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2025 MarsdenLR 6009
COURT OF APPEAL PUTRAJAYA
ZEN ESTATES SDN BHD – Appellant
Versus
BADAN PENGURUSAN BERSAMA SUBANG PARKHOMES – Respondent
[Civil Appeal No: B-02(NCVC)(W)-140-01/2023]
Developers are statutorily obligated to collect maintenance fees and sinking fund charges, and cannot absolve themselves of this duty by pledging to absorb costs.
Headnote:(A) Strata Management Act 2013 - Sections 9(3), 12(2), and 15(1)(a) - Appeal against High Court decision on statutory breaches by Developer - Developer failed to collect maintenance fees and sinking fund charges during management period, breaching statutory duties - Developer's pledge to absorb fees does not negate its obligation to collect - Court affirms High Court's findings on breaches and dismisses appeal. (Paras 1-72)
(B) Statutory Duties - Developer's obligations include collecting fees from itself for unsold units and transferring balances to JMB - Developer cannot claim errant purchasers failed to pay when it did not bill them. (Paras 4, 57)
(C) Estoppel - Developer is barred from denying accuracy of accounts it previously admitted. (Paras 60-64)
Facts of the case:
The Appellant-Developer failed to collect maintenance fees and sinking fund charges from both sold and unsold units during the Developer Management Period, despite pledging to absorb these fees for the first year. The Respondent-JMB was established on 25 June 2016, and the Developer delayed transferring the required funds for 18 months. (Paras 1-6)
Findings of Court:
The court found that the Developer breached its statutory duties by failing to collect and transfer maintenance fees and sinking fund charges, confirming the High Court's ruling. (Paras 46-66)
Issues: The main issues were whether the Developer breached its statutory duties regarding fee collection and fund transfer. (Paras 48-49)
Ratio Decidendi: The court held that the Developer's failure to collect maintenance fees is a breach of its statutory duties, and its pledge to absorb fees does not exempt it from these obligations. (Paras 57-71)
Result: Appeal dismissed with costs of RM30,000.00 to the Respondent.
JUDGMENT
Introduction
[1] The Appeal before us is an appeal by the Appellant against the High Court 's decision allowing the Respondent's claims against the Appellant-Developer for numerous breaches of statutory duties of a Developer during the Developer Management Period (prior to the handover to the Respondent-Joint Management Body ("JMB") as well as after the Appellant's handover of the "development area" (Subang Parkhome Condominium) to the Respondent.
[2] It is plain and trite law that prior to the formation of the JMB (during the Deveolper Management Period) it is statutorily incumbent upon the Appellant-Developer to keep distinct accounts and collect maintenance fees as well as sinking fund charges from the parcel owners (and from the Developer itself in respect of unsold units).
[3] We are most aware that the Developer ought not be blamed or be burdened with outstanding maintenance fees or sinking fund charges remain unpaid by errant parcel purchasers. However, the facts of the Appeal before us is certainly a far cry from a typical case as the Appellant-Developer here had intentionally pledged to absorb and not collect (to omit) any maintenance fees or sinking fund from parcel Purchasers for the 1st Year after delivery of vacant possession.
[4] Thus, specific to the circumstances of the Appeal before us, the Appellant-Developer's failure to account for and to fully settle the first year's maintenance fees and sinking fund charges (for both sold and unsold units) was indeed a clear instance of breach of its statutory duties.
[5] In furtherance of the Appellant-Developer's statutory breaches during the Developer's management period, it was also undisputed that the Appellant had (in breach of its statutory duty) failed to timeously transfer the sums of receivables in the maintenance fees and sinking fund accounts to the Respondent one month before the establishment of the Respondent as the JMB at the 1st Annual General Meeting.
[6] It also remains undisputed and even admitted by the Appellant that the Respondent-JMB was established as early as 25 June 2016 and that the Appellant had only furnished its signed Audited Financial Report and the relevant Statements of Account to the Respondent on 8 January 2018 (which was at least a delay of 18 months).
[7] The Audited Financial Report was prepared by an auditing firm which was appointed by the Appellant itself. In fact, the Appellant's own Directors have unequivocally signed, verified, and admitted the correctness and accuracy of the figures and receivables that were supposed to be transferred to the Respondent-JMB (of which now the Appellant somehow contradictorily insists to impugn despite its prior admission).
[8] During the hearing of the Appeal before us, it was also admitted by the learned counsel for the Appellant that the Appellant had at least thrice failed to refute or even respond to the Respondent's Notices of Demand for remittance of the receivables amount as stated within the signed Audited Financial Report, Aging Reports, and Statements of Account. In any case, it is only apt for us to appreciate the full breadth of the essential facts before we delve into our deliberations.
B. Brief Facts
[9] The Appellant, Zen Estates Sdn Bhd (formerly known as Sendi Bangga Development Sdn Bhd) ("the Developer"), was the Developer of Subang Parkhome Condominium ("SPH/the Condominium").
[10] Prior to SPH's 1st AGM to establish the Respondent-JMB, the Developer was statutorily responsible for the management of the residences as well as common properties of SPH (which includes the duty of collecting maintenance fees and sinking fund charges during the Developer's Management Period prior to the establishment of the JMB) (see s 9(3) of the Strata Management Act 2013 (" SMA "):
(3) The powers of the developer during the developer's management period shall be as follows:
a) to collect the Charges from the parcel owners in proportion to the allocated share units of their respectiv
