Maintenance Charges and the Defaulting Owner (Part 2): How Charges Are Calculated and How to Enforce What You Are Owed
by Muhammad Faiz bin Hasan
In Part 1 we looked at who counts as a defaulter and what a management body may lawfully do about it. But two practical questions sit underneath all of that, and they are the ones that spark most of the real disputes in strata schemes. The first is how the maintenance charge is supposed to be worked out in the first place, a question that gets thorny in older buildings put up long before the current law. The second is what happens after you win: how a Tribunal award or a court judgment turns into money in the management account. This article takes each in turn.
How is the maintenance charge supposed to be calculated?
The law does not leave this to the whim of a committee. The duty to decide and impose charges sits with the JMB under section 21(1) of the Strata Management Act 2013, and the measure of those charges is spelt out in section 25(3): the amount payable is to be worked out “in proportion to the allocated share units of each parcel.” The equivalent rule for a Management Corporation appears in section 52. Share units are themselves worked out using the formula in the First Schedule to the Act, which already builds in things like the type and use of the parcel, its floor area and its accessory parcels. In other words, fairness between a large penthouse, a small studio and a car park bay is meant to come through the share units, not through inventing different rates for each.
Can a management body charge different rates to different types of parcels?
This exact question reached the Court of Appeal in Muhamad Nazri Muhamad v JMB Menara Rajawali & Anor [2019] 10 CLJ 547, and the answer it gave is one every committee should know. There, the management had fixed one rate for residential and retail parcels and a lower rate for car park parcels, and it had done so with the unanimous blessing of the first annual general meeting. An owner challenged it, and the Court of Appeal held the arrangement to be unlawful.
The reasoning is the valuable part. The court explained that the phrase “in proportion to the allocated share units” in sections 21 and 25 means a JMB must fix a single rate that applies to every parcel; the differences between a shop, a flat and a car park are already accounted for in the weightage built into their share units under the First Schedule. Charging two different rates therefore double-counted the difference and produced an unfair result, and it went beyond the powers Parliament had given the JMB.
The court made a further observation that matters in practice, and the Act bears it out: the power to charge different rates is given, in limited circumstances, only to a Management Corporation. Section 60(3) of the Act allows an MC to “determine different rates of charges to be paid in respect of parcels which are used for significantly different purposes and in respect of the provisional blocks,” a power that is conspicuously absent from the JMB provisions. The court also held that a JMB cannot hand the actual decision on rates to its management committee, because that decision is the JMB’s own to make. The plain message is that a JMB applies one rate per share unit, full stop; an MC has slightly more room, but only within the narrow situations section 60(3) allows.
What about old buildings put up before the current law? Can they keep using the old method?
This is the question I am asked most often about older schemes, and the honest answer is that the old way is living on borrowed time. Many buildings put up before the Strata Management Act came into force levied their charges on a simpler basis, often the same flat sum for every unit, or a straight split by floor area that ignored the weightage the law now requires. The Act and its 2015 Regulations contain transitional arrangements that let charges carry on a provisional share-unit basis, or on a basis approved in general meeting, while a building catches up, but the destination the law fixes is always the share-unit method in sections 25 and 52.
So, it is not safe to assume that a legacy formula stays lawful forever simply because “we have always done it this way.” Once the Act applies to a building, any method that strays from “one rate multiplied by allocated share units” is exposed to exactly the kind of challenge that succeeded in the Menara Rajawali case. Where share units have been allocated, or can be, the management body should move to the share-unit method. Where share units genuinely do not yet exist, it should use the provisional share-unit mechanism the law provides and ratify it in general meeting, rather than clinging to the old calculation.
How do you reconcile the old and new calculations when everything is already recorded in the system?
There is a real practical headache here, because the same building’s billing history usually sits in a community or strata management software system, all of it recorded on the old basis. The answer is an accounting exercise, not a reason to keep an unlawful method. The cleanest approach is to switch to the correct share-unit method going forward, by resolution in general meeting, ideally backed by the share units shown in the developer’s schedule of parcels or the strata plan, which the Court of Appeal in Menara Rajawali stressed must be filed with the Commissioner of Buildings and approved by the Director of Lands and Mines.
