01 April 2011, the portion of contribution to the Management Fund by the proprietors/parcel owners to be paid into the Sinking Fund Account would be increased by 15% of the current service charges.

[ix] On 27 June 2011, the Plaintiff received a Notice on the convening of the 2nd AGM specifying 3 agenda items therein namely the adoption of the Audited Accounts for the year ended 31 December 2010, reappointment of auditors and election for members of the Defendant.

[x] At the 2nd AGM, the Defendant purportedly resolved, without prior notice, to increase the monthly service charges imposed on the Plaintiff from RM0.93 per share unit to RM2.03 per share unit. The effect of this increase in monthly service charges is that only the Plaintiff is adversely affected by this said increase whereas all other lot owners enjoyed a reduction of service charges.

[xi] The Plaintiff was not allowed to vote at either of the 2 AGMs on account of certain disputed sums being allegedly due to the Defendant.

[2] [i] Arising from the 2nd AGM, the Plaintiff herein filed the Originating Summons against the Defendant, Perbadanan Pengurusan Endah Parade on 11 August 2011 seeking the following 11 prayers.

[1] A declaration that the 15% increase in the portion of contributions to the management fund to be paid by the Plaintiff into the special account established under Section 46 of the Strata Titles Act 1985 in respect of the Plaintiff's Property, as notified by the Defendant to the Plaintiff vide a notice dated 1 April 2

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