Criminal penalty on non-compliance of tribunal awards

By Datuk Chang Kim Loong

THE recent successful prosecution of cases involving failure to comply with awards handed down by the Strata Management Tribunal (SMT) is a milestone to the Strata Management Act 2015 (SMA) and sends an important message to the stratified properties stakeholders that awards given by SMT shall be treated seriously.

Last week, the Subang Jaya Municipality (Magistrate’s) Court convicted and fined a defendant (defaulting strata owner), who failed to comply with an award of the SMT ordering payment of outstanding charges and contribution to sinking fund within 30 days from the date of award.

The presiding magistrate Barath Manian imposed a fine of RM5,500 on the defendant or in default thereof one-month imprisonment. The case was prosecuted by prosecuting officer Emyshimy Rizal Nasaruddin.

Earlier in February and March, a defendants were fined RM1,500 or in default five days imprisonment (however the prosecution has filed notice of appeal to high court appealing for a heavier sentence) and another RM3,500 or in default three days imprisonment, respectively by the same municipal court after pleading guilty to the same offence.

This recent development is certainly a positive development in the correct direction.

Strata management tribunal to hear disputes

Since coming into force on June 1, 2015, the SMA has immediately become an important legislation as stratified developments (residential, commercial and mixed) have become a norm in densely populated areas such as Klang Valley, Ipoh, Penang and Johor Baru.

The SMA is by no means a simple piece of federal statute. It governs the relationships and interaction between developers, joint management bodies, management corporations, parcel owners, commissioner of buildings, managing agents etc.

It is primarily for this reason that the drafters of SMA saw it fit to establish a quasi-court in the form of the SMT to provide a speedy and efficient channel to resolve disputes between stakeholders of the SMA.

The SMT was established pursuant to the SMA to act as an adjudication body to hear disputes concerning strata management in a cost effective manner and thereafter to dispense awards (equivalent to a court order) without delay and within 60 days from the first hearing date of the case.

The members of the SMT comprise officers of the judicial and legal services and advocates and solicitors of not less than seven years’ standing, who are experienced and well versed with laws in the SMA, its Regulations and its application.

The SMT has jurisdiction to hear disputes of various natures ranging from simple claims involving recovery of charges to more complicated ones involving exercise and performance of duty, power and functions pursuant to SMA and subsidiary legislation made thereunder by various stakeholders.

In short, it is a quasi-judicial body entrusted to hear and determine strata management related disputes.

Orders of the tribunal

The Fourth Schedule, Part 2 [Subsection 117(3)] to the SMA states that the tribunal may order a party to the proceedings to:

  • Pay a sum of money to another party.
  • The tribunal may order the price or other consideration paid by a party to be refunded to that party.
  • The tribunal may order the payment of compensation or damages for any loss or damage suffered by a party.
  • The tribunal may order the rectification, setting aside or variation of a contract or additional by-laws, wholly or in part.
  • The tribunal may order costs to or against any party to be paid.
  • The tribunal may order interest to be paid on any sum or monetary award at a rate not exceeding eight per centum per annum.
  • The tribunal may dismiss a claim which it considers to be frivolous or vexatious.
  • The tribunal may make any order of which it has the jurisdiction to make under Part 1 of this Schedule or any other order as it deems just and expedient.
  • The tribunal may make such ancillary or consequential orders or relief as may be necessary to give effect to any order made by the tribunal.

Awards

The decision and order granted by SMT upon hearing is known as an award.

Section 120 of the SMA provides that an award is final and is binding on all parties to the proceedings. The same provision further provides that Awards shall be deemed to be an order of court and could be enforced by any party to the proceedings.

In the event an award is not duly complied with, a party whose award is in his favour, may request the secretary of the SMT to send a copy of the award to the courts having jurisdiction in the place to which the award relates or in the place where the award was made, and the court shall cause the copy of the award to be recorded.

Once this is done, the party seeking enforcement may file enforcement proceedings at the courts of law. However, the reality is far from ideal.

Sometimes, a winning party may have financial difficulty to apply for enforcement in court through the civil processes and is left with a paper award.

In addition, the SMT will not seek to enforce its award upon handed down its award. This situation, if left unchecked, may render SMT a toothless tiger.

In order to give more force to the awards granted by SMT, the SMA has criminalised non-compliance with awards of SMT.

Section 123 of the SMA provides that any person who fails to comply with an award made by SMT commits an offence and shall, on conviction, be liable to a fine not exceeding RM250,000 or to imprisonment for a term not exceeding three years or to both, and in the case of a continuing offence, to a further fine not exceeding RM5,000 or every day or part thereof during which the offence continues after conviction.

MPSJ set the precedent

Since year 2015, there has not been any reported cases concerning prosecution for default of SMT’s Award and there are concerns that awards of SMT could be treated lightly or even neglected.

In the prosecution cases narrated earlier, the Commissioner of Buildings (COB) of Subang Jaya Municipal Council (MPSJ) working together with the Ministry of Housing and Local Government, the National House Buyers Association (HBA) and public prosecutor have charged the Award defaulters who had been convicted subsequently.

This reflects the seriousness of the prosecution processes that involve investigation and recording of statements of the parties seeking enforcement of the awards.

Heavier sentence could be Imposed

The success of these prosecution cases further boost and bolster the sanctity of SMT’s awards. The positive effect of these prosecution cases will hopefully not confine to cases involving default in paying maintenance charges.

It is expected that the successful prosecution will also send a chilling message down the spine of the defaulters and to members of public and stakeholders to treat all Awards of SMT seriously or risk facing penalty such as fine or imprisonment or to both.

Notwithstanding the monetary fine sentence handed by the magistrate in the three cases mentioned earlier, the high courts has power to impose heavier punishment and higher penalty fine within the limit of Section 123 of the SMA (namely RM250,000 fine or to imprisonment for a term not exceeding three years or to both) depending on the gravity of the offence and consequences of non-compliance with SMT’s award.

It is worth highlighting that the punishment can also be extended to individuals having being responsible for the “management and control” of the affairs of a body corporate who disobey the Awards.

In this regard, it is important for all committee members of management bodies to closely monitor the status of each cases filed against the management bodies at the SMT and take appropriate action to ensure compliance, if need be.

Strata unit owners are advised to get acquainted with the SMA, its rules and by-laws governing sub-divided buildings. If they do not understand the intricacies of the SMA, they should seek out the services of the professionals in this field. – July 12, 2020.

Chang is the honorary secretary-general of the National House Buyers Association.

 

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