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Case Update: Appeal Court Validates Carpark Business in Strata Property Case

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15 October 2024

PROPERTY LAW
Strata Titles Act 1985 – Accessory Parcels – Common Property – Carpark Units – Maintenance Charges

Target Term Sdn Bhd v Waldorf and Windsor Management Corporation
Civil Appeal No. W-02(NCVC)(W)-1890-10/2021 | Court of Appeal
- see the grounds of judgment here

Facts Target Term Sdn Bhd (the ‘Appellant’) purchased an apartment unit and 420 carpark units from Malaysia Land Properties Sdn Bhd in a development known as Waldorf & Windsor Towers in Taman Sri Hartamas, Kuala Lumpur. The Appellant intended to operate a commercial carpark business using these carpark units. In 2017, the Waldorf and Windsor Management Corporation (the ‘Respondent’), the management body of the building, billed the Appellant for arrears in management charges and sinking fund contributions amounting to over RM850,000. The Appellant filed a suit against the Respondent, arguing that the charges were unjustified since the Respondent did not provide maintenance services for the carpark units. The Respondent counterclaimed, challenging the legality of the sale and the use of the carpark units for commercial purposes, alleging violations of the Strata Titles Act 1985. The High Court ruled that the sale and purchase agreement between the Appellant and Malaysia Land Properties was null and void, declaring the 414 carpark units as common property rather than accessory parcels. It found that the commercial use of the carpark parcels violated the Strata Titles Act 1985, as they were not used in conjunction with the apartment unit. Hence, this appeal.

Issues 1. Whether the sale of the carpark units to the Appellant contravened sections 34(2)[1] and 69[2] of the Strata Titles Act 1985?
2. Whether the commercial use of the carpark units constituted an illegal "dealing" in accessory parcels under the Strata Titles Act?
3. Whether the carpark units, although accessory parcels, should be treated as common property?
4. Whether the Appellant was liable for back charges on management fees and sinking fund contributions to the MC?

Held In allowing the appeal in part, the Court of Appeal held that the commercial carpark business run by the Appellant did not violate the Strata Titles Act, as the operation of the carpark amounted to a "licence" rather than an illegal "dealing" in accessory parcels. The Appellate Court held that the 414 carpark units remained accessory parcels and could not be converted into common property. The Appellate Court ordered the Appellant to pay the arrears for maintenance and sinking fund contributions, but limited the Respondent’s ability to claim further back charges unless proper procedures, such as passing resolutions at a general meeting, were followed. Additionally, the Respondent’s claim for general and exemplary damages were dismissed, and the Court of Appeal awarded costs to the Appellant.

Zul Rafique & Partners
{15 October 2024}
[1] No rights in an accessory parcel shall be dealt with or disposed of independently of the parcel to which such accessory parcel has been made appurtenant.
[2] No accessory parcel or any share or interests therein shall be dealt with independently of the parcel to which such accessory parcel has been made appurtenant as shown on the approved strata plan.

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