KYB Case Update: Liquidators’ Fees In Effecting Transfer Of Strata Titles
- Kuruvilla, Yeoh & Benjamin
- Apr 4
- 3 min read
As an update to our previous article entitled “Liquidators’ Fees In Effecting Transfer of Strata Titles", the Kuala Lumpur High Court had recently on 4th December 2024 held in Simon Ng Sai Hoong & Ors v Lim Keng Peo & Ors [2024] MLJU 3187 that the liquidator shall execute a valid and registrable memorandum of transfer in favour of the plaintiffs without charging any amounts as verification charges.
Brief Background Facts
The plaintiffs consist of 73 purchasers of units in the development known as Empire Residence.
The 2nd defendant, being the developer, was wound up and the 1st defendant was appointed as the liquidator of the 2nd defendant.
Initially, the 1st defendant sought to impose RM15,000.00 as verification charges per purchaser to enable the 1st defendant to execute the necessary documents for the transfer of the respective units to the plaintiffs. The 1st defendant also reserved the right to charge storage fees.
After negotiations, the verification charges were reduced to RM8,000.00 per purchaser, with a requirement that payment must be made within six months, failing which the verification charges would revert to RM15,000.00 per purchaser.
Arguments before the Court
The 1st defendant’s position effectively was:
The tasks required of the 1st defendant was gigantic and incurs considerably time cost for the 1st defendant’s team comprising of 20 personnel; and
Such costs ought not be passed on to the unsecured creditors of the 2nd defendant.
The plaintiffs argued that:
The 1st defendant lacked any basis to charge the verification charges in the first place;
The fact that the 1st defendant was willing to reduce the verification charges from RM15,000.00 to RM8,000.00, a reduction of almost half the initial amount, demonstrated that the imposition of any amount claimed to be verification charges was arbitrary; and
The verification charges sought were actually for the 1st defendant’s remuneration for work done as a liquidator of the 2nd defendant and which requires the an agreement of the committee of inspection (if there is one), a resolution passed at a meeting of creditors or a court order, all of which were absent.
Decision of the Court
With regards to whether the verification charges imposed by the liquidator were genuine fees or merely a means to secure remuneration, the Court held that as there was neither any evidence presented by the liquidator to show or justify how the figure of RM15,000.00 was arrived at nor was there any evidence to show or justify how the reduction to RM8,000.00, the 1st Defendant had refused and/or failed to justify the amounts on a balance of probabilities.
The time cost table did not provide sufficient detail to show the verification charges and the 1st Defendant did not explain what items in the time cost table comprised of the verification charges imposed.
The Court further held that the plaintiffs’ argument that the there was no agreement or resolution or even court sanction to authorise such imposition of verification fees on the Plaintiffs, are not applicable and are immaterial.
Accordingly, the Court was persuaded that the verification charges are indeed excessive, unreasonable with no basis and arbitrary in nature.
Interestingly, the Court also considered whether verification charges are administrative or secretarial work which ought not be included in a time cost table but did not arrive at any conclusion.
Key Takeaways
This development substantiates the position that verification charges must be properly justified and cannot be arbitrarily imposed as the Court has shown that it is willing to strike down charges it deems excessive, unreasonable and arbitrary.
That being said, the question remains whether verification charges which can be justified, is not excessive and reasonable will nevertheless be struck down on the basis that it is administrative or secretarial work within the duties of a liquidator which the liquidator is therefore not entitled to charge.
This article is authored by Clarice Lim, currently a pupil of Messrs Kuruvilla, Yeoh & Benjamin.
For more information, please visit our website at www.kyblegal.com.
This article is intended to provide general information in summary form on legal topics, current at the time of first publication. The contents should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Formal legal advise should be sought in particular matters.
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