BADAN PENGURUSAN BERSAMA KM1 EAST CONDOMINIUM BERJAYA HARTANAH BERHAD

WA-22NCvC-16-01/2024 Kand. 36 13/08/2024 09:51:58 IN THE HIGH COURT AT MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY OF KUALA LUMPUR WRIT SUMMON NO: WA-22NCvC-16-01/2024 BETWEEN BADAN PENGURUSAN BERSAMA KM1 EAST CONDOMINIUM …PLAINTIFF AND BERJAYA HARTANAH BERHAD (DIKENALI SEBAGAI "BERJAYA GOLF RESORT BERHAD" SEBELUM INI) (Company No.: 223292-U) …DEFENDANT 1 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal Judgment [Enclosure 11] Introduction [1] The plaintiff is the Joint Management Body (“JMB”) of a residential condominium known as KM1 East Condominium (“KM1 East Condominium”) located at No. 11, Jalan Jalil Perkasa 1, Bukit Jalil, 57000 Kuala Lumpur. The defendant, Berjaya Hartanah Berhad (formerly known as Berjaya Golf Resort Berhad), is the developer of KM1 East Condominium. [“Berjaya Hartanah”]. [2] The JMB filed a suit on 12-01-2024 against Berjaya Hartanah, seeking, among others, an order directing Berjaya Hartanah to rectify and/or remedy the defects in KM1 East Condominium within 3 months. [3] Berjaya Hartanah filed an application dated 25-03-2024 to strike out the writ under Order 18 rule 19 of the Rules of Court 2012. [See Enclosure 11 Notice of Application]. The application raises three interesting legal issues. Berjaya Hartanah, the developer of KM1 East Condominium, contends: i. JMB’s claim is premised on negligence for latent damage in a construction of a condominium. By virtue of section 6A of the Limitation Act 1953, the JMB must file this suit within three years after it discovered the alleged latent damage. 2 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal ii. Berjaya Hartanah does not owe a duty of care to the JMB in respect of the construction of the condominium as the JMB was not even in existence at the time KM1 East Condominium was constructed. iii. Further, the JMB’s claim is in relation to alleged defects in the common properties and/or facilities of KM1 East Condominium. Case law held that such claim is a contractual claim and only the purchasers of KM1 East Condominium, who have privity of contract under their respective sale and purchase agreements, have the necessary locus standi to pursue such claim against Berjaya Hartanah within the Defects Liability Period. [4] I dismissed the application on 15-07-2024. These are my Grounds of Judgment. The plaintiff shall be referred to as the plaintiff or as JMB, the defendant as defendant or Berjaya Hartanah. Facts of the case [5] The plaintiff is the Joint Management Body of KM1 East Condominium and is involved in the maintenance and management of KM1 East Condominium. [6] The defendant Berjaya Hartanah is the developer of KM1 East Condominium. [7] Berjaya Hartanah delivered vacant possession to the purchasers of KM1 East Condominium in or around February 2016, and subsequently 3 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal held the first Annual General Meeting (“AGM”) for KM1 East Condominium on 17-12-2016. [8] Pursuant to the AGM, the plaintiff was formed as the Joint Management Body to take over all aspects of management and maintenance of KM1 East from the defendant. [9] In the course of the plaintiff’s management and maintenance of KM1 East Condominium, the plaintiff discovered various structural and/or latent defects in KM1 East Condominium. (“Defects”). [10] Sometime in January 2020, the plaintiff engaged Architect Centre Sdn Bhd to carry out an inspection of the Defects. Architect Centre Sdn Bhd carried out the said inspection on 18-01-2020 and thereafter issued a report dated 23-03-2020 (“March 2020 Report”). [11] The March 2020 Report according to the JMB identified the Defects to include: i. Water seepages and leakages in multiple areas in KM1 East Condominium; ii. Dislocation and/or exposed electrical wiring, conduits and cables; iii. Cracks and concrete spalling in multiple floors, rooftops and surfaces; and iv. Water leakage and ponding issues in multiple lift pits. 4 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal [12] The JMB requested Berjaya Hartanah to rectify the defects but Berjaya Hartanah refused and/or failed to carry out any rectification work in respect of the Defects. [13] Hence the JMB filed this suit before me. Berjaya Hartanah