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Centralised Air-Conditioning Facilities: Its Classification as “Common Property” Within the Legislative Frameworks

posted 3 days ago

Introduction

The legal definition of “Common Property” as provided under the relevant Act would include lifts, escalators, stairways, passageways, landings, lobbies, corridors, stairs, parking areas, lavatories for public use, refuse chambers, drains, water mains, sewers, pipes, wires and cables with the list being non-exhaustive, which includes facilities that can be used and enjoyed by occupants of the building.

How do we determine the extent of usage of the common property, particularly the Centralised Air-Conditioning Facilities?

In the recent Court of Appeal decision of AUM Capital Sdn Bhd v Menara UOA Bangsar Management Corporation Sdn Bhd [2024] 3 MLRA 428, it was held inter alia that “exclusivity” or extent of usage or benefit by owners of the building is irrelevant to the question of whether the Centralised Air-Conditioning Facilities is common property. The fundamental tenet of strata law is that the common property of a development area is generally taken as a whole, regardless of each proprietor’s level of use or enjoyment of the common property.

The appellant, the registered proprietor of the building, Menara UOA Bangsar (“Building”), appealed against the decision delivered by the High Court. There were five (5) questions of laws posed to the High Court, however, we have extracted and summarised the issue relevant to the questions posed under this article as follows: –

  1. the Centralised Air-Conditioning Facilities in respect to (i) the common property of Tower A, Tower B and the car parks, and (ii) the private parcels of Tower B and the retail area were not utilised or enjoyed by all occupants of the building but solely for the benefit of a particular private parcel owner, namely UOA REIT; therefore the Centralised Air-Conditioning Facilities cannot be classified as common property; and
  2. the Management Corporation has unlawfully utilised the monies from the maintenance account to maintain the Centralised Air-Conditioning Facilities and compelled the Respondent to reimburse all monies paid towards maintaining the same.

Is it common property or otherwise?

The Court referred to Section 2 of the Strata Management Act 2013, whereby common property in relation to a subdivided building means “so much of the lot (i) as is not comprised in any parcel, including any accessory parcel, or any provisional block as shown in a certified strata plan and (ii) used or capable of being used or enjoyed by occupiers of two or more parcels” and Section 4 of the Strata Titles Act 1985 “common property means so much of the lot as is not comprised in any parcel (including any accessory parcel), or any provisional block as shown in an approved strata plan”.

In addition, the Court relied on the Court of Appeal’s decision in the case of Perbadanan Pengurusan 3 Two Square v. 3 Two Square Sdn Bhd & Anor & Another Appeal [2019] MLRAU 454 where it was held that “… there is no need for there to have been labels affixed to the relevant areas to be designated as common property; all the areas that are not identified as parcels will automatically be regarded as common property; Nowhere is the concept of exclusive or special use provided for in the Strata Titles Act.”

Therefore, it was held that common property is almost exclusively defined by reference to the location. Based on the plans of the building and photographs of the Building, it can be clearly seen that Centralised Air-Conditioning Facilities is located outside of any private parcels.

Therefore, the Centralised Air-Conditioning Facilities are rightly defined and fall within the definition of common property.

Does the right to seek reimbursement arise?

The Court also agreed with the Respondent’s Counsel’s submission that “… the practice of charging different rates of service charges to take into account the specific amount of usage of different elements of common property, for example, lifts and swimming pools, does not accord with the legislative intent of the 2013 Act, which requires the management corporation to impose a single rate of service charges on all parcels according to their share units unless those parcels are used for “substantially different purposes” according to s 60 of the 2013 Act.”

The Management Corporation cannot rely on the express wording of Section 59(3)(b) of the Strata Management Act 2013 that empowers a management corporation to recover “any money expended’ in performing any “repairs, work, or act” if “the repairs, work, or act were or was wholly or substantially for the benefit of some of the parcels only…” simply because the Centralised Air-Conditioning Facilities does not benefit some of the parcels of the Building.

It follows that the Management Corporation is, therefore, statutorily duty-bound to properly maintain and manage the common property and require the Management Corporation to bear the costs and expenses of operating the Centralised Air-Conditioning Facilities including the electricity and maintenance costs thereon (Section 59 (1) (a) of the Strata Management Act 2013) irrespective of that the facilities substantially benefits some but not all parcels, so long as the facilities benefit the common property as well.

Hence, no legal obligation on the Management Corporation to seek reimbursement from the proprietors of individual parcels of the said Building for the maintenance charges paid by the Management Corporation in maintaining the Centralised Air-Conditioning Facilities.

Summary

In summary, the decision reaffirms the legislative intent of ensuring equitable management of common property within strata developments, emphasizing the collective responsibility of all owners in bearing maintenance costs.

The categorisation of common property within the legislative frameworks is irrespective of individual benefit levels. Referring to pertinent sections of the Strata Management Act 2013 and Strata Titles Act 1985, the court highlighted that common property is primarily determined by location rather than individual usage.

Consequently, the legal obligation of the Management Corporation stands within the relevant provisions of the Act to collect and pay for the maintenance of such facilities within the exterior of all common parts regardless of varied benefit distribution among parcels.


About the author

Sharifa Nurliliyana binti Abd Karim
Senior Associate
Real Estate
Halim Hong & Quek
[email protected]

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