Illegal JMB Committees, Missing Funds and Injunctions: How the High Court Stopped a Strata Governance Crisis
How the High Court Protected Strata Owners — and What It Means for JMBs & MCs in Malaysia
Introduction: When Strata Management Goes Wrong
Strata living in Malaysia depends heavily on trust — trust that elected Joint Management Body (JMB) or Management Corporation (MC) office bearers will act lawfully, transparently, and in the best interests of proprietors. When that trust is breached, the consequences can be devastating: unpaid service providers, frozen bank accounts, operational paralysis, and millions in missing funds.
In a High Court decision delivered in Shah Alam in August 2025 (Perbadanan Pengurusan The USJ 19 City Mall & Another V. Tiow Weng Theong and others [2025] CLJU 2737), the Court sent a clear and uncompromising message:
Individuals who unlawfully cling to JMB positions, collect cash without authority, ignore audit obligations, and bind a JMB to unauthorised contracts will be held personally liable — jointly and severally.
This article unpacks the case, the Court’s reasoning, and — most importantly — what JMBs, MCs, developers, and proprietors must learn from it.
Background of the Dispute: A JMB That Never Let Go
The dispute arose from the management of a mixed strata development comprising a condominium and a commercial mall in Selangor. The plaintiffs were the statutory management body formed under the Strata Management Act 2013, which took over from the earlier Joint Management Body.
The defendants were three individuals who had been elected as JMB office bearers in January 2016:
- Chairman
- Treasurer
- Secretary
Their terms expired in January 2019.
Yet despite the expiry of their statutory mandate, no AGM was convened, no proper elections were held, and no lawful extension was obtained. Instead, the defendants continued to:
- Hold themselves out as JMB office bearers
- Control the management office
- Collect large amounts of cash from proprietors
- Enter into contracts purportedly on behalf of the JMB
This continued until September 2021, when the Court finally intervened with sweeping injunctions.
Key Allegations Before the High Court
The plaintiffs alleged, among others, that the defendants:
- Had no legal authority to act as JMB office bearers after January 2019
- Collected and controlled over RM1 million in cash without depositing it into JMB bank accounts
- Failed to maintain proper accounts or audits for several years
- Entered into long-term contracts with a service provider without AGM approval
- Ignored multiple court injunctions, including restrictions on handling funds
The defendants denied wrongdoing, claiming they were acting out of necessity — that “someone had to manage the place.”
The High Court decisively rejected that narrative.
The Court’s Central Findings
1. Expired JMB Office Bearers Have No Residual Authority
The Court held that under the Strata Management Act 2013, JMB committee members cease to hold office automatically upon the expiry of their term unless lawfully extended.
There was:
- No court order authorising the defendants to remain in office
- No AGM approval legitimising continued control
- No statutory exception permitting indefinite “caretaker” status
The Court described the defendants’ refusal to step down as legally and morally indefensible.
“Someone has to manage the place” is not a legal defence.
This is a critical reminder: necessity does not override statute.
2. Cash Collection Without Banking Is a Serious Statutory Breach
One of the most damning findings concerned RM1,010,195.61 collected in cash from proprietors over a two-year period.
The Court found that:
- None of the cash was deposited into JMB bank accounts
- No receipts, invoices, or vouchers were produced to justify expenditure
- The funds were removed from safes by the defendants personally
Independent auditors confirmed that the accounts could not be audited due to missing records and unexplained balances.
This conduct breached multiple statutory duties, including obligations to:
- Maintain proper accounts
- Deposit funds into designated accounts
- Ensure auditability and transparency
The Court drew adverse inferences against the defendants for failing to produce bank statements and supporting documents.
3. Personal Accounts Used for JMB Funds
The Court was particularly critical of evidence showing that:
- Rental payments belonging to the JMB were deposited into a defendant’s personal bank account
- Fixed deposit funds authorised for the JMB were placed into a personal account instead
This was done while injunction orders were already in force.
The Court had no hesitation in concluding that this amounted to misappropriation of funds, not mere administrative error.
4. Injunction Orders Mean Exactly What They Say
Multiple injunctions were issued restraining the defendants from:
- Handling JMB funds
- Issuing notices in the JMB’s name
- Representing themselves as office bearers
- Interfering with bank accounts
Despite this, the defendants continued to act as though the injunctions were optional.
The Court made it clear: injunctions are not suggestions.
Breach of injunctions significantly worsened the defendants’ position and credibility.
5. Unauthorised Contracts = Personal Liability
The defendants entered into contracts worth RM939,642.99 with a service provider:
- Without AGM approval
- For a duration exceeding statutory limits
- Without quotations or due diligence
- While lacking authority
Although the plaintiff later entered into a consent judgment to resolve the service provider’s claim, the Court held that:
Settlement does not absolve wrongdoing.
The defendants were held personally liable for the RM325,000.00 paid in settlement.
The Final Outcome: Joint and Several Liability
The High Court concluded that the defendants:
- Acted without lawful authority
- Misappropriated funds
- Breached statutory and fiduciary duties
- Exposed the JMB to financial loss
They were held jointly and severally liable for:
- RM1,010,195.61 (misappropriated cash)
- RM325,000.00 (settlement paid to service provider)
- Costs
This means each defendant is individually responsible for the full amount, not just a share.
Why This Case Matters to JMBs, MCs & Developers
This decision is a wake-up call for the strata ecosystem in Malaysia.
For JMBs & MCs
- Office bearers must step down when terms expire
- AGMs are not optional — they are mandatory
- Cash handling without proper banking is dangerous and unlawful
For Proprietors
- You have enforceable rights against rogue committees
- Courts will protect owners from abuse of power
- Delay does not legalise misconduct
For Developers & Managing Agents
- Contracts signed by unauthorised committees may expose individuals to personal liability
- Always verify authority before contracting
How JY Ko Advocates & Solicitors Can Help
At JY Ko Advocates & Solicitors, we regularly act for:
- Joint Management Bodies (JMBs)
- Management Corporations (MCs)
- Proprietors & parcel owners
- Developers & managing agents
Our experience includes:
- Injunction applications to restrain unauthorised office bearers
- Recovery of misappropriated strata funds
- Strata Management Act litigation
- AGM / EGM disputes and compliance advisory
- Urgent court intervention to regain control of management offices and accounts
This case demonstrates what decisive legal action can achieve when strata governance breaks down.
Conclusion: Compliance Is Not Optional
The High Court’s ruling reinforces a fundamental principle:
Strata management is governed by law, not convenience.
Those who misuse positions of trust — whether through inertia, arrogance, or intentional misconduct — will face personal financial consequences.
If your JMB, MC, or development is facing:
- Rogue committee members
- Missing funds
- Invalid contracts
- AGM paralysis
- Injunction breaches
Early legal intervention is critical.
Speak to a Strata Dispute Lawyer in Malaysia
If you need advice or urgent action regarding strata management disputes, injunctions, or recovery of funds, JY Ko Advocates & Solicitors stands ready to assist.
Written on: 29th December 2025
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Disclaimer: The above proposition is subject to actual facts and circumstances and shall never be referred as the actual law without seeking legal advice. Consult us for more information!