filed a striking out application as mentioned earlier. Issues First issue - JMB’s claim is premised on negligence for latent damage in a construction of a condominium. By virtue of section 6A of the Limitation Act 1953, must the JMB file this suit within three years after it discovered the alleged latent damage? The law on latent defects or latent damage [14] Sections 6(1) and 6A of the Limitation Act 1953 apply to a claim against a builder or developer for negligence for latent defects or latent damage in the construction of a building. [15] Section 6(1) of the Limitation Act 1953 reads as follows: “6 Limitation of actions of contract and tort and certain other actions (1) Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say- 5 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal (a) actions founded on a contract or on tort; (b) actions to enforce a recognisance; (c) actions to enforce an award; (d) actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or of a sum by way of penalty or forfeiture.” [Emphasis added] [16] Section 6(1) of the Limitation Act 1953 in its application to a suit for negligence for latent defects or latent damage in the construction of a building was modified by the addition of section 6A of the Limitation Act 1953 which reads as follows: “6A. Limitation of actions to claim damages for negligence not involving personal injuries (1) Notwithstanding subsection 6(1), this section shall apply to any action for damages for negligence not involving personal injuries, where the starting date for calculating the period of limitation under subsection (2) falls after the date on which the cause of action accrued. (2) An action to which this section applies shall not be brought after the expiration of three years from the starting date if the period of three years expires later than the period of limitation prescribed in subsection 6(1). 6 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal … (4) For the purposes of this section: (a) “starting date” means the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such action.” ILLUSTRATIONS (a) C bought a house from D in 2000. In 2010, C discovered a crack which damaged the walls badly. A building report made by a consultant revealed that the cracks had occurred in 2002, two years after C moved into the house. C has three years from 2010 to file an action in court against D for damages. (b) C bought a house from D in 2000. In 2006, C discovered a crack which damaged the walls badly. A building report made by a consultant revealed that the cracks had occurred in 2002, two years after C moved into the house. C has three years from 2006 to file an action in court against D for damages. (c) C bought a house from D in 2000. In 2005, C discovered a crack which damaged the walls badly. A building report made by a consultant revealed that the cracks had occurred in 2002, two years after C moved into the house. C has three years from 2005 to file an action in court against D for damages.” [Emphasis added] 7 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal [17] The purpose for the addition of section 6A [2] of the Limitation Act 1953 was to give a plaintiff in negligence cases for latent defects or latent damage in the construction of a building, a further three years from the date of the plaintiff’s knowledge of the latent defects or latent damage if the period of three years expires later than the 6-year period of limitation prescribed in subsection 6(1) of the Limitation Act 1953. [18] The intention was to cure the inequitable position that would arise when a suit is barred by Section 6(1) of the Limitation Act 1953 if a plaintiff only discovers the latent defects or latent damage more than 6 years after the said latent defects or latent damage had occurred. [19] The rationale was explained in Parliament in 2018 as can be seen in the Hansard “Penyata Rasmi Parlimen Dewan Rakyat” dated 03-04- 2018 for the “Parlimen Ke-13, Penggal 6, Mesyuarat Pertama”: “Fasal 2, bertujuan untuk memasukkan seksyen baharu 6A ke dalam Akta 254 untuk membolehkan seseorang untuk mengambil tindakan berasaskan kecuaian yang tidak melibatkan kecederaan diri dengan membenarkan pelanjutan had masa tiga tahun daripada tarikh pengetahuan orang yang mempunyai klausa tindakan itu. Peruntukan ini