Ideal Advantage Sdn Bhd v Perbadanan Pengurusan Palm Spring @ Damansara (Court of Appeal No. W-02 (NCVC)(W)-138-01/2018 [2019] 1 LNS 894
Whether accessory parcels must be used in conjunction with the main parcel?
Facts:
The Plaintiff is a Management Corporation of Palm Spring. D2 is the developer. D1 purchased 45 units of condominium from D1 vide 45 SPAs. The 45 units collectively have accessory car parks of 439 car parks.
Plaintiff sought to impugn the purported sale and claim ownership to those car parks as common property.
D1 on the other hand argued that it is the registered owner of the 45 units together with the 439 accessory parcels and has acquired an indefeasible title over them.
D1 then rents out the car parks to 3rd parties.
High Court’s decision:
The 394 (439-45 1 car park to each parcel) accessory car parks were rented out and not used in conjunction with the main parcel.
The purpose and intent or “usage” of the car parks constitute a breach of Section 4, 34(2) and 69 Strata Titles Act 1985;
The renting out of the 394 car parks is a “dealing” of the accessory parcels which is independent of the main parcels and prohibited by law.
Since 394 accessory car parks were dealt with in a commercial manner and not appurtenant to the main parcel, it is illegal and falls within Section 24(b) of the Contracts Act 1950 and the sale of car parks is null and void.
Court of Appeal’s Decision
The Court of Appeal dismissed the appeal and agreed with the High Court Judge’s decision. The Court of Appeal further went on and ruled:
That there is no legal restriction for an owner to purchaser more than 1 accessory car park, but they must be used in conjunction with the main parcel unit. They cannot be dealt with independently and separately by renting out to different individuals utilised for commercial purposes to generate a substantial income.
The STA 1985 prohibits commercial usage of car parks in that manner and renting out to 3rd parties.
The word “accessory” connotes the usage of the accessory car park parcel as attached or annexed, connection or dependent on and/or used or intended to be used with the main parcel. It is not independent on its own. to allow the carrying out of a business venture of renting out the accessory car park parcels independently of the parcel units of the condominium would defeat the very purpose and intent of Parliament in legislating the STA 1985 with regards to accessory parcel.
The 394 car parks are common property since the SPA is null and void.
The fact that the car parks are already comprised in the strata titles alone, is not the determining factor that they do not form “common property”. The facts of the each case need to be scrutinized.
Takeaway:
A developer should adopt a more cautious approach when determining what are to be accessorised as accessory parcels.
