9 December 2020
Malaysia

The limitation period in Malaysia is six years from the date the cause of action arises. While general exceptions are provided by the Limitation Act 1953 (“Limitation Act”) and case law, one must bear in mind that certain legislation also provide their own rules on limitation.

This article explores the application of the Limitation Act on strata management disputes in Malaysia.

Applicability of the Limitation Act

Section 105 of the Strata Management Act 2013 (“Section 105”) stipulates that the Limitation Act does not apply to proceedings before the Strata Management Tribunal.

Therefore, a claim by the joint management body (“JMB”), the management corporation (“MC”), or stratified property owners brought before the Tribunal cannot be statute-barred due to the effluxion of time.

Resolving ambiguity

The provision is clear on the inapplicability of Limitation Act in proceedings before the Tribunal. However, it is vague with regard to similar proceedings before the courts.

Throughout the years, this ambiguity has been resolved by the courts in various cases involving disputes arising out of the Strata Management Act 2013.

The earliest case on this is Perbadanan Pengurusan Megan Avenue 1 v Harcharan S Sidhu & Anor [2017] 9 CLJ 563. The court held that since a MC can choose to either file a claim in the tribunal or court of competent jurisdiction, the Limitation Act, impliedly, should also not apply to the court proceedings in relation to the appellant’s claim for the outstanding charges.[1] Otherwise, there would be a discrepancy in what charges can be claimed at the tribunal and at court.

The same Judicial Commissioner in the Megan Avenue case above heard another High Court case, namely Badan Pengurusan Bersama Kompleks Pandan Safari Lagoon v Tam Cheng Meng [2018] 8 CLJ 361 where the same conclusion was reached. The JMB claimed against the purchaser and owner of a unit parcel for the outstanding service charges for the building from 2005 to June 2015. The JMB was constituted on 13 June 2014. The Magistrate only allowed part of JMB’s claim for the service charges for the period from July 2014 to June 2015. The High Court set aside the Magistrate’s decision based on the identical reasons laid out  in the Megan Avenue case. Relying on Section 105, the JMB was entitled to its full claim together with interest.

Running accounts not caught by the Limitation Act

In the case of Ekuiti Setegap Sdn Bhd v Plaza 393 Management Corp (established under The Strata Titles Act 1985) [2018] 4 MLJ 284, the Court of Appeal held that the claim for unpaid charges owing by the parcel owners to the MC was not time-barred despite six years having lapsed from the date of debt. Nevertheless, the appellate court’s reason differs from the earlier cases. Instead of going behind the intention of Parliament when the provision was enacted, the appellate court based its decision on the nature of the statement of account of unpaid charges, which was a running account.

In this case, the plaintiff/appellant was an MC established on 21 April 2008 while the defendant/respondent was the registered proprietor of seven retail parcels of the complex. The MC’s claim against the proprietor of the parcels was for outstanding service charges, contribution to the sinking fund, quit rent, insurance and late payment interest, being accumulated arrears from the date of incorporation of the MC i.e. 21 April 2008 until 4 March 2016.

One of the defences was that the claim was statute barred. However, referring to settled cases, the High Court held that the MC’s statements of account were running accounts as whatever maintenance charges that were not paid by the proprietor were carried forward to the subsequent months. The High Court thus held that the MC’s claim was not time-barred under the Limitation Act. The appellate judges agreed to this finding. Citing Malayan Banking Bhd v Wembley Industries Holdings Bhd [2012] 5 CLJ 956, the appellate court reproduced the following excerpts:

…a running account is a single account and not a composite of its various parts. A payment made on account of a running account is in respect of the entire outstanding balance, with the result that time is extended for the whole of the debt. It appears, therefore that a running account will become statute-barred only if more than six years elapse between the supply of the last article under it and the last payment on account.

Similarly, in the case of Wisma Cosway Management Corp v Dubon Bhd [2019] 2 MLJ 649, the Court of Appeal found that the payment of management charges amounts to a running account and therefore limitation does not come into play.

Another reported case of the same nature was the High Court case of Golden Support Sdn Bhd v Tribunal Pengurusan Strata Malaysia & Anor [2019] 11 MLJ 561 where the court held that the maintenance charges claimed by the Second Respondent were running accounts and therefore not caught by the Limitation Act.

Notwithstanding the above settled judicial precedent, in the High Court case of Golden Expansion Sdn Bhd v Dubon Bhd [2018] MLJU 797, it was held that it is trite that an action to recover any sum recoverable by virtue of any written law cannot be brought after the expiration of six years from the date on which the cause of action arises. Given the timeline of the case, the court made an express statement that any claim before 31 May 2011 had been barred by limitation. It must be noted that the court in this case did not consider Section 105; as such, caution must be taken in relying on this case law.

Conclusion

The question of whether Section 105 disapplies the six-year statutory limitation period for strata management disputes brought to the civil courts has not been tested or decided by the apex court. To date, the Court of Appeal case of Ekuiti Setagap remains the highest judicial precedent with regard to this issue.

As such, following the principles of the case and in answering the question – yes, strata management disputes are indeed free from the application of the Limitation Act.

If you have any questions or require additional information, please contact Jeyakuhan S K Jeyasingam of Zaid Ibrahim & Co (a member of ZICO Law). This article was prepared with the assistance of Audrey Lim Shu Ting of Zaid Ibrahim & Co.


This alert is for general information only and is not a substitute for legal advice.

[1] The outstanding charges were for maintenance or service charges, sinking fund, sewerage charges and water charges, quit rent, insurance such as for fire and theft and late payment interest from 8 May 2004 to 14 July 2015.