mengambil kira kes kecuaian yang melibatkan kerosakan pendam dalam kes pembinaan.” Defendant’s Contentions [20] The defendant’s counsel Mr Kelvin Seah Khye Jie relies on two recent decisions at the High Court level on section 6A [2] of the Limitation Act 8 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal 1953. They are Paul Raj Samy Raj v Pulau Pinang Clinic Sdn Bhd & Ors (owner of Hospital Gleneagles Penang) [2023] 12 MLJ 210 HC at [45 - 50] per Kenneth St James JC and Cekap Mesra Development Sdn Bhd v Che Seman bin Abdullah [2021] 1 LNS 1817 HC at [28] per Choo Kah Sing J. [21] He contends in Enclosure 18 at paragraphs 35 and 36 that: [35] …the plaintiff has pleaded that it discovered the Alleged Defects pursuant to the report prepared by Architect Centre on 23-03-2020. Even if we take this argument at its highest, the latest date for the Plaintiff to file this suit would be on/before 23-03-2023. [36] Given that the plaintiff only filed this suit in January 2024, this suit remains time-barred, as it still exceeded the three-year limitation period prescribed under section 6A of the Limitation Act 1953. Court’s Analysis [22] The plaintiff’s counsel Mr Clinton Tan Kian Seng submits that the suit is not barred by limitation. [23] In my view the defendant’s counsel is erroneous when he submits the plaintiff only has three years from the date of the report prepared by the Architect Centre dated 23-03-2020 to commence a suit. This is because a defect can occur on say 22-03-2020 and the plaintiff still has 6 years from 22-03-2020 to file a suit under section 6[1] of the Limitation Act 1953. 9 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal [24] Pursuant to section 6A[2] of the Limitation Act 1953, the three-year limitation period prescribed under section 6A of the Limitation Act 1953 only comes into play if the period of three years expires later than the period of limitation prescribed in subsection 6(1). [25] In conclusion, I hold that the defendant has failed to prove that the suit here is barred by the Limitation Act 1953. 2nd issue - Berjaya Hartanah does not owe a duty of care to the JMB in respect of the construction of the condominium as the JMB was not even in existence at the time KM1 East Condominium was constructed 3rd issue - The JMB’s claim is in relation to alleged defects in the common properties and/or facilities of KM1 East Condominium. Such claim is a contractual claim and only the purchasers of KM1 East Condominium, who have privity of contract under their respective sale and purchase agreements, have the necessary locus standi to pursue such claim against Berjaya Hartanah within the Defects Liability Period. [26] I shall consider both issues 2 and 3 together as they are related. [27] I begin by observing that the governing law in relation to strata title management used to be the Building and Common Property (Maintenance and Management) Act 2007 (‘BCPA 2007’) which came into force on 12-04-2007 until the BCPA 2007 was replaced by the Strata Management Act 2013. [See Sykt East Coast & Ors v Makna Mujur Sdn Bhd & Ors [2020] 2 MLJ 654 at [43] CA]. Thus, the law applicable in this case before me is the Strata Management Act 2013. 10 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal [28] On issues [2] and [3] I hold that the JMB does have locus standi to sue in respect of defects in the common property by virtue of sections 21 and 143 (2)(a) and (A) of the Strata Management Act 2013. My reasons are as follows. [29] Sections 21 of the Strata Management Act 2013 reads: 21. Duties and powers of joint management body (1) The duties of a joint management body shall be as follows: (a) to properly maintain and manage the building or land intended for subdivision into parcels and the common property, and keep it in a state of good and serviceable repair. [30] Section 143 (2)(a) and (A) of the Strata Management Act 2013 reads: 143. Representation in proceedings … “(2) Where all or some of the parcel owners or proprietors of the parcels in a development area- (a) are jointly entitled to take proceedings for or with respect to the common property in that development area against any person or are liable to have such proceedings taken against them jointly; or 11 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal … the