Diora-Ace Ltd and others v Management Corporation Strata Title Plan No 3661 and another

• Judge: Hoo Sheau Peng JC
• Judgment Date: 02 April 2015
• Neutral Citation: [2015] SGHC 88
• Citation: [2015] SGHC 88
• Docket Number: Originating Summons No 392 of 2014
• Published date: 08 April 2015
• Hearing Date: 24 December 2014,27 October 2014
• Plaintiff Counsel: Richard Lim (Richard Lim & Co)
• Date: 02 April 2015
• Defendant Counsel: Cheo Chai Beng Johnny (Cheo Yeoh & Associates LLC)
• Court: High Court (Singapore)
• Subject Matter: Declaratory,Land,Management council,Management corporation,Strata titles,Courts and jurisdiction,Court judgments

Hoo Sheau Peng JC:

The seven plaintiffs, Diora-Ace Limited, Liteace Management Ltd, Vuitton Assets Ltd, Laser Ace Ventures Ltd, Skytrax Ventures Ltd, Key Navigation Consultants Ltd, and I.Contemporary Living Pte Ltd (“the Plaintiffs”), are subsidiary proprietors of a condominium development known as “Riveria Gardens” (“the Development”). The first defendant, the Management Corporation Strata Title Plan No 3661 (“the MCST”), is the management corporation of the Development, and the second defendant, Dr Sim Chiang Khi (“Dr Sim”), was the former chairman of the second council of the MCST (collectively, “the Defendants”).

In this Originating Summons No 392 of 2014 (“OS 392/2014”), the Plaintiffs sought relief from the court in relation to alleged breaches of the Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed) (“BMSMA”) committed by the Defendants. The Plaintiffs applied for, inter alia, the following relief: an order that the present council of the MCST be removed, and elections held to elect a new council (“Prayer 1”); declarations that: the MCST was wrong in insisting that the Plaintiffs produce and deposit a company profile or certificate of incorporation from the authority which registered the incorporation of the corporate subsidiary proprietor at the MCST’s Managing Agent’s office 48 hours before the scheduled time for the general meeting of the MCST (“Prayer 2”); the MCST’s sinking fund was wrongly utilised in April, June and July 2013 (“Prayer 3”); the MCST was wrong in requiring the Plaintiffs to submit a copy of their respective tenancy agreement to the management of the MCST (“Prayer 4”); and the MCST’s purchase of items from Ikano Pte Ltd (“Ikea”) totalling $2,990 made on 30 May 2013 were unauthorised (“Prayer 5”).

After the hearing on 24 December 2014, I dismissed Prayers 2, 3 and 4 against the MCST. In relation to Prayer 5, I ordered that the MCST seek to ratify the purchases within two weeks of the order. Against Dr Sim, I dismissed Prayers 2 to 5. No order was made on Prayer 1, as the Plaintiffs confirmed that they were not proceeding with the prayer. Costs were awarded to the Defendants. The Plaintiffs have appealed against my decision. I now set out my detailed reasons.

Background Parties

As mentioned above, the Plaintiffs are subsidiary proprietors of the Development. Together, the Plaintiffs own 18 out of the 49 units in the Development, and 123 out of 321 of the total share value therein. The first to sixth plaintiffs are incorporated in the British Virgin Islands, and the seventh plaintiff, I.Contemporary Living Pte Ltd, is the developer of the Development (“the Developer”). The main contractor of the Development is I.Delight (S) Pte Ltd (“the Main Contractor”). In March 2010, the Temporary Occupation Permit was issued by the Commissioner of Building Control for the Development. During the interim period before the first council of the MCST was appointed, the Developer assumed the duties of the council under Division 1 of Part V of the BMSMA.

Colliers International Consultancy & Valuation (Singapore) Pte Ltd (“Colliers”) was the Managing Agent of the Development up to the end of February 2013, when it was replaced by Affinity Property Consultants Pte Ltd (“Affinity”).

The first council of the MCST was appointed on 18 November 2011, with one Mr Teo Boon Kang Peter (“Mr Teo”) as the chairman. Mr Teo has described himself in affidavits filed on behalf of the Plaintiffs as the “Manager of all the Plaintiffs”. During the term of the first council, in February 2012, a fire broke out at the basement consumer switch room of the Development. The power supply to the Development was cut off for safety reasons until the damaged equipment in the switch room had been repaired. During the interim, a temporary generator was used to supply power to the residents. The repair works cost $165,315 of which $69,550 was paid by the insurers and $15,765 was paid by the MCST. The Main Contractor contributed the remaining $80,000 as a “goodwill gesture”.

