by Angeline Ang

Icon City in Selangor is a mixed-use strata scheme comprising ten distinct components:

• Shop offices and shop lots (no exclusive facilities);

• Tower 1 and Tower 2 (residential towers with exclusive access to swimming pool, gym, sauna, roof garden, BBQ deck, and picnic areas);

• Tower 3 and Tower 3A (office towers with exclusive access to business centre, executive lounge, and gym);

• Volt, Arc, car park, and MSU (en-bloc parcels with no exclusive facilities).

These facilities were limited and/or exclusive to their respective components, and designated as “Limited Common Property”.

The agreements and resolutions

The Sale and Purchase Agreements (SPAs) and Deeds of Mutual Covenants (DMCs) signed by all purchasers disclosed the designation of Limited Common Property exclusive to the respective components, and the obligation to pay additional maintenance charges for those facilities.

At its 1st Annual General Meeting, the JMB passed a Special Resolution approving additional by-laws regulating exclusive use of the said Limited Common Properties, and imposing additional charges on owners who enjoyed such access in accordance with the expenses required to maintain and manage those Limited Common Properties. Subsequent AGMs approved annual budgets resulting in different rates of charges for the different components.

The dispute

216 parcel owners challenged these resolutions, arguing that the Strata Management Act 2013 [“SMA”] mandates a single uniform rate calculated strictly by share units, regardless of facility usage. They relied primarily on the Court of Appeal decision in Menara Rajawali, which they argued established that a JMB has no power to impose different rates.

They sought declarations that all resolutions approving different rates were ultra vires to the SMA, unlawful, and void.

Menara Rajawali is confined to its facts

The court held that Menara Rajawali involved a single building development with no designation of Limited Common Property and no differentiation of facilities by component. Icon City, by contrast, has ten distinct components with clearly designated exclusive facilities that are not accessible to all owners. The Menara Rajawali decision must therefore be confined to its own factual context.

Pearl Suria is the authority

The court relied on the Court of Appeal's decision in Aikbee Timbers Sdn Bhd & Anor v Yii Sing Chiu & Anor (the "Pearl Suria" case) (read more at: https://www.angeline.associates/articles/case-update-004), which clarified that the SMA permits different rates where parcels are used for "significantly different purposes" such as residential, commercial, or office use.

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Pearl Suria established that charges must be "just and reasonable" under the SMA and "fair and justifiable", which means owners should contribute to expenses for facilities they are entitled to enjoy. Where different categories of parcels do not enjoy the same common facilities, it would be unjust and contrary to social legislation principles to require some owners to subsidise facilities they cannot access.

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The judge noted that the statutory wording in Section 25(3) SMA (JMB period) mirrors Section 52(2) SMA (developer/preliminary period). Since Pearl Suria held that the developer may impose different rates under section 52(2), the same interpretation applies to the JMB under Section 25(3) SMA. The court rejected the Plaintiffs' argument that Pearl Suria only applies to Management Corporations.

Section 32 SMA and contractual agreements support the structure

Section 32(3) SMA explicitly authorises a JMB, by special resolution, to make additional by-laws regulating restricted-use common property. This provision was not considered in Menara Rajawali but was validly exercised in Icon City.

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The SPAs and DMCs signed by the plaintiffs expressly disclosed and agreed to the Limited Common Property structure and additional charges. DMCs entered into by parties are binding, and the doctrine of estoppel applies: having contractually agreed to these terms, the Plaintiffs cannot now demand that owners without access to those facilities subsidise their exclusive amenities.

Why the different rates were upheld

In Icon City, residential, office, and commercial parcels are used for significantly different purposes, and different components enjoy different exclusive facilities. The JMB prepared detailed budgets segregating expenses for common property (shared by all) and Limited Common Property (exclusive to specific components). The Plaintiffs did not dispute these budgets.

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Requiring shop office owners, en-bloc parcel owners, and other owners without access to residential or office tower facilities to contribute towards swimming pools, saunas, business centres, and executive lounges they cannot use, would be inequitable.

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Both the Commissioner of Buildings and the Ministry of Housing and Local Government confirmed that different rates could be imposed where approved at a general meeting, and the JMB obtained the required approvals at its AGMs.

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The court found that the different maintenance charge rates were just, reasonable, and properly apportioned based on actual facility use and benefit. The Plaintiffs' Originating Summons was dismissed with costs.