This article first appeared in City & Country, The Edge Malaysia Weekly on June 16, 2025 - June 22, 2025

It is important for strata-titled malls to work within the scope of the legal framework for strata management, for example the Strata Management Act 2013 (SMA), says Samuel Tan, partner at Messrs Shook Lin & Bok.

“Management corporations (MCs) ought to be empowered to carry out their duties, including repair and refurbishment works, and to obtain the necessary contributions. However, the relevant approvals from local authorities must be obtained and refurbishment/renewal works must be validated and carried out in accordance with the law,” Tan says.

He is responding to the recent decision by the Federal Court to unanimously dismiss the leave applications by defaulting Summit USJ Shopping Mall parcel owners (41 applicants in 52 applications), with costs to the MC.

The outcome of the Federal Court’s decision is that the refurbishment charges are due and payable by the defaulting share-unit owners, who had benefited from the refurbishment exercise carried out at Summit USJ Shopping Mall.

For context, the case involved tribunal claims filed by the Summit USJ Shopping Mall MC at the Strata Management Tribunal against 83 defaulting Summit USJ Shopping Mall proprietors to claim for, among others, refurbishment charges in relation to the refurbishment and rebranding exercise carried out at the mall.

The tribunal dismissed the MC’s tribunal claims and held that, among others, the proprietors were not liable to pay for the refurbishment charges. As a result, the MC filed judicial review applications against the tribunal’s decisions at the Shah Alam High Court.

On March 29, 2022, the High Court allowed the MC’s judicial review applications and quashed the tribunal’s decision. The High Court held that the tribunal, along with the High Court, was bound by an earlier Court of Appeal decision in 2018 that had set aside another tribunal’s award, involving the same MC and mall share-unit owners/proprietors.

It effectively meant that the proprietors were liable to pay for the refurbishment charges and interest on the outstanding charges. The High Court’s decision was also affirmed by the Court of Appeal on June 24, 2024.

Tan and his colleague Muhammad Izzat Zainal represented Summit USJ Shopping Mall MC.

The mall was injected into AmFIRST Real Estate Investment Trust (AmFIRST) (KL:AMFIRST) in 2008. AmFIRST owns 70.6% of the mall in terms of the share units. AmFIRST owns 87% of the entire mixed-use development which also comprises a mall, office, car parks and hotel.

AmFIRST deputy CEO Zuhairy Md Isa explains that the refurbishment was intended to reposition and upgrade the retail mall, which was built in 1997.

“The upgrading involved the common area and facilities of the mall. The proposal was first presented to the proprietors of Summit USJ during the first annual general meeting of the MC on Dec 15, 2012, and passed by majority vote. Subsequently, a resolution was passed in the second AGM on March 15, 2014, that only proprietors of the retail mall contribute to the refurbishment based on the tender price,” says Zuhairy.

“The resolution at the first AGM was to obtain approval from proprietors for the refurbishment, whereas the second AGM was to present the tender prices for the refurbishment works on the retail mall and the basis of contribution based on share units.”

He says that when the refurbishment works were completed in December 2016, the MC had to settle all payments to the consultants and contractors using the sinking fund, as some proprietors refused to pay the contributions.

“Some even took the MC to the courts, which resulted in the MC having to foot hefty legal fees,” he adds.

Tan explains that the High Court, at a judicial review hearing, overturned the tribunal’s decision primarily because of a previous Court of Appeal order, which was delivered on Feb 27, 2018.

He adds that, on March 29, 2022, the High Court highlighted and held, among other things, as follows:

•    That the tribunal president failed to appreciate and take into consideration the relevance of the outcome and effect of the 2018 Court of Appeal’s ruling, which had resolved the issue of Summit USJ Shopping Mall share-unit owners’ liability to pay for the refurbishment costs, late payment interest and legal fees;

•    That the 2018 Court of Appeal decision and order are premised on a finding that 92 share-unit owners are liable to pay for the refurbishment costs and late payment interest. The Court of Appeal’s finding is equally applicable to all other affected share-unit owners of the mall;

•    The tribunal and the High Court should not depart from the decision of the Court of Appeal in 2018, otherwise a serious contradiction would result in one group of share-unit owners having to pay for the refurbishment costs, late payment interest charges and legal costs, whereas another group of share-unit owners do not have to pay the same (even though they are all share-unit owners of the same shopping mall); and

•    Thus, the tribunal is bound by the 2018 Court of Appeal’s decision and order.

Tan explains that the Federal Court’s refusal to grant leave affirms the decisions of both the High Court in 2022 and the Court of Appeal in 2024.

“The High Court and Court of Appeal followed the principle of stare decisis — that the 2018 Court of Appeal decision is binding on the tribunal. The Federal Court decision effectively upholds the High Court’s finding that the retail mall parcel/share-unit owners are liable to pay for the refurbishment charges, late payment interest and legal costs,” he says.

Zuhairy notes that the conclusion of the case will certainly help the MC focus on efforts and resources to improve the mall by increasing footfall and maintaining its facilities and services to attract retailers.

“The message to the owners is that the refurbishment benefits the mall and sends a strong signal to defaulters to pay up so that resources can be optimised towards the betterment of the mall,” he says.

Nevertheless, Tan reckons that every case is fact-sensitive and the decision involving the refurbishment of Summit USJ Shopping Mall may not have a direct influence on future disputes over refurbishment charges in other strata properties.

“However, the Summit USJ Shopping Mall case sheds light on the importance of obtaining proper approvals for refurbishment/renewal works from the local authorities and share unit/parcel proprietors. The MC must also ensure that any such works to be carried out and the demand for contributions from the share units’ owners are permitted under the relevant laws,” he says.

He adds that while this case may not establish a legal precedent, it serves as an indication of the challenges and obstacles that an MC may face in obtaining approvals for refurbishment and renewal works, and in obtaining contributions for such refurbishment/renewal costs in a mixed-use development comprising parcels that are used for significantly different purposes.

Finally, Tan advises that MCs facing pushback from parcel owners over capital works should ensure they are well versed in the relevant enabling laws, particularly the provisions of the SMA 2013, and obtain the necessary approvals at a general meeting, as required by law.

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