Acts of the second council

The second council of the MCST was appointed on 19 December 2012, with Dr Sim as its chairman. Mr Teo was also appointed as a member of the second council. During the term of the second council, a council resolution was sought to be passed by simple majority, allowing the chairman and secretary of the council to jointly approve any discretionary expenditure in relation to “maintenance, repair and replacement works” in the Development, “not exceeding $2,000/- per single item or collective items (whichever lower) under each single receipt”. Under this resolution, the MCST made purchases of Ikea furniture in two receipts of $1,976 and $1,014 respectively on 30 May 2013. The Plaintiffs also alleged that the second council of the MCST mismanaged its finances by wrongfully utilising the sinking fund in April, June and July 2013.

On or about 7 November 2013, the MCST sent out a letter to all its subsidiary proprietors requiring, among other things, a copy of the tenancy agreement in relation to their units, if any. The Plaintiffs did not comply. A standing instruction was also issued by the MCST sometime in November 2013, requiring the corporate subsidiary proprietors of the Development to deposit a letter of authority (“LOA”) and a company profile or certificate of incorporation at the Managing Agent’s office 48 hours before the third annual general meeting (“AGM”) of the MCST which was to be held on 1 December 2013 (“the Standing Instruction”). The Plaintiffs did not do so, and did not attend the third AGM. Subsequently, one Mr Joel Chang Chung Yhow (“Mr Chang”) was elected as the chairman of the third council of the MCST.

Proceedings

On 29 April 2014, the Plaintiffs filed the present action. On the same day, the Plaintiffs, under s 58(3) of the BMSMA, issued a written notice to the secretary of the third council, one Mr Heng Chih Yang (“Mr Heng”) informing him that they opposed any decision of the third council that would result in the MCST incurring legal costs in the present proceedings (“the s 58(3) Notice”). Another application, being Originating Summons No 994 of 2014 (“OS 994/2014”), was filed on 24 October 2014 by the Plaintiffs against the MCST, the chairman and the secretary of the third council, being Mr Chang and Mr Heng respectively, seeking an injunction to prevent the MCST from acting in breach of the s 58(3) Notice.

Meanwhile, in the affidavit filed on behalf of the Defendants by Dr Sim and Mr Chang in the present action, the MCST alleged that there are potential counterclaims against the Developer, being the seventh plaintiff, in respect of the following: the defects in the common property; the Developer’s failure to hand over drawings, plans, warranties to Colliers/Affinity when the first council (comprising the Plaintiff’s representatives) assumed office; and the design and construction of the basement consumer switch room which led to the fire there in 2012.

At the first hearing on 27 October 2014, parties indicated that the fourth AGM of the MCST was due to be held in December 2014, and it was likely that no order would be necessary in respect of Prayer 1. I queried the Plaintiffs as to the legal basis for the Prayers, and asked the parties whether there were substantial disputes of fact which might require (i) a conversion of the action to a writ action or (ii) cross-examination of the witnesses, as well as whether the present action should be consolidated with OS 994/2014. The hearing was adjourned for parties to consider these preliminary issues.

The fourth AGM of the MCST was held on 13 December 2014. Each of the Plaintiffs submitted its respective LOA duly signed by an identified person with a disclosed designation. The Plaintiffs’ representatives attended the general meeting and voted, but did not garner sufficient votes to be elected into the fourth council of the MCST.

At the adjourned hearing on 24 December 2014, parties confirmed that given that the fourth AGM had taken place, Prayer 1 was no longer necessary. The substantial disputes of facts were in respect of potential counterclaims by the MCST against the Developer, as set out in [10] above. The Defendants proposed to proceed by way of a separate claim against the Developer for such matters, which the Plaintiffs did not object to. The Plaintiffs were also of the opinion that OS 392/2014 and OS 994/2014 should be dealt with separately, and that the s 58(3) Notice would not bind the court’s discretion on costs of the present action. Given these positions taken by the parties, I proceeded to hear the parties on Prayers 2 to 5 of OS 392/2014.

Parties’ submissions Plaintiffs’ arguments

The Plaintiffs submitted that this court had the jurisdiction to grant the declarations sought either under s 88 of the BMSMA or under the inherent jurisdiction of the court. It was the Plaintiffs’ case that the MCST had committed numerous breaches of the BMSMA in issuing the Standing Instruction and requesting for tenancy agreements. The Plaintiffs also pointed to the MCST’s mismanagement of its finances by (i) wrongfully utilising the sinking fund in April, June and July 2013 and (ii) purchasing furniture from Ikea in an unauthorised manner. In this regard, Dr Sim was made a defendant in this action because the Plaintiffs were of the view that he was a “dominating member” of the second council of the MCST. They also pointed out that all the matters complained of happened during the time when Dr Sim was the chairman of the second council of the MCST.

Defendants’ arguments

The Defendants dealt at length in their submissions about the relationship between the Plaintiffs and the Main Contractor. According to the Defendants, the first to sixth plaintiffs were nominees of, or otherwise closely related to, the Developer. The Defendants also contended that the Main Contractor was...