Claims for Arrears of Maintenance Charges: Tribunal or Court?

In strata management, arrears of maintenance charges are among the most common issues faced by the Joint Management Body, Management Corporation, committee members and property managers.

When an owner does not pay maintenance charges or sinking fund contributions, the management body must take appropriate steps to recover the amount. However, a common question arises: where should the claim be brought?

Should the claim be filed at the Strata Management Tribunal?

Or should legal action be commenced in court?

The answer depends on several matters, including the amount claimed, nature of the claim, supporting documents, legal position, recovery strategy and further action that may be required after a decision is obtained.

This article provides a simple explanation of the difference between bringing a claim for arrears of maintenance charges at the Strata Management Tribunal and in court.

1. Why Must Arrears of Maintenance Charges Be Claimed?

Maintenance charges and sinking fund contributions are important financial sources in a strata development.

These funds are used to pay various management and maintenance costs, including security, cleaning, lift maintenance, utility bills for common areas, building insurance, repair works and management services.

If many owners do not pay their charges, the finances of the building will be affected. The management body may face difficulty paying contractors, maintaining services, carrying out repairs or managing the building properly.

Therefore, a claim for arrears is not merely an action against one owner. It is a step taken to protect the financial interest of the entire strata community.

2. What Is the Strata Management Tribunal?

The Strata Management Tribunal is a forum established to hear and decide certain types of disputes relating to strata management.

In the context of arrears of maintenance charges, the Tribunal is often considered because the process is usually simpler and more focused on strata management issues.

The management body may consider the Tribunal where the claim falls within the Tribunal’s jurisdiction and is supported by sufficient documents.

However, not every dispute is suitable for the Tribunal. Each case must be considered based on the nature of the claim, amount claimed, parties involved and remedies required.

3. When Is the Tribunal Suitable?

The Tribunal may be suitable where the claim is clear and relates to arrears that can be proven through documents.

For example, the Tribunal may be considered where:

a. the amount of arrears is within the Tribunal’s jurisdictional limit;

b. the respondent is a parcel owner with an account record;

c. the claim involves maintenance charges, sinking fund contributions or amounts relating to strata management;

d. the statement of account is clear;

e. the rate of charges imposed can be proven;

f. notices or payment demands have been issued;

g. the factual issues are not too complex; and

h. the management body wants to obtain a decision through a simpler process.

In such cases, the Tribunal may be a practical channel to obtain an award against an owner who has arrears.

4. What Are the Advantages of the Tribunal?

One advantage of the Tribunal is that the process is usually easier to understand compared to ordinary court proceedings.

The Tribunal is also more specific to strata management issues. This is helpful because disputes involving arrears of maintenance charges are usually closely connected to statements of account, charges, common property, meeting decisions and owners’ responsibilities.

The advantages of the Tribunal include:

a. a simpler process;

b. a forum specific to strata issues;

c. generally more controlled costs;

d. suitability for clear and document-based claims;

e. greater accessibility for management bodies in certain claims; and

f. the ability to resolve certain disputes without a longer court process.

Even so, the management body must still prepare its documents properly. A claim filed without proper documents or sufficient evidence may face difficulties even if filed at the Tribunal.

5. What Are the Limits of the Tribunal?

The Tribunal also has certain limits.

Matters that must be considered include the Tribunal’s jurisdiction, monetary limit, types of claims that may be brought and remedies that may be granted.

If the claim exceeds the Tribunal’s jurisdictional limit, or if the matter requires remedies that are more appropriately granted by the court, court action may need to be considered.

Further, if the dispute involves more complex issues, such as serious disputes over the validity of meeting decisions, status of parties, title issues, complicated contractual issues or claims requiring specific orders, the Tribunal may not be the most suitable forum.

Therefore, before filing a claim, the management body must consider whether the Tribunal is truly the correct forum.

6. When Is Court Action Suitable?

Court action may be considered where the claim is not suitable or cannot be brought before the Tribunal.