proceedings may be taken- A. in the case of paragraph (2) (a), by or against the joint management body or management corporation; or B. … as if the joint management body, management corporation or subsidiary management corporation, as the case may be, were the parcel owners of the proprietors of the parcels concerned. [Emphasis added] [31] The defendant relies on the High Court decision in Hampshire Residences Joint Management Body v Zelan Development Sdn Bhd [2014] 10 MLJ 471 (HC) which had allowed the defendant’s application to strike out the plaintiff’s negligence claim on the ground that only purchasers can sue: “[7] I have perused the entire statement of claim of the plaintiff and it is obvious that the plaintiff's claim is related to defect of the common properties and for the rectification costs thereof. It is my considered opinion that the claim of this nature is and should be based on a contractual claim. In this respect, only the purchasers of the condominium units have privity of contract with the defendant vide their respective sale and purchase agreement. … 12 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal [8] The plaintiff is a separate entity from the purchasers. Its duty, obligation and powers in so far as it relates to common property is the same as that of a management corporation established under the Strata Title Act 1985, to wit, the maintenance and management of the common property. In my opinion the scope of duty of the plaintiff in maintaining and managing the common properties does not extend to suing the defendant for defects arising out of the construction of the common facility. Defects arising out of the construction of the common facilities give rise to a contractual claim against the developer/defendant by the purchasers but not the plaintiff. Further, there is no express power given by the said Act for the plaintiff to make a claim of this nature against the developer/defendant. … [10] In the circumstances, I agree with the defendant's counsel that the plaintiff does not have a legal standing to make the present claim against the defendant. In other words, the plaintiff has no reasonable cause of action recognised by the law.” [Emphasis added] BCPA 2007 [32] In my respectful view, the High Court decision in Hampshire Residences Joint Management Body v Zelan Development Sdn Bhd [2014] 10 MLJ 471 (HC) (“Hampshire Residences”) does not represent the current legal position. This is because Hampshire Residences was based on the BCPA 2007 [See Ground of Judgment 13 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal paragraph 1]. BCPA 2007 has been replaced by the Strata Management Act 2013. [33] Further I note that the Court of Appeal construing the BCPA 2007 in the 2020 decision in Sykt East Coast & Ors v Makna Mujur Sdn Bhd & Ors [2020] 2 MLJ 654 per Harmindar Singh JCA took a contrary view to Hampshire Residences. I should add that Hampshire Residences was not considered in the Grounds of Judgment of the Court of Appeal. [34] Leaving aside the court observations on the right of the strata proprietors in law or equity to pursue their claims in respect of common property, this is what Harmindar Singh JCA said on the right of a JMB to sue in relation to the common property: [57] Even so, there is another serious infirmity in the appellant’s standing to commence the suit against the respondents which we are compelled to address. We agree with the respondents that the appellants do not have any right in law or equity to pursue their claims in respect of common property. By virtue of statutory law in the form of s 8 of the BCPA 2007, the second respondent has sole control and management of the common property of KL Plaza. By law, the JMB is the guardian of the common property. Any claims against third parties in relation to the common property can only be brought by the JMB and not the individual parcel owners or some of them together as is the case in the instant suit. It is for the JMB alone to pursue such claims for the benefit of all parcel owners. It is for this reason that the JMB has been given the right in law to sue or be sued in its name. 14 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal [Emphasis added] Strata Management Act 2013 [35] I now consider the relevant legislation before me