New beginning in Malaysian strata property management?

With more and more people living in stratified buildings, the new Strata Management Act is timely in helping to reduce animosity among residents and owners during dispute resolutions.

Act for peace: An effective and efficient dispute resolution mechanism will help promote peace and good neighbourliness in stratified buildings.

LAST Sunday, I attended the annual general meeting (AGM) of the management corporation of an upmarket condominium as a proxy for my wife. Its last AGM was held in September last year.

This AGM was by far the most heated and disorderly since the management corporation was set up some six years ago. A fight almost broke out despite the presence of representatives of the Commissioner of Buildings (COB) and the police.

Let me now share with you my personal thoughts about the AGM, before examining whether the new Strata Management Act (SMA), when it comes into force, will help minimise and remove such animosity which appears to be rather prevalent and common among occupants living and undertaking business in stratified buildings.

In fact, trouble was already brewing before the AGM. In the AGM notice sent to owners of all the 170 parcel units, all the three outgoing 2011/2012 Council (CM2012) members – in their 30s (let’s call him CM1), 60s (CM2) and 70s (CM3) – jointly signed and attached a three-page letter containing allegations of impropriety against the previous Council (CM2011) members.

The CM2011 members, through their lawyers, demanded that their written explanatory response also be circulated to all the parcel owners before the AGM. This was refused.

Drama-charged

The situation was aggravated when CM2, the outgoing CM2012 chairman, used his welcoming speech, delivered in Mandarin, to reply to CM2011 members’ written explanatory response, which was also not circulated during the AGM. He also attempted to make more allegations of impropriety against CM2011 members until I intervened because the latter had not first been given any opportunity to be heard. Procedurally also, this should not have been done before first electing the chairman of the AGM.

I also observed that each time someone spoke up against any resolution proposed by CM2012, CM3 would shout and try to interrupt and intimidate the speaker. A fight almost ensued when some parcel owners confronted CM1 and CM3 during the break. They wanted to know why their parcel unit numbers had been displayed on the notice board as not having settled a one-time payment of RM400 for upgrading work, approved in the 2010 AGM. The parcel owners felt aggrieved that they had been publicly shamed, claiming and showing proof that at the time the notice was put up, CM1, CM2 and CM3 as Council members themselves had failed to pay maintenance charges for a few months, but their parcel unit numbers were not mentioned in the said notice. CM3 then raised his walking stick cum foldable chair, wanting to strike his fellow septuagenarian CM2011 member who questioned him until he was restrained by police and the former’s wife.

(Interestingly, I was informed by the COB that a fight virtually broke out before him during the extraordinary general meeting of a nearby condominium on Oct 28 when chairs were also thrown! Fortunately, goodwill prevailed when the injured decided not to press any criminal charges.)

The AGM then proceeded with election of 2012/2013 Council members. The House decided to elect only seven Council members. Eight owners were nominated. When the COB suggested that voting could be dispensed with if the House decided to change the number to eight, CM2 strenuously objected. CM2 vociferously proclaimed that he could not accept the CM2011 Chairman into the new Council. When one of the eight said he would withdraw so that the number could be reduced to seven, CM2 objected too because that would mean CM2011 Chairman would get elected. It was obvious to everyone present that there is a lot of bad blood between CM2 and CM2011 Chairman. Then almost half of those present who are owners living in the condominium walked out in protest.

Nevertheless CM1, CM2 and CM3 were elected even though it was obvious that they did not enjoy any support from the live-in owners. Their support came, instead, from the proxies. Twelve proxies who were present actually represented owners of 48 parcel units. CM1, CM2 and an estate agent who is also an owner (EA), were also each a proxy to several parcel unit owners. It was abundantly clear that these proxies were mainly CM2’s friends.

When challenged whether these proxies knew who the principals/owners they were representing, the mainly Mandarin-speaking group just remained silent. But CM2 openly instructed them on how to vote and they voted according to his instructions. If voting had been done by show of hands, CM1, CM2 and CM3 could have lost, but it was done by poll where the proxies’ votes are calculated according to all their principals’/owners’ shares of the parcel units.

