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Court of Appeal: A Management Corporation cannot impose different rates of charges in a fully residential scheme
Court of Appeal: A Management Corporation cannot impose different rates of charges in a fully residential scheme
by Angeline Ang
Case update: Yong Kein Sin & Anor v Perbadanan Pengurusan Springtide Residences [2025] MLJU 1469
Case update: Yong Kein Sin & Anor v Perbadanan Pengurusan Springtide Residences [2025] MLJU 1469
[Note: As at the date of this article, this decision is pending appeal in the Federal Court]
The Court of Appeal has recently delivered a judgment that limits the scope of a Management Corporation’s [“MC”] powers in determining different rates of charges under the Strata Management Act 2013 [“SMA 2013”].
In the case of Yong Kein Sin & Anor v Perbadanan Pengurusan Springtide Residences, the court deliberated on several issues, including the validity of “indemnity” by-laws and the correct procedure for raising additional funds from proprietors.
Of particular note for developers and management bodies is the court’s decision regarding different rates of charges in respect of a fully residential scheme. The Court deliberated whether the MC’s different rates are justified under Section 60(3)(b) SMA 2013, and in essence whether villas and high-rise units are “parcels which are used for significantly different purposes” in Section 60(3)(b) SMA 2013.
Facts
Facts
Springtide Residences in Penang is a luxury development comprising 2 apartment towers and 3 landed villas.
The dispute arose in respect of a resolution which was passed at the Annual General Meeting ["AGM"] of the MC, to charge two different rates of charges. The apartment owners were charged RM3.57 per share unit, while the villa owners were charged only RM1.86 per share unit.
The MC justified this discount by arguing that the villa owners had their own private swimming pools and lifts. Since the villa owners effectively maintained their own facilities and rarely used the common podium facilities (like the main pool, gym, or barbecue area), the MC felt it was not just and reasonable to charge them the same rate as the high-rise apartment proprietors.
The apartment owners disagreed. They argued that the law requires a uniform rate for all proprietors, regardless of use of facilities and how often they use the facilities.
Findings of the Court
Findings of the Court
The Court of Appeal ruled against the MC. It held that charging different rates for the villas was illegal.
The court looked at Section 60(3)(b) of the Strata Management Act 2013 (SMA), which allows different rates only if the parcels are used for "significantly different purposes."
The court clarified that "significantly different purposes" refers to the category of use. For example, distinguishing between a commercial shop lot and a residential apartment. In this case, both the villas and the apartments were used for residential purposes.
The fact that the villa owners had their own private amenities did not change the nature of their property. They were still residential owners within the same strata scheme. Therefore, the MC had no power to offer them a discount based on low usage of common facilities.
TAKEAWAY
TAKEAWAY
This ruling simplifies the financial management of strata developments but removes flexibility for MCs.
1. Usage does not dictate rates: You cannot lower maintenance charges for ground-floor owners just because they do not use the lifts, or for residents who never visit the gym. If the property type is the same (residential), the rate per share unit must be the same.
2. "Significantly Different Purposes" is strictly construed: Different rates are only permissible where parcel use is distinctly different, such as Residential vs. Commercial.
3. AGM approval invalid: Even if a majority of owners agree at an AGM that different rates of charges should apply, the SMA 2013 does not allow it. A resolution passed at an AGM cannot override the legislative intent of the Act.
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