which is the Strata Management Act 2013. [36] Section 143 (2)a and (A) of the Strata Management Act 2013 expressly states that if the parcel owners or proprietors of the parcels are jointly entitled to take ‘proceedings’ for or with respect to common property the same may be taken by the management corporation or the joint management body. [See Perbadanan Pengurusan Bersama Surin Condominium v GLM Property Development Sdn Bhd & Ors [2023] MLJU 734 at [13 - 16] per Azizan Md Arshad JC]. [37] In fact, the Federal Court in a recent decision in Datuk Bandar Kuala Lumpur v Perbadanan Pengurusan Trellises & Ors And Other Appeals [2023] 4 MLRA 114 FC per Madame Justice Nallini Pathmanathan FCJ held- [492] … (ix) We are cognisant that based on s 143(2) and (3) of the SMA, if the parcel owners or proprietors of the parcels are jointly entitled to take ‘proceedings’ for or with respect to common property the same may be taken by the management corporation or the joint management body. However, this right conferred on the joint management body and the management corporation is specifically in relation 15 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal to proceedings for or in respect of common property and no more. The present factual matrix relating to standing to sue of each of the parcel proprietors in relation to a neighbouring development which they contend adversely affects them, does not fall within the section. [Emphasis added] [38] In conclusion I hold that the JMB does have locus standi to sue Berjaya Hartanah in respect of defects in the common property by virtue of sections 21 and 143 (2)(a) and (A) of the Strata Management Act 2013. [39] Lastly, I thank both counsel for their helpful submissions. 16 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal Decision [40] For the reasons above, I dismiss the striking out application as this is not a suitable case to strike out the suit under Order 18 rule 19 of the Rules of Court 2012. This suit is not plainly and obviously unsustainable based on the principles set out in Bandar Builders Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36 SC and in SJ Securities Sdn Bhd v Clarence Chew Chin Fook [2017] 3 MLJ 382 CA. …………(signed)…………. Leong Wai Hong Judicial Commissioner High Court of Malaya Kuala Lumpur (NCVC 10) Dated: 12th August 2024 COUNSEL: 1) Clinton Tan Kian Seng for plaintiff. (Julian Stephanie (Kuala Lumpur)) 2) Kelvin Seah Khye Jie and Lew Wei Shing for defendant. (Pierre Chuah & Associates (Kuala Lumpur)) 17 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal CASES REFERRED TO: 1) Bandar Builders Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36 SC. 2) Cekap Mesra Development Sdn Bhd v Che Seman bin Abdullah [2021] 1 LNS 1817 HC. 3) Datuk Bandar Kuala Lumpur v Perbadanan Pengurusan Trellises & Ors And Other Appeals [2023] 4 MLRA 114 FC. 4) Hampshire Residences Joint Management Body v Zelan Development Sdn Bhd [2014] 10 MLJ 471 (HC). 5) Paul Raj Samy Raj v Pulau Pinang Clinic Sdn Bhd & Ors (owner of Hospital Gleneagles Penang) [2023] 12 MLJ 210 HC. 6) Perbadanan Pengurusan Bersama Surin Condominium v GLM Property Development Sdn Bhd & Ors [2023] MLJU 734. 7) SJ Securities Sdn Bhd v Clarence Chew Chin Fook [2017] 3 MLJ 382 CA. 8) Sykt East Coast & Ors v Makna Mujur Sdn Bhd & Ors [2020] 2 MLJ 654 at [43] CA. LEGISLATION REFERRED TO: 1) Order 18 rule 19 of the Rules of Court 2012. 2) Section 6(1) of the Limitation Act 1953. 3) Subsection (2) of the Limitation Act 1953. 4) Subsection 6(1) of the Limitation Act 1953. 5) Section 6A of the Limitation Act 1953. 6) Section 6A [2] of the Limitation Act 1953. 7) Section 8 of the Building and Common Property (Maintenance and Management) Act 2007. 18 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal 8) Sections 21 of the Strata Management Act 2013. 9) Sections 143 (2) of the Strata Management Act 2013. 10) Sections 143 (2)(a) and (A) of the Strata Management Act 2013. 11) Sections 143 (3) of the Strata Management Act 2013. 12) Strata Title Act 1985. LITERATURE REFERRED TO: 1) Hansard “Penyata Rasmi Parlimen Dewan Rakyat” dated 03-04-2018 for the “Parlimen Ke-13, Penggal 6, Mesyuarat Pertama”. 19 S/N zERSWDhAp0y9cUH3lnd/Rw **Note : Serial number will be used to verify the originality of this document via eFILING portal