A recent Court of Appeal (COA) ruling has provided important legal clarification on how mixed-use developments in Malaysia should be managed, particularly regarding the role of joint management bodies (JMBs).
In a decision linked to the Gurney Paragon mixed-development project in Penang, the appellate court ruled that a development must operate under one unified JMB, even when it contains both residential and commercial components. Separate management structures for different property segments were deemed inconsistent with the statutory framework governing strata developments.
While the court held that management must be unified, it also confirmed that different maintenance rates may still be imposed on residential and commercial units. This reflects the practical reality that different property types often have varying levels of usage and maintenance requirements.
The decision addressed the interpretation of provisions under the Building and Common Property (Maintenance and Management) Act 2007 and the Strata Management Act 2013, both of which emphasise centralised management and proper financial oversight of maintenance and sinking funds.
The three-member bench, led by Datuk Azhahari Kamal Ramli, ordered the developer Hunza Properties (Gurney) Sdn Bhd and the proprietor Hunza Properties (Penang) Sdn Bhd to hand over all necessary documents to the JMB to enable effective management of common property.
The court also directed that an annual general meeting (AGM) be convened promptly, allowing all parcel owners—both residential and commercial—to participate in determining appropriate maintenance charges.
Gurney Paragon is a large integrated project comprising residential towers, an office tower, a retail podium and shopping mall, heritage buildings and supporting facilities. Earlier resolutions passed at the first AGM in 2014 allowed separate management and maintenance arrangements for residential and commercial portions, including independent maintenance funds.
These arrangements were initially upheld by the High Court, which considered them reasonable given the different interests of residential and commercial owners. However, the Court of Appeal overturned that decision, ruling that such resolutions were invalid and beyond the powers granted by legislation.
The appellate judges concluded that developers and original proprietors cannot act as separate management bodies or maintain independent maintenance accounts for specific components of a development.
Although the residential JMB had sought to recover substantial arrears in maintenance and sinking fund contributions, the court determined that proper rates must first be established through a general meeting involving all owners. The developers’ liability will therefore be assessed based on charges determined through this process.
The court also declared earlier resolutions enabling separate management to be null and void and instructed the JMB to prepare a comprehensive budget covering all shared facilities across the development.
This ruling carries broader significance for Malaysia’s property market, particularly for large-scale integrated projects that combine residential, retail and office elements. Investors evaluating commercial property in KL, mixed-use developments in Selangor, or strata-titled office space in Bukit Jalil should pay close attention to governance structures, as proper management frameworks directly affect long-term asset value and operational efficiency.
Similarly, businesses acquiring industrial property in the Subang area, establishing a factory in Puchong, or investing in industrial land in Selangor often assess management quality, maintenance standards and legal compliance when choosing premises within strata or managed environments. Clear legal precedents such as this decision help improve transparency and consistency across the sector.
As mixed-use developments continue to grow in Malaysia’s major urban corridors, the court’s guidance reinforces a key principle: while cost structures may vary between property types, management responsibility must remain unified to ensure accountability, transparency and effective maintenance of shared assets.
Singapore