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2023 MarsdenLR 2467
HIGH COURT SABAH & SARAWAK KOTA KINABALU
ACTIVE WATER SDN BHD – Appellant
Versus
SAGAJUTA (SABAH) SDN BHD (IN LIQUIDATION) & ORS – Respondent
[Suit No: BKI-22NCvC-71/9-2022]
The obligation to pay service fees is binding and must be uniformly enforced across all unit owners in a shared property development.
Headnote:This judgment addresses the dispute concerning service fees owed by the Plaintiff for a condominium unit, wherein the Plaintiff contended that previous arrangements justified non-payment. The Court elucidated that the Service Fees are mandated under the Sale and Purchase Agreement (S&P) and a Deed of Mutual Covenants. The Court's primary finding was that no valid reduction arrangement existed, and the Plaintiff's failure to pay was a breach of their obligations, justifying the actions of the 3rd Defendant as the manager of the property. The issues included the fairness of enforcing service charges and the legal authority of the 3rd Defendant. The Court reasoned that service charges must be uniformly applied to all owners, and thus upheld the obligation to pay full amounts owed. The order allowed a short extension for payment but ultimately dissolved the previous injunction.
| Table of Content |
|---|
| 1. initial injunction granted due to service fee dispute. (Para 1 , 2 , 4 , 5) |
| 2. court's ruling on contractual obligations and service fee responsibilities. (Para 6 , 7 , 8) |
| 3. legal background on property management and ownership responsibilities. (Para 9 , 10 , 11 , 12 , 13 , 14) |
| 4. details regarding the sale and purchase agreement and its implications. (Para 15 , 16 , 17 , 18) |
| 5. final orders issued by the court regarding the injunction and costs. (Para 19 , 20) |
Preliminary
[1] An Interim ex parte injunction was earlier allowed in favour of the Plaintiff, an owner of a Penthouse ("Penthouse") in a condominium development within a mixed residential and commercial project in Kota Kinabalu known as Prince Tower, 1 Borneo, Jalan Sulaman ("Prince Tower" and "the Project") against the 3rd Defendant.
[2] Briefly, the Plaintiff fell into arrears in the payment of the service fees or contribution to the management fund ("Service Fees") for the Penthouse which it was contractually obligated to pay under the Sale and Purchase Agreement and an accompanying Deed of Mutual Covenants signed by the Plaintiff with the 1st Defendant when it purchased the Penthouse.
[3] The Plaintiff alleged an arrangement with an earlier manager of Prince Tower for a reduction in the Service Fees and the arrears to be paid in instalments.
[4] The 3rd Defendant was recently appointed to manage Prince Tower and without any record of such arrangement for the reduction of the Service Fees, enforce the payment of the outstanding arrears by first demanding payment of the same and failing that, and in accordance with the terms of the relevant Sale and Purchase Agreement, terminated the Plaintiff's use of facilities such as water and access to use the lifts.
[5] The Plaintiff applied ex parte and obtained an interim injunction from my learned brother judge, YA Wong, requiring the 3rd Defendant to restore the Plaintiff's use of the facilities enjoyed by the Penthouse located in Prince Tower as well as access to lifts, among others.
My Decision On The 5 January 2023 With Reasons
[6] Following the inter-parte hearing before me, on the 5 January 2023, I dissolved the injunction granted on the 12 September 2022 but allowed a short ad interim extension of four clear days to the 12 January 2023 to afford the Plaintiff an opportunity to regularize its accounts with the 3rd Defendant in relation to the Service fees due and owing.
[7] The summarized reasons for my decision follows:
(a) When the Plaintiff purchased the Penthouse ("Penthouse") at Prince Tower, 1 Borneo, ("the Project") with a staggering floor area of 11,920 sq feet and for the purchase price of RM4.213 million, the legal relationship between the parties was then of developer/contractor/1st Defendant and purchaser/Plaintiff. The obligation of the 1st Defendant was to construct the Penthouse in accordance with approved plans and the Purchaser to pay the agreed purchase price progressively;
(b) When the building was completed as evidenced by the issuance of the Certificate of Fitness for Occupation and after the Purchaser had taken possession of the Penthouse, the legal roles of the parties and their relationship inter se change dramatically;
(c) Although there were still some residual duties of the 1st Defendant as Contractor (such as liability to make good defects), it became, by and large the Interim Manager of the common property of the Project, pending the formation of the formal Management Corporation, by operation of law, under the Land (Subsidiary Title) Enactment 1972 (" LSTE ");
(d) The responsibility of the Purchaser becomes that of an owner having to live in harmony with the other owners of Prince Tower and the Project, and for this the Plaintiff signed a Deed of Mutual Covenants in common and together with all the other purchasers in the project including the 1st Defendant. Such Deed supplements the principal obligations in the Sale and Purchase Agreement ("S&P")
