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TORT OF NEGLIGENCE – STRATA MANAGEMENT – HOLDING DEVELOPERS ACCOUNTABLE FOR DEFECTS – A WIN FOR CONDO OWNERS!

1. Summary and Facts

In Badan Pengurusan Bersama Subang Parkhomes v Zen Estates Sdn Bhd (Fadhlullah & Associates Consulting Engineers Sdn Bhd) [2025] 7 MLJ 780, JMB Subang Parkhomes initiated legal action against Zen Estates Sdn Bhd, alleging negligence related to defects and incomplete construction works in their condominium development. The Joint Management Body (JMB) contended that Zen Estates, as the developer, failed to properly complete and rectify various defects, resulting in financial and practical burdens for the residents.

2. Legal issues

i. Whether Zen Estates was negligent in delivering defective and incomplete common properties?
ii. What’s the liability of a developer in ensuring construction defects are rectified.
iii. What is the extent of the developer’s duty of care toward purchasers regarding common property?

3. Court Findings

• The court found that the developer was liable for negligence and had breached its duty of care to the JMB, even though the JMB had not yet been established under Section 17(1) of the Strata Management Act 2013 (SMA) at the material time.
• The court concluded that the developer owed a clear duty of care towards the JMB and the residents to ensure that common facilities were completed properly and free from defects. The Court further established that the developer failed to rectify these defects adequately, breaching their statutory and contractual obligations. As a result, damages were awarded to cover rectification costs and losses associated with the incomplete and defective works.

4. Practical Implications

This decision reinforces that developers have a continuous obligation to ensure that common properties are constructed without significant defects. Developers must maintain rigorous oversight during construction to avoid liability. It also emphasizes that JMBs have a strong legal foundation to demand accountability from developers in safeguarding residents’ rights and property values.

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