The acquisition authority must compensate the management corporation for common property when strata units are compensated, in accordance with fair market value principles, preventing under-compensation or double counting.

DECISION

Tee Geok Hock JC:

Introduction

[1] This Land Reference involves a very important question of law of wide implications to property owners and management corporations of strata developments in Malaysia.

[2] The question of law is whether, after having compensated the parcel owners of strata units for the market values of their respective strata units, the acquisition authority can acquire the common property in the same strata development in the same acquisition process without paying any value to the management corportion of the strata development.

[3] In our present land reference, the Land Aministrator has taken the position that the management corporation in such land acquisition scenario should not get any monetary compensation whatsoever for the common property in the strata development, whereas the Appellant (management corporation) has taken the position that it is entitled to a reasonable compensation for the common property in the strata development which has been acquired in the same process as the acquisition of the strata units in the same development.

[4] When this matter first came up for hearing and decision previously, this Court directed the parties to do further legal research and file and exchange supplementary submissions on this important question of law which, according to the understanding of this Court based on both counsel's feedback, has still not been covered by any reported judgment of the Court in Malaysia on this question of law.

Background

[5] A brief summary of the subject land and the land acquisition are as follows:

2.1 Subject Land:

Title No GM472 Lot 43171 s 14 Bandar Ampang Daerah Hulu Langat, Selangor.

2.2 Gazette No/Date: 2081/23 July 2015

2.3 Date of service of Borang E: 21 August 2015

2.4 Date/Area (Borang G): 18 October 2016/3895 M2 (41,926 sq ft)

2.5 Date/Area (Borang H): 18 October 2016/3895 M2 (41,926 sq ft)

2.6 Project: Projek Lebuhraya Bertingkat Sungai Besi-Ulu Kelang (SUKE) Daerah Ulu Langat, Negeri Selangor.

2.7 Area of Subject Lot: 3895 M2 (41,926 sq ft)

2.8 Area of the acquired land: 3895 M2 (41,926 sq ft)

2.9 Category of land use: Building

2.10 Status/tenure: freehold

2.11 Compensation awarded by Land Administrator for the Common Property:

Land: Nil.

Building: Nil.

Others: 46,190.00 (disturbance of business & building maintenance)

Question Of Law

[6] Firstly, it is clear law that a management corporation, upon its incorporation, is a legal entity separately from the parcel owners in the strata development: see s 39(3) of the Strata Titles Act 1985 and s 20 of the Strata Management Act 2013 , Lionel Yew Wei Ming & Anor v. Menara Duta Management Corporation, [2019] 7 AMR 660 (Su Geok Yiam J).

[7] Secondly, the common property is not part of a parcel or accessory parcel which is owned by an individual unit owner in the strata development, as is self-evident in the statutory definition of "common property" set out below and also the judgment of Idrus Harun JCA (later FCJ) in E&O Trading Sdn Bhd v. Americk Singh Sidhu & Ors, [2018] 6 MLJ 783 at para [22]:

(i) section 4 of the Strata Titles Act 1985 :

"common property" means so much of the lot as is not comprised in any parcel (including any accessory parcel), or any provisional block as shown in a certified strata plan;

(ii) section 2 of the Strata Management Act 2013 "common property:

(a) in relation to a building or land intended for subdivision into parcels, means so much of the development area:

(i) as is not comprised in any parcel or proposed parcel; and

(ii) used or capable of being used or enjoyed by occupiers of two or more parcels or proposed parcels; or

(b) in relation to a subdivided building or land, means so much of the lot:

(i) as is not comprised in any parcel, including any accessory parcel, or any provisional block as shown in a certified strata plan; and

(ii) used or capable of being used or enjoyed by occupiers of two or more parcels;

[Emphasis Added]

[8] In the third place, it is clear law that the management corporation upon its co