Managing your own block in a mixed development. Are maintenance charges still payable?

In a mixed development, different blocks may serve different purposes. A developer may operate one block as serviced apartments while the MC manages another for residential owners. If a developer maintains its own block, are maintenance charges still payable to the management corporation (MC)?

The High Court’s decision in Attana Scotts Properties (KL) Sdn Bhd v Kirana Management Corporation shows why separate management does not, by itself, establish a right to deduct expenses from the MC’s charges.

Case: Attana Scotts Properties (KL) Sdn Bhd v Kirana Management Corporation | High Court, Kuala Lumpur | Written grounds dated 15 August 2025

Separate management in a mixed development

The developer retained control of Menara A, which was connected with its serviced-apartment business, while the MC managed Menara B. Both towers remained within one strata development. The developer relied on an alleged agreement permitting the arrangement.

It claimed approximately RM41.96 million in expenditure and sought to set this off against approximately RM39.74 million in maintenance charges and sinking fund contributions. The dispute therefore concerned both management authority and who should bear the expenses.

Why were the expenses not accepted against maintenance charges?

The court found that the developer had not established the alleged agreement. It also held that even such an agreement could not override the statutory responsibilities governing management of the development.

There were further problems with the expenditure. The developer had to establish a legal basis for recovering it and provide proper evidence of the expenditure. An accounting calculation alone did not establish that the MC owed the amount claimed.

In this mixed development, the court distinguished the cost of maintaining common property from the cost of running the developer’s business. The developer could not simply make the MC responsible for housekeeping, front-office operations and other business expenses.

The High Court dismissed the developer’s claim. Its orders on the MC’s counterclaim included handing over management of Menara A and specified repayments. The judgment also records an appeal by the MC concerning costs.

What should developers and management bodies check?

Start with the documents behind the arrangement. If a developer or operator manages one block separately, identify the areas covered, the services provided and the legal basis for that division. Years of following an arrangement do not, by themselves, establish that it complies with the law.

Separate common-property expenses from business expenses. Cleaning a common corridor raises a different question from servicing guests’ rooms. Invoices, work descriptions, payment records and the relevant plans should show what each expense actually relates to.

Do not simply deduct your own expenses from the MC’s bills. A reimbursement claim and an obligation to pay maintenance charges are separate matters. Establish whether there is a lawful entitlement to reimbursement and whether a set-off is legally available. A committee agreement or vote cannot cure an arrangement that the law does not permit.

An incoming committee should request the agreements, accounts and plans supporting any separate management arrangement. This helps identify what needs to be regularised before further expenses accumulate.

This case concerns management authority and the claimed set-off. Whether different rates of charges may lawfully apply within a mixed development is a separate question.

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