Strata Management Case Updates 22 – Can a JMB directly employ services of a property manager and can an employee of a JMB claim unlawful dismissal in the Industrial Relations Court?

Thong King Chai v One South JMB (Industrial Court) Award No. 2091 of 2019 [2019] 2 LNS 2091

Facts:

Thong King Chai, a General Manager employed directly by One South JMB filed a claim under Section 20(3) of the Industrial Relations Act (“IRA”) against the JMB as the employer.

By a letter of appointment dated 4.6.2015, Thong was employed by the Joint Management Committee for the term of 2015/2016 as the General Manager under a 1 year fixed term contract with effect from 1.7.2015 until 30.6.2016. The contract of employment was subsequently renewed with effet from 1.7.2016 to 30.6.2017.

The Claimant’s duties include to take charge of the overall management of all operations of the One South Mall, Park Apartment, Gardenz and the Flexis Apartment and he was to report to the Joint Management Committee.

At the 3rd AGM of the JMB held on 26.6.2016, all members of the JMB 2015/2016 were replaced by the newly elected committee members (“JMC 2016/2017”). Soon after JMC 2016/2017 took office, they issued the Claimant with a letter of suspension dated 12.8.2016 and a further issued a show cause letter dated 30.8.2016.

The Claimant replied to the show cause letter. Dissatisfied with the explanation, the JMC convened a domestic inquiry (“DI”). DI was held on 7.10.2016 with 12 charges made against him.

After conclusion of DI, the JMB found the Claimant guilty and dismissed him via a letter dated 21.10.2016.

Decision:

1. The DI breached the basic rule of natural justice that “no man may be judged in his own cause, nemo judex in cause sua”.
2. The Court went on further to determine whether the proven misconduct constitutes just cause or excuse for the dismissal. The Court found the Claimant guilty of Charges 1, 10, 11 and 12 and held that the Claimant’s dismissal is warranted and justified.
3. The charges made out against the building manager include:

• charge 1 – failed to monitor and ensure water bills of all phases and/or building of One South be paid promptly;
• charge 2 – failed to monitor and ensure of the monthly tax deduction
• charge 3 – failed to monitor and ensure that the Form E for year 2015 be submitted to the Inland Revenue Board;
• charge 4 – failed to monitor and ensure that all resolutions passed by the previous JMB be passed by the adequate quorum required
• charge 5 – failed to disclose whether he is a registered property manager and produce any Bon in Form 12
• charge 6 – abused the position and/or authority by allowing a parcel owner to rent her office unit to restaurant workers;
• charge 7 – failed to advise JMB office bearers to respond to an urgent letter received from MBSJ;
• charge 8 – imposed penalty amounts of more than RM200.00 against parcel owners
• charge 9 – abused the position and/or authority to by issuing a letter dated 28.9.2016 to all staff instructing them not to take direct instructions from an Joint Management Committee members unless instructions were given by them in the capacity as One South Owners;
• charge 10 – abused the position and/or authority by issuing a credit note in the sum of RM2,700.00 without the consent, knowledge and/or approval of JMC;
• charge 11 – failed and/or neglected to advise the JMC in respect of the calculation of the share units for each parcel owner of One South required under Section 8 of the Strata Management Act 2013;
• charge 12 – abused the position and/or authority by allowing a parcel owner to install grill at the entrance located at the common area

4. In respect of Charge 5, the Court found the Claimant not guilty and referred to Regulation 21 of the Strata Management (Maintenance and Management) Regulations 2015. It ruled that Regulation 21 does not apply to the Claimant and the Claimant does not need to lodge a bond despite not being licensed building manager.

The IR court firstly referred to Regulation 21 of the Strata Management (Maintenance and Management) Regulations 2015 reproduced below:

21 Services of any person or agent to maintain and manage common property

(1) If a joint management body shall employ or arrange and secure the services of any person or agent to undertake the maintenance and management of the common property of the building or lands intended for subdivision into parcels under paragraph 21(2)(f) of the Act, the joint management body shall enter into a management agreement with such person or agent.

(2) If the person or agent is not a registered property manager, he shall not act to undertake such maintenance and management of the common property unless he has lodged with the joint management body a bond Form 12 to be given by a bank, finance company or insurer.

(4) A copy of the management agreement under subregulation (1) and the bond under subregulation (2) shall be filed by the joint management body with the Commissioner together with payment of the prescribed fee within thirty days from the date of the management agreement of the bond, as the case may be.

(5) Any person who fails to comply with subregulation (1), (2), (3) or (4) commits an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both.

The Court found that Regulation 21 does not apply to the Claimant. The claimant was employed as the General Manager to manage all operations of One South JMB pursuant to the letters of appointment dated 4.6.2015 and 16.6.2016. The Court distinguished the scope of services of the Claimant against the strict reading of Regulation 21 which was employed to undertake the maintenance and management of the common property of the building. The Court further found that in the absence of having a management agreement entered into between the Claimant and the JMB, the Claimant does not fall under the definition of Property Manager undertaking services set out in Regulation 21

The requirement of the bond is not set out expressly in the letter of appointment and failure to provide bond cannot be a ground for dismissal.

5. In respect of Charge 10, the Court ruled that the Claimant has no authority to issue credit note to write off debt owing without the approval of the JMC and such it is a misconduct.

6. In respect of Charge 11, the Court found that the failure to advise the JMC in respect of assigning of allocated share units for each parcel owner of One South Development is not a misconduct but a negligent on the part of the Claimant.

Key Takeaways:

1. The JMB is allowed to employ any person to undertake the maintenance and management of the common property pursuant to Section 21(2)(f) Strata Management Act 2013.
2. If the JMB employs such person, the JMB SHALL enter into a management agreement with such person.
3. The person employed should be a registered property manager otherwise he has to lodge with the JMB a bond in Form 12.
4. This however must be read in light of the amendments made to the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 gazetted on 1.2.2018 where all property managers must be registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP).
5. Section 22J of the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 went on to restrict an unregistered property manager to act as a property manager reproduced below:

(1) No person shall, unless he is a registered property manager and has been issued with an authority to practise under section 16-

(a) practise or carry on business or take up employment under any name, style or title containing the words “Property Manager”, “Managing Agent”, or the equivalent thereto in any language or bearing any other word whatsoever in any language which may reasonably be construed to imply that he is a registered property manager or he is engaged in property management practice or business;

(b) act as a property manager;

(c) carry on business or take up appointment or engagement as a property manager;

(d) display any signboard or poster, or use, distribute or circulate any card, letter, pamphlet, leaflet, notice or any form of advertisement, implying either directly or indirectly that he is a registered property manager or he is engaged in property management practice or business;

(e) undertake for a fee or other consideration any of the work enumerated in subsection 22I(2); or

(f) be entitled to recover in any court any fee, commission, charge or remuneration for any professional advice or services rendered as a property manager.