by MH Law | May 29, 2024 | Legal Updates | Case Spotlight
Overview
In AUM Capital Sdn Bhd v Menara UOA Bangsar Management Corporation [2024] 3 AMR 662, the Court of Appeal clarified that the exclusivity or extent of use by parcel owners does not determine whether a facility constitutes "common property" under the Strata Management Act 2013 (SMA 2013). The judgment reinforces that common property is defined primarily by its location—outside of private parcels—and not by the degree of benefit derived by specific proprietors.
Brief Facts
Menara UOA Bangsar, a mixed-development property, consists of parcels in two office towers, a retail podium, and car parks. Most parcels are owned by UOA Real Estate Investment Trust.
The centralized air conditioning facilities (CACF) serve both common areas and specific private parcels in Tower B and the retail area.
The appellant challenged the classification of the CACF as common property, arguing that its benefits disproportionately favored specific proprietors.
Legal Issues and Findings
Is CACF "Common Property"?
The SMA 2013 defines common property as areas not within any private parcel, irrespective of usage or benefit.
Both the High Court and the Court of Appeal confirmed that CACF is common property, as it is located entirely outside private parcels.
Responsibility for CACF Maintenance Costs
The management corporation (MC) is statutorily obligated under Section 59(1)(a) of the SMA 2013 to manage and maintain common property.
This duty includes bearing operating expenses, even if some parcels benefit more than others.
Reimbursement for CACF Costs
The appellant argued the MC should recover costs from proprietors who benefited more significantly.
Courts held that Section 59(3)(b) SMA 2013 applies only when expenditures benefit specific parcels exclusively—not when common property is involved. Thus, reimbursement was not required.
Key Takeaways
Location vs. Benefit
The primary determinant of common property is its physical location, not who benefits or to what extent. This principle prevents fragmented management responsibilities and ensures consistency.
Non-Delegable Duty
The MC cannot delegate its statutory responsibility for maintaining common property, even if some parcels enjoy greater benefits. This reinforces the equitable nature of strata property management.
Fairness in Cost Allocation
Section 17A of the Strata Titles Act 1985 allows for the designation of "limited common property" and creation of subsidiary MCs. This mechanism can help ensure fairness when certain facilities are used exclusively by specific proprietors.
Comments
This decision highlights the need for clarity in managing mixed-use developments. While the SMA 2013 promotes collective responsibility for common property, the lack of reimbursement provisions for disproportionate benefits may frustrate some parcel owners. A legislative review could consider balancing collective obligations with fairness for proprietors who derive limited or no benefit from specific facilities.
Moreover, property developers and MCs should proactively explore the use of limited common property to minimize disputes and foster greater transparency in cost-sharing arrangements.
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