For example, court action may be more suitable where:

a. the amount claimed exceeds the Tribunal’s limit;

b. the issues involved are more complex;

c. broader remedies are required;

d. there is a need for a more strategic enforcement approach;

e. the matter involves parties who may not be suitable for Tribunal proceedings;

f. the claim involves more serious legal issues; or

g. the management body decides to use the court process from the outset based on case strategy.

Court action may also be an option where the management body anticipates that, after obtaining judgment, certain enforcement actions may need to be taken.

However, court action usually involves more cost, time and procedural compliance compared to the Tribunal.

7. What Is the Difference Between a Tribunal Award and a Court Judgment?

A Tribunal award is a decision given by the Tribunal.

A court judgment is a decision given by the court.

Both may have legal effect, but the process of obtaining, registering or enforcing the decision may differ depending on the applicable law and procedure.

In the context of strata management, the management body should understand that obtaining an award or judgment is only one stage. If the owner still does not pay after a decision is obtained, enforcement action may need to be considered.

For this reason, before commencing a claim, the management body should think not only about how to obtain a decision, but also about how to recover payment after the decision is obtained.

8. What Documents Are Important for the Claim?

Whether the claim is brought at the Tribunal or in court, documents are very important.

Documents usually required include:

a. the owner’s statement of account;

b. invoices or bills for maintenance charges;

c. payment receipts;

d. arrears records;

e. demand notices;

f. reminder letters;

g. records of service of notices;

h. minutes of meetings relating to the rate of charges;

i. general meeting decisions, where relevant;

j. documents showing the owner’s status;

k. by-laws;

l. authority letter or resolution to commence action, where necessary; and

m. records of communication with the owner.

A good claim must be supported by clear, organised and consistent documents.

If records are incomplete, the owner may dispute the amount of arrears, rate of charges, period claimed or whether the claim was properly brought.

9. Why Is Strategy Important?

Not every arrears claim should be treated in the same way.

Some cases may be resolved through payment reminders or instalment arrangements. Some cases are suitable for the Tribunal. Other cases may be more suitable for court action.

The management body should consider several factors before choosing the appropriate action, including:

a. amount of arrears;

b. period of arrears;

c. conduct of the owner;

d. previous payment record;

e. cost of action;

f. time required;

g. likelihood of recovery;

h. need for enforcement after the decision; and

i. effect on the overall management of the building.

Legal action is not merely about filing a claim. It should be viewed as part of a wider recovery strategy.

10. What Should an Owner Do If a Claim Is Received?

If an owner receives a claim for arrears, the owner should not ignore it.

Better steps include:

a. checking the statement of account;

b. checking the amount claimed;

c. checking the period of arrears;

d. checking payments previously made;

e. seeking clarification from the management;

f. keeping all payment receipts;

g. discussing payment if the arrears are genuine;

h. obtaining advice if the amount or basis of the claim is disputed; and

i. attending the proceedings if a claim has been filed.

If the owner does not attend or respond to the claim, a decision may be given without the owner’s full explanation.

In many cases, arrears issues are easier to resolve if the owner acts early and does not allow the claim to proceed without response.

11. Conclusion

Arrears of maintenance charges are an important issue in strata management.

If charges are not paid, the management body may need to take action to recover payment. Depending on the facts and amount claimed, action may be considered either at the Strata Management Tribunal or in court.

The Tribunal may be suitable for claims that are simpler, clearer and within its jurisdiction. Court action may be more suitable for larger, more complex claims or matters requiring a more strategic enforcement approach.

Whatever forum is chosen, the most important matters are complete records, proper procedure and a suitable strategy.

The management body should act transparently and based on documents. Owners should understand that arrears of maintenance charges are not a small issue because they affect the entire strata community.

Prepared by:
Khairul Shahrizan bin Hamizi
Advocate and Solicitor
High Court of Malaya

Brief Note

This article is prepared for general information only and should not be treated as specific legal advice. Each claim for arrears of maintenance charges must be assessed based on its own facts, amount claimed, documents, statements of account, notices, minutes of meetings, by-laws, Tribunal jurisdiction, court procedure and the applicable laws.