Developers can legally grant leases on common properties in strata developments without retrospective restrictions, and service charges must align with allocated share units to prevent discrimination.

Tee Geok Hock JC:

Introduction

[1] At times, a developer of a stratified development strategized its sale and marketing of strata parcels in the development which has the effect of maximising its profits from the development but which is not conducive to the peace and common well being of the parcel purchasers who become its successors-in-title in the parcels of the stratified development.

[2] The disputes in our present case, though being litigated between the Plaintiff-purchaser and the Defendant-management corporation, are inherited from the developer who sold the majority of the carparking bays in a high-rise strata commercial development separately to another legal entity who in turn sold the carparking bays to the Plaintiff-purchaser.

[3] In our present case, the developer sold all except one of the strata parcels in the high-rise commercial development without any car parking bay accessorised to the strata parcels and sold the great majority of the carparking bays separately as different parcels. The Plaintiff, who eventually bought the car parking bays from the developer's associate or affiliate company, is now embroiled in several litigations, including the present case, with the management corporation who took over the management and maintenance of common properties and the stratified development from the developer.

Background And Salient Facts

[4] The Defendant is the Management Corporation of Phileo Damansara 2 Commercial Development ("PD2 Commercial Development") and was incorporated pursuant to the Strata Management Act 2013 (" SMA 2013").

[5] PD2 Commercial Development is a mixed commercial development consisting of ground floor shop units, office units, Menara Star and carparks.

[6] A car park space consisting of, (a) three (3) levels of basement car park space at Levels B1, B2 and B3; (b) part of the car park space at Level B4; and (c) part of the surface car park space ("Car Park Parcels") was acquired by PD II Corporate Parking Sdn Bhd from the developer of PD2 Commercial Development, Affinity Land Sdn Bhd ("Developer").

[7] On or about sometime in December 2013, the Plaintiff (pursuant to an internal restructuring exercise) acquired the Car Park Parcels from PDII Corporate Parking Sdn Bhd.

[8] The Joint Management Body of the PD2 Commercial Development was established on or about 17 December 2012 and following the issuance of the strata titles, the Management Corporation ("the Defendant") was established on or about 21 January 2014.

[9] The Defendant, on 12 October 2017 issued a Notice of the 1st Annual General Meeting of the said Defendant (scheduled for 27 October 2017) with a view to inviting the proprietors of the various parcels in the said PD2 Commercial Development to resolve on, among others, the Proposed Ordinary Resolution No 4 ("Resolution No 4").

[10] The Plaintiff's claim herein is premised on the fact that Resolution No 4 for intended implementation by the Defendant is, according to the Plaintiff's argument, ultra vires the SMA 2013 and/or the Strata Titles Act 1985 (" STA 1985") since Resolution No 4 runs foul of the concept of share units as envisaged by 2013 and/or 1985.

[11] It is undisputed that prior to the issuance of the strata titles for the parcels, the allocated share units as determined by the licensed surveyor of the Developer of the PD2 Commercial Development had been approved by the relevant authorities. The usage of all parcels comprised in the PD2 Commercial Development (inclusive of the Car Park Parcels) has never changed from the original purpose and remain the same at present.

[12] Resolution No 4 among others resolved to impose different rates of service charges for the first time on the different parcels (including in particular the Car Park Parcels) within the Commercial Development.

[13] The Plaintiff also submitted that in proposing Resolution No 4, the Defendant was also aware of the following:

(a) Pursuant to an Order of Court dated 20 April 2016 (Shah Alam High Court Origin