On October 1, 2024, the Court of Appeal of Malaysia deliberated on Pesuruhjaya Bangunan Kawasan Pentadbiran Majlis Bandaraya Pulau Pinang v Perbadanan Pengurusan Mar Vista Resort (Civil Appeal No.: P-01(A)-194-04/2023). The case posed a pivotal legal question: Is the Commissioner of Buildings (COB) empowered under the provisions of the Strata Management Act 2013 (SMA 2013) to allow an adjournment of a strata scheme’s Annual General Meeting (AGM)?

This issue arises from a broader challenge faced by local authorities across Peninsular Malaysia, as all strata schemes are bound to conduct AGMs within the time frame stipulated in the Second Schedule of the SMA 2013.

The central argument revolves around Section 1(7) of the SMA 2013, which permits the State Authority to “suspend the operation of this Act or any provision of this Act”. According to counsel for the COB, this power lies exclusively with the State Authority and cannot be delegated to the COB. The statutory provision makes it clear that the State Authority must independently assess public and purchaser interests before exercising this suspension power.

High Court Ruling

The High Court found that the COB, as the State Authority’s delegate under Section 4(1), holds administrative powers under the SMA 2013, including matters related to the holding of AGMs. The High Court further concluded that Section 1(7) implicitly conferred authority upon the COB to adjourn the AGM. To support this decision, the High Court relied on the case of Perbadanan Pengurusan Anjung Hijau v. Pesuruhjaya Bangunan Dewan Bandaraya Kuala Lumpur (“Anjung Hijau”), interpreting Section 1(7) of the SMA 2013 as empowering the COB to allow an adjournment of AGMs.

Court of Appeal Ruling

The Court of Appeal overturned the High Court’s decision, noting that the High Court’s ruling in Anjung Hijau had already been overturned by the Court of Appeal on November 9, 2017. The Court of Appeal also referenced previous ruling, such as Ang Ming Lee & Ors v. Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and Other Appeals, and reaffirmed that the power to suspend must be exercised directly by the State Authority as the State Authority shall form the opinion that the suspension of the operation of the SMA 2013 in any local authority area or area “will not be contrary to public interests and the interest of the purchasers”. The Court also stressed the protective provisions of the SMA 2013, designed to safeguard purchasers, proprietors, and parcel owners, emphasizing the AGM’s role in ensuring transparency and accountability.

Importance of AGMs

AGMs, as outlined in Paragraph 10(1) of the Second Schedule of the SMA 2013, serve as critical platforms for reviewing management accounts, electing committee members, and addressing operational matters. These meetings empower stakeholders to monitor the management corporation’s adherence to statutory duties, including financial accountability under Sections 60-62 of the SMA 2013.

Implications for Strata Governance

This judgment underscores the importance of maintaining a strict statutory interpretation to uphold public and purchaser interests. The decision reinforces the principle that key powers under social legislation, such as the SMA 2013, must remain with designated authorities to ensure proper accountability and compliance.

If you require assistance with organizing AGMs, please feel free to contact the firm’s Real Estate Office. The lawyers in the Real Estate Office have extensive experience in assisting clients with their legal needs, particularly in compliance with the Strata Management Act 2013, and will be able to help.

About the author

Goh Li Fei
Partner
Real Estate
Halim Hong & Quek
lfgoh@hhq.com.my