Taking over the JMB. Can you recover losses from the previous committee?

A new committee takes over the management of a condominium and questions the expenditure, contractor appointments and accounting records left by its predecessors. Can the former committee members be made to pay personally?

In Badan Pengurusan Bersama Cova Suites v Edmund Tay Kim Joo & Ors [2026] MLRHU 1908, the High Court in Shah Alam dismissed the JMB’s claims against its former committee members and other defendants. The JMB had not proved the wrongdoing and recoverable loss alleged.

The decision draws an important distinction between identifying shortcomings in past management and establishing a legal claim against the individuals involved.

What happened?

Following a change of committee in 2019, the Cova Suites JMB brought proceedings against four former committee members, its former accounts manager and two defendants connected with the security services.

The complaints included contractor appointments without adequate competitive quotations, allegedly improper incentive payments, accounting irregularities and delays in preparing audited accounts.

The former committee members denied wrongdoing. They explained that they were unpaid volunteers who had kept the development operating through difficult circumstances, including the developer’s liquidation. They also argued that several disputes had already been decided in earlier court proceedings.

Why did the claims against former committee members fail?

The allegations were not supported by sufficient evidence.

Some complaints concerned the competence of lift contractors and the quality of access-card systems. However, the JMB did not call the relevant engineers or technical specialists to support those allegations.

One witness admitted that there was no documentary evidence of kickbacks or improper payments. Another had joined after the former committee’s tenure and lacked personal knowledge of the disputed events.

The Court also considered the explanations for the expenditure. Certain arrangements and incentives had been adopted to maintain essential services during financial difficulties. The JMB did not effectively contradict those explanations.

Accounting shortcomings did not, by themselves, establish a damages claim.

The Court recognised the importance of proper bookkeeping and timely audited accounts. However, delayed accounts and imperfect records did not automatically prove the serious misconduct alleged.

The JMB also needed to show how a particular defendant’s breach had caused a loss that could be recovered. It had not established that connection.

Some disputes had already been decided.

Parts of the case revisited contractor disputes and clamping-fee arrangements addressed in earlier proceedings. The Court rejected attempts to reopen matters that had already been conclusively determined.

Ultimately, the claims against all seven defendants were dismissed with costs.

Does this mean committee members cannot be personally liable?

No. The Court’s decision should not be read as giving committee members blanket protection from liability.

The Court took account of their voluntary service, the circumstances in which they operated and the absence of sufficient evidence supporting the allegations. It also emphasised that protection for good-faith conduct does not excuse dishonesty or bad faith.

Equally, being unpaid does not remove a committee member’s statutory responsibilities. The outcome depended on the claims made and the evidence presented.

What should owners, committee members and management bodies take note of?

For an incoming committee, the first step is to identify the particular transaction or decision being questioned.

If a contractor was allegedly overpaid, obtain the contract, invoices, payment records and evidence of the work actually performed. If the complaint concerns defective lifts or equipment, obtain a technical assessment explaining what went wrong. A general statement that the previous committee “wasted money” does not establish who was responsible or what loss resulted.

Seek and assess the explanation before deciding to sue. An unusual payment may require investigation, but the records may also show that it was authorised or made to keep essential services running. Check earlier court orders too: a change of committee does not necessarily allow the JMB to reopen a dispute it has already lost.

For serving committee members, retain minutes recording significant decisions, supporting quotations, approvals and reasons for expenditure. These records help the next committee understand what happened and help those involved explain their decisions if challenged later.

Management funds should be protected from wrongdoing. They should also be protected from litigation pursued without sufficient evidence. Before committing those funds to a claim against former committee members, establish what each person did, why it amounted to a breach, and how it caused the loss claimed.

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