As for the arrears already sitting on the books, those sums were validly demanded under the basis that applied at the time, and they stay recoverable as a debt. The sensible thing is to ring-fence them in the system as legacy arrears, reconciled parcel by parcel, while new billing runs on the share-unit rate. Re-rating the past retrospectively should be approached with great care, because it tends to create fresh disputes of its own. What matters is a clear audit trail in the system: the old basis up to the changeover date, the new basis after it. Done that way, the changeover is defensible and, crucially, the accrued arrears stay enforceable.
Where do you take your claim, the Tribunal or the court?
For most disputes about unpaid charges, the law provides a deliberately cheap and accessible forum: the Strata Management Tribunal, set up under Part VI of the Act. By section 105, the Tribunal has jurisdiction to hear the claims listed in the Fourth Schedule, which include the recovery of charges, provided the amount in respect of which an award is sought does not exceed two hundred and fifty thousand ringgits (RM250,000). A claim is started by filing the prescribed form and fee, and by section 110 the parties generally appear in person, since no party may be represented by an advocate and solicitor unless the Tribunal, given the complexity of the matter, allows it. The Tribunal must make its award without delay, and in any event, where practicable, within sixty days of the hearing starting under section 117.
Where the sum owed goes above that ceiling, or where you need a remedy the Tribunal cannot give, such as winding up a company that owns the parcel, or an injunction, the claim belongs in the Magistrates’, Sessions or High Court, depending on the amount and the relief sought. A straightforward claim for arrears is a simple liquidated debt, and the court route, though more formal, unlocks the full range of enforcement tools.
You have won; now how do you actually get paid?
This is the most often neglected step, and a paper award that is never enforced helps no one. The good news is that the Act treats an award almost exactly like a court order. Under section 120(1), an award of the Tribunal is final and binding on the parties and is “deemed to be an order of a court and be enforced accordingly.” And the Act tells you how: under section 120(2), where the award has not been complied with, the Secretary of the Tribunal sends a copy of the award to the court that has jurisdiction over the place concerned, and the court records it, at which point it can be executed like any judgment of that court. (An award can only be reopened on the narrow grounds of serious irregularity under section 121, by application to the High Court.)
There is a further sting that gives a Tribunal award real bite. Section 123 makes it a criminal offence for any person to fail to comply with an award, punishable on conviction by a fine of up to RM250,000, or imprisonment for up to three years, or both, and, in the case of a continuing offence, a further fine of up to RM5,000 for every day the non-compliance carries on after conviction. So, ignoring an award is not a soft option.
Once you have a recorded award or a court judgment, the recovery options are the familiar ones. You can obtain a writ to seize and sell the defaulter’s movable property. You can garnish money owed to him, such as the balance in his bank account or the rent his own tenant pays him. You can bring him in on a judgment debtor summons to examine his means. And if the defaulter is a company, you can petition to wind it up; if an individual, bankruptcy may be available once the threshold is met. Running alongside all of this, the Act’s own remedies, the warrant of attachment under sections 35 and 79, and recovery of the sum as a debt, stay in your armoury.
Conclusion
The two questions in this article are really two sides of the same coin: getting the charge right at the front end and collecting it at the back end. On calculation, the law is now clear that share units, applied at a single rate, are the measure of fairness, and Muhamad Nazri Muhamad v JMB Menara Rajawali shows that even a unanimous resolution cannot rescue a method that ignores that rule, a warning that old, pre-Act formulas should be brought into line rather than kept out of habit. On enforcement, the lesson is that a judgment or an award is only the halfway mark; the real protection of a strata community’s finances lies in following through, recording the award under section 120, invoking the criminal sanction in section 123 where necessary, and executing by seizure, garnishment, winding-up or the Act’s own attachment remedies. A management body that calculates its charges lawfully and enforces its dues diligently will rarely need to reach for anything it is not allowed to do.
