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2025 MarsdenLR 5398
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]
A developer's pledge to absorb maintenance fees does not absolve its statutory duties to collect and remit such fees. Silence in response to demand constitutes acceptance of liability.
Headnote:(A) Strata Management Act, 2013 - Sections 9(3), 12(2), and 15 - Breach of statutory duties by Developer during Management Period - Developer failed to collect maintenance fees and sinking fund charges as pledged - Developer admitted to the debt owed to Joint Management Body (JMB) for unpaid charges - Established that the Developer's pledge to absorb charges did not absolve its legal obligations - Appellant's silence on demand letters constituted acceptance of liability. (Paras 49, 57, 70)
(B) Appeal - Grounds of appeal dismissed - No errors in fact or law by the High Court - Developer must fulfill statutory duty to account and remit funds to JMB despite discrepancies claimed. (Paras 72, 73)
Facts of the case:
The Developer, responsible for management of Subang Parkhomes Condominium, failed to collect due maintenance fees and sinking fund charges during the Developer Management Period, pledging to absorb these fees for the first year. Developer's delay in providing audited accounts further compounded the issue. (Paras 3, 4, 6, 22)
Findings of Court:
It was determined that the Developer breached multiple statutory duties related to the collection and transfer of fees, resulting in affirmed liability to the Respondent-JMB. (Paras 46, 70)
Issues: The court examined whether the Developer breached statutory duties in collecting and transferring maintenance fees and charges as outlined in the Strata Management Act. (Paras 48)
Ratio Decidendi: The court emphasized that the Developer could not negate its obligations by unilaterally absorbing fees; silence in the face of demand constitutes acceptance of owed amounts. (Paras 70, 72)
Result: Appeal dismissed with costs of RM30,000.00 awarded to the Respondent.
| Table of Content |
|---|
| 1. developer's duty during management period. (Para 1 , 2 , 3) |
| 2. breach of statutory duties by developer. (Para 4 , 5 , 6 , 12 , 18) |
| 3. admission of debts and breach acknowledged. (Para 20 , 21 , 22 , 23) |
| 4. issues examined for appeal. (Para 48 , 49 , 50) |
| 5. failure to transfer funds is breach. (Para 65 , 66) |
| 6. appeal dismissed with costs. (Para 70 , 71 , 72) |
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 AppellantDeveloper 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 Parkhomes Condominium) to the Respondent.
[2] It is plain and trite law that prior to the formation of the JMB (during the Developer Management Period) it is statutorily incumbent upon the AppellantDeveloper 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 burdened with outstanding maintenance fees or sinking fund charges that remain unpaid by errant parcel purchasers. However, the facts of the Appeal before us are 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 AppellantDeveloper'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 a 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 RespondentJMB (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 Parkhomes 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 fe
