Invalid maintenance rates. Does that mean a refund?
Can Owners Recover Maintenance Payments When a JMB’s Charging Resolutions Are Invalid?
You have paid maintenance charges for years. The resolutions behind those charges are then declared invalid. Can you demand all your money back, or stop paying altogether?
In Badan Pengurusan Bersama Gurney Paragon Residental v. Hunza Properties (Gurney) Sdn Bhd & Ors [2026] 4 CLJ 351, the Court of Appeal drew an important distinction between an invalid charging rate and the continuing statutory obligation to contribute to maintenance.
What happened?
Gurney Paragon was a mixed development under one lot, with residential towers and commercial components. Resolutions passed unanimously at the first annual general meeting in 2014 separated their management and accounts. The JMB managed the residential component, while the commercial component was managed separately.
The JMB later claimed approximately RM56.93 million in charges and sinking fund contributions and sought the handover of common property. The High Court rejected the monetary claim and permitted the separate management arrangement to continue.
On 3 February 2026, the Court of Appeal set aside that decision. During the JMB management period, the statutory framework required one JMB to manage all common property within the development area, with one maintenance account and one sinking fund account. The resolutions creating separate management and accounts were beyond the powers conferred by law and void. Unanimous agreement and the Commissioner of Buildings’ support could not make them lawful.
Invalid maintenance charges: why were refunds refused?
The duty to pay maintenance charges and sinking fund contributions arose from statute. The meeting determined the rate; it did not create the underlying obligation. An invalid rate therefore did not extinguish the owners’ duty to contribute.
The court also considered that the residential owners had enjoyed the maintenance and capital expenditure funded by their payments. Refunding years of payments would prejudice ongoing maintenance and disrupt the development’s finances.
The court prohibited refunds of the residential owners’ earlier payments under the invalid resolutions. It directed the JMB to convene a proper general meeting, involving both residential and commercial parcel owners, to determine valid charges using a budget for the whole development.
Once those rates were properly determined, the accounts had to be adjusted. Overpayments were to be credited against future charges. Underpayments and unpaid contributions were to be recalculated retrospectively using the valid rates. In this case, the order extended the recalculation back to October 2011.
This was not an immediate award of the RM56.93 million originally claimed. The court required the rates and accounts to be regularised first. It also allowed claims for reimbursement of qualifying commercial common-property expenses, subject to documentary proof, verification and approval at the general meeting.
What should owners, JMBs and property managers do?
1. Identify precisely what is invalid.
A challenge to the rate does not necessarily remove the duty to pay. Review the resolutions, budget and court order before demanding a refund or treating the entire account as cancelled.
2. Prepare the accounting remedy alongside the legal challenge.
Keep payment records, invoices, share-unit schedules and expense breakdowns. A successful challenge may lead to recalculation and credits, making accurate accounts essential for both owners and management.
3. Check the management stage and the proposed arrangement.
This decision concerned separate management and accounts during the JMB period. The court distinguished that issue from different charging rates and from the statutory subsidiary management corporation framework at the MC stage. Any proposed arrangement must be examined under the provisions applicable to that development and management period.
In our view, the practical lesson is to consider the remedy from the outset. Establishing that a resolution is invalid is only part of the dispute. The next question is how lawful contributions should be determined and past payments accounted for while maintenance continues.
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