In fact, this expressly went against the COB’s circular that a person can be a proxy to only one owner at any one general meeting. According to the management office, just like last year, CM2012’s supporters’ completed proxy forms were submitted in bulk by CM2 and EA, that is, they were not submitted individually by either the owners/principals or their proxy holders. No verification was also done whether the owners/principals did personally execute the proxy forms or whether the owners/principals and proxies knew each other.

It is sad to see that the live-in owners who were present were powerless to decide on the affairs of their condominium which they know most. Instead, these outsiders (one of them a former gardener at the condominium), who appeared bored and lost throughout the proceedings when English was used, had the ultimate say.

To my mind, the entire AGM is invalid as the legality of the proxies’ appointment and voting is seriously in doubt because it has also gone against the law of agency.

In fact, I had raised this issue of manipulating the proxy voting system even way back in June last year in my article, “Resolving tenancy disputes” (Sunday Star, June 12, 2011). I also subsequently had a brief SMS discussion with the Housing and Local Government Minister Datuk Seri Chor Chee Heung.

I am glad that the SMA has now made the one-proxy-one-owner rule clear in paragraph 18 of the Second Schedule. However, in light of the above and the relaxation of quorum requirement, paragraph 18 should be amended to state that only an owner’s immediate family member, tenant or attorney (appointed by way of a power of attorney) is qualified to be his proxy. If the owner is a corporation or organisation, the same principle should also apply in that there should be a close nexus between the owner and his proxy.

This will also compel owners to take more responsibility and a keen interest in the management affairs of their properties by making an effort to attend the general meetings. Such an amendment is not required to be tabled before Parliament as the minister is empowered to do so under Section 152 of the SMA.

Timely law

That said, assuming the SMA is in force now, the above fiasco could have been avoided. Under the new law, the Council will be known as a management committee and no committee member shall hold office for more than three consecutive terms. Also, a committee member will be deemed to have vacated his office if his conduct brings discredit on the management committee.

Most importantly, any dispute or altercation among owners living in stratified buildings can be resolved through the Snatrata Management Tribul. Hence, the Tribunal ought to be set up expeditiously unlike the Strata Titles Board which was never set up since the enabling provision was first inserted in the Strata Titles Act, 1985 (Act 318) in December 2000.

With an effective and efficient dispute resolution mechanism in place, this will help promote peace and good neighbourliness in stratified buildings. A lot of precious time can also be saved during general meetings. For example, in the Dec 9 AGM, CM2011 and CM2012 members seemed to be more obsessed with each other instead of discussing real issues such as lax enforcement of House Rules, the recent robbery-cum-rape case that reportedly took place and the appearance of a large crack on the exterior wall of the building next to one of its columns.

Similarly, the performance of the managing agent engaged by CM2012 at RM8,000 per month was not discussed. In my view, the performance of CM2011 members in managing the condominium is better than the said managing agent’s. Not to mention, they did it voluntarily. In this respect, I must register my agreement with Chor that registered valuers should not have monopoly over the management of stratified properties because strata owners must be allowed to have a choice and the right to decide who is best to manage their building.

As a whole, congratulations are in order for Chor, Datuk Seri Douglas Uggah Embas, Minister of Natural Resources and Environment (NRE) and their ministry officials in revamping the laws relating to strata management. When the SMA comes into force, the Housing and Local Government Ministry will take over from the NRE in monitoring the management of all stratified buildings and the operation of the SMA. Act 318 has also been amended and the Building and Common Property (Maintenance and Management) Act 2007 will be repealed.

Time will only tell how successful the SMA is in coming to grips with multifarious problems faced by those who live and do business in stratified buildings. But it cannot be gainsaid that this new law marks a new beginning of a comprehensive legal framework in strata management.

Comment by Roger Tan

> The writer is a former chairman of the Conveyancing Practice Committee of the Malaysian Bar Council. 

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