The doctrine of privity of contract negates enforceability of obligations from the DMC against the Management Corporation.

Introduction

[1] This is an appeal against an O 14 judgment granted by the Sessions Court.

[2] The appeal deals with an issue that frequently crops up between a strata unit owner and the Joint Management Body/Management Corporation. The issue is whether a rebate promised or granted by a developer of a strata development to their buyer is binding on the Joint Management Body/Management Corporation.

[3] The Plaintiff is a Management Corporation of a stratified mixed development called Soho Suites set up under the Strata Titles Act 1985 . ["Soho Suites"]. The Defendant is one of the registered proprietors of parcels within the Soho Suites.

[4] The Plaintiff had sued the Defendant in the Sessions Court for not paying to the management fund and sinking fund from 1 October 2019 to 30 April 2022 as required under the law.

[5] It is an undisputed fact that the Defendant did not pay its dues to the management fund and sinking fund.

[6] The Defendant refused to pay on the ground that under cl 10.10 of the Deed of Mutual Covenants ["DMC"] it was agreed the Defendant is to "procure the Joint Management Body or the Management Corporation (ie the Plaintiff) [as the case may be] to grant" (a 90% rebate of the service charge)".

[7] It is undisputed that neither the JMB nor the Plaintiff is a party to the DMC. The DMC was between the Land owner on which the Soho Suites is built, the developer [as vendor] and the original buyer. So, there is no privity of contract between the Plaintiff and the Defendant.

[8] Clause 10.10 of the DMC can be seen in the Reply Affidavit of Low Khian Beng dated 29 August 2022 Exhibit LKB-2. [Enclosure 3 p 417]. It reads as follows:

"10.10 Notwithstanding anything to the contrary, the Purchaser agrees that the service charge as contribution to maintenance charge payable by the owner of the car park bays belonging to the Commercial Development where the numbers and locations of the car park bays shall be as determined by the Vendor (hereinafter refer to as "the Commercial Car Parks"), shall be granted a 90% rebate of the service charge as contribution to maintenance charge payable by a parcel owner on a per square foot basis. The Purchaser undertakes and covenants together with all Other Purchasers of the Other Parcels comprised in the said Project to procure the Joint Management Body or the Management Corporation (as the case maybe) to grant such."

[Emphasis Added]

[9] The Plaintiff applied for O 14 judgment. This was granted by the Sessions Court. The Defendant appealed to me. I dismissed the appeal on 13 April 2023.

[10] The Defendant has appealed to the Court of Appeal. These are my Grounds of Judgment. Parties will be cited as they were cited at the Sessions Court.

Background Facts

Earlier 2019 Suit Between The Plaintiff And Defendant On The Same Issue Whereby The Plaintiff Had Also Sued The Defendant For Not Paying Its Dues To The Management Fund And Sinking Fund

[11] There was an earlier 2019 suit whereby the Plaintiff had also sued the Defendant for not paying its dues to the management fund and sinking fund.

[12] On 13 November 2019, the Plaintiff had commenced a Civil Suit in the Kuala Lumpur Sessions Court against the Defendant to recover the arrears in contribution in the sum of RM392,037.58 for the period from 10 February 2017 to 30 September 2019 (vide Civil Suit No:: WA-B52-65-11/2019) ("2019 Suit"). The said outstanding sum included service charges, contribution to sinking fund, quit rent, insurance premium, water meter billing and late payment interest. [Enclosure 3 p 218 - 231].

[13] In resisting the 2019 Suit, the Defendant in its Defence