Can monies in a Joint Management Body’s Maintenance Account and Sinking Fund Account be garnished?

In Transpacc Property Management Sdn Bhd v Badan Pengurusan Bersama Pangsapuri Aman Larkin & Anor [2022] 9 CLJ 794, the High Court held that monies in a joint management body’s maintenance account (but not the sinking fund account) may be garnished towards settlement of a judgment debt to the building management services provider.
 
Relevant facts
 
The appellant was the property manager for Scott Tower Condominium (‘Scott Tower’).
 
The joint management body of Scott Tower (‘JMB’) refused to pay the sums due and owing to the appellant for the building management services provided by the appellant. The appellant  commenced an action against the JMB and obtained judgement in default against the JMB. The appellant’s ex parte application for a garnishee order for part of the judgement sum against the bank at which the JMB’s maintenance account and sinking fund account are maintained (‘Bank’) was allowed by the Sessions Court.
 
Nonetheless, the appellant’s application for a second garnishee order against the Bank for the balance judgement sum was dismissed by the Sessions Court on the basis that monies in the JMB’s maintenance account and sinking fund account with the Bank are held on trust pursuant to the Strata Management Act 2013 (‘SMA’), and hence could not be garnished.
 
The issues before the High Court
 
Dissatisfied with the Sessions Court’s decision in relation to its application for the second garnishment order, the appellant appealed. The issues before the High Court include whether the monies in the JMB’s maintenance account and sinking fund account can be garnished towards settlement of the JMB’s judgement debt.
 
The decision of the High Court
 
Monies in JMB’s Maintenance Account
 
Section 23(3) of the SMA requires a joint management body’s maintenance account to be “used solely for the purpose of meeting the actual or expected general or regular expenditure necessary” for matters including “paying any expenses, costs or expenditure in relation to the procurement of services incurred or accepted by the joint management body in the performance of its functions and the exercise of its power under [the SMA]” and “meeting other expenses of a general or regular nature relating to the maintenance and management of the building or land intended for subdivision into parcels and the common property” under paragraphs (m) and (n) thereof.
 
Hence, the High Court held that the JMB may use the monies in its maintenance account to meet expenditure for paying the costs, expenses or expenditure relating to the building management services procured from the appellant. Such monies may also be garnished towards settlement of the JMB’s judgment debt to the appellant.
 
Monies in JMB’s Sinking Fund Account
 
Section 24(2) of the SMA provides that a joint management body’s sinking fund account shall be “used solely for the purposes of meeting the actual or expected capital expenditure” for matters stipulated thereunder.
 
The High Court distinguished that the JMB’s judgment debt was for unpaid operating expenditure due and owing by it to the appellant for the provision of building management services for Scott Tower, and was not for capital expenditure. Hence, the High Court held that the monies in the JMB’s sinking fund account in the Bank cannot be garnished towards the settlement of such judgment debt.
 
For the reasons set out above, the High Court allowed the appeal in so far as it relates to the garnishment of monies in the maintenance account of the JMB with the Bank.
 
Comments
 
This decision clarifies that monies in a joint management body’s maintenance account, but not those in a sinking fund account, may be garnished towards settlement of judgement debt for building management services. The same principle should be applicable to moneys in a maintenance account held by a management corporation under the SMA.
 
It remains to be seen whether moneys in a joint management body’s or a management corporation’s sinking fund account can be garnished to satisfy a judgment debt incurred in relation to a capital expenditure, such as expenditure incurred in repainting the common property or replacement of fixtures or fittings comprised in the common property of the strata development.
 
Case note by Jesy Ooi (Partner) and Engy Tan (Senior Associate) of the Real Estate Practice of Skrine.
 

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