Non-compliant strata property owners may now be given a criminal penalty

A strata property owner who fails to comply with awards handed down by the Strata Management Tribunal (SMT) can now be slapped with a criminal penalty.

neighbour-property-strata

MIXA / © Getty Images

In early July 2020, the Subang Jaya Municipality (Magistrate’s) Court convicted and fined a defaulting strata parcel owner, who had failed to comply with an award of the Strata Management Tribunal (SMT) ordering payment of outstanding charges and contribution to sinking fund within 30 days from the date of the award. The presiding Magistrate, Barath a/l Manian imposed a fine of RM5,500 on the defendant or in default, a one (1) month imprisonment. The case was prosecuted by officer Emyshimy Rizal Bin Nasaruddin.

Earlier in February and March 2020, a couple of defaulting strata owners or parcel owners were fined RM1,500 or in default five (5) days imprisonment, and another RM3,500 or in default three (3) days imprisonment, respectively by the same Municipal Court after pleading guilty to the same offence.

This recent development is certainly a positive one that’s moving in the correct direction. This sends an important message and reinforces the seriousness of awards by the SMT.

What is the Strata Management Tribunal?

Since coming into force in 2015, the Strata Management Act (SMA) 2013 has immediately become an important legislation. This is due to the fact that stratified developments (residential, commercial and mixed) have become a norm in densely populated areas such as Klang Valley, Ipoh, Penang and Johor Bahru

The SMA 2013 is by no means a simple piece of the federal statute. It governs the relationships and interaction between those involved in the strata building and strata management, such as:

  • Developer
  • Purchaser
  • Proprietor
  • Joint Management Body (JMB)
  • Management Corporation (MC)
  • Subsidiary Management Company (SMC)
  • Managing agent and any other relevant parties

©Sino Images/ gettyimages

The SMT was established specifically to hear disputes concerning strata management in a cost-effective manner – because of that, no professional legal representation is allowed. It even has the power to dispense awards (which is equivalent to a Court Order) without delay and within 60 days from the first hearing date of a case. The members of the SMT comprise officers of the Judicial and Legal Services and advocates and solicitors of not less than 7 years’ standing – members who are experienced and well versed with laws in the SMA, its Regulations and its application. 

The SMT has jurisdiction over disputes of various natures ranging from simple claims up to more complicated ones that may involve nullifying resolutions – however, they do not cover issues relating to the dispute of ownership. Cases can only be presented if they are relatively low-cost, up to RM250,000 in financial costs.  

In short, it is a quasi-judicial body entrusted to hear and determine strata management related disputes. 

MORE: What is the Strata Management Act (SMA) 2013?

What are the powers of the Strata Management Tribunal?

The Fourth Schedule, Part 2 [Subsection 117(3)] to the SMA 2013 states that the Tribunal may order a party to the proceedings to:   

  1. Pay a sum of money to another party.
  2. The Tribunal may claim for an order the price or other consideration paid by a party to be refunded to that party.
  3. The Tribunal may claim for an order the payment of compensation or damages for any loss or damage suffered by a party.
  4. The Tribunal may claim for an order the rectification, setting aside or variation of a contract or additional by laws, wholly or in part.
  5. The Tribunal may claim for an order costs to or against any party to be paid.
  6. The Tribunal may claim for an order interest to be paid on any sum or monetary award at a rate not exceeding eight per centum per annum.
  7. The Tribunal may dismiss a claim which it considers to be frivolous or vexatious.
  8. The Tribunal may make any order of which it has the jurisdiction to make under Part 1 of this Schedule or any other order as it deems just and expedient.
  9. The Tribunal may make such ancillary or consequential orders or relief as may be necessary to give effect to any order made by the Tribunal.

What is an award under the SMT & why is it important?

The decision and Order granted by SMT upon hearing is known as an ‘award’.

An award is similar to a court order, and Section 120 of the SMA states that an award is final and is binding on all parties to the proceedings. 

In the event an award is still not complied with, the winning party may file enforcement proceedings at the Courts of Law. However, the reality is far from ideal. Sometimes, a winning party may have financial difficulty to apply for enforcement in Court through the civil processes and is left with a paper Award. 

While the SMT’s primary job is to listen to disputes and reach a satisfactory conclusion for both parties, not everyone likes to do as they’re told – this is where the SMT can also step in and impose some substantial penalties. In order to give more force to the awards granted by SMT, the SMA 2013 has criminalised non-compliance with awards of SMT. 

 Section 123 of the SMA 2013 provides that any person who fails to comply with an award made by SMT commits an offence and shall, on conviction, be liable to a fine not exceeding RM250,000 or to imprisonment for a term not exceeding 3 years or to both, and in the case of a continuing offence, to a further fine not exceeding RM5,000 or every day or part thereof during which the offence continues after conviction. 

CHECK OUT: The Complete Guide to Gated & Guarded Communities in Malaysia

How is MPSJ setting the precedent for keeping strata owners in check?

Since 2015, there have not been any reported cases concerning prosecution for default of SMT’s award and there are concerns that it could have been treated lightly or even neglected by parcel owners. In the prosecution cases mentioned above, the Commissioner of Buildings (COB) of Subang Jaya Municipal Council (MPSJ) worked together with the Ministry of Housing and Local Government, the National House Buyers Association (HBA) and public prosecutor to charge the award defaulters who had been convicted subsequently. 

© Datuk Chang Kim Loong

This has shown us the seriousness of the prosecution process, which involves thorough investigation and recording of statements of the parties seeking enforcement of the awards.

Heavier sentences could be imposed in the future

The success of these prosecution cases further boosts and bolsters the sanctity of the SMT’s awards. The positive effect of these prosecution cases will hopefully not only be confined to cases involving default in paying maintenance charges. It is expected that the successful prosecution will also send a firm message to all members of public and stakeholders to treat all awards of the Strata Management Tribunal seriously or risk facing criminal penalties such as heavy fines or imprisonment, or both.

It is worth highlighting that the punishment can also be extended to individuals being held responsible for the ‘management and control’ of the affairs of a corporate body who disobeyed the awards. In this regard, it is important for all committee members of the management bodies to closely monitor the status of each case filed and take appropriate action to ensure compliance if need be.

Strata unit owners or parcel owners are advised to get acquainted with the SMA 2013, its rules and additional by laws. If they do not understand the intricacies of the SMA 2013, they should seek out the services of the professionals in this field, or ask around.

This article is written by Datuk Chang Kim Loong, Hon Sec-Gen of the National House Buyers Association (HBA), a non-political, non-government and not-for-profit Organisation manned wholly by volunteers. www.hba.org.my 

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