Fu Loong Lithographer Pte Ltd v Mok Wai Hoe

• Jurisdiction: Singapore
• Judgment Date: 28 October 2013
• Date: 28 October 2013
• Docket Number: Originating Summons No 569 of 2013
• Court: High Court (Singapore)

Fu Loong Lithographer Pte Ltd and others

Plaintiff

and

Mok Wai Hoe and another

Defendant

[2013] SGHC 226

Chan Seng Onn J

Originating Summons No 569 of 2013

High Court

Land—Strata titles—Meetings—Chairperson of management council rejecting votes of certain subsidiary proprietors on basis of conflict of interest—Whether such rejection of votes valid—Section 104 (1) (a) and First Schedule paras 2 and 5 Building Maintenance and Strata Management Act (Cap 30 C, 2008 Rev Ed)

Land—Strata titles—Meetings—Chairperson of management council ruling certain motions out of order—Whether chairperson's rulings valid—First Schedule para 4 Building Maintenance and Strata Management Act (Cap 30 C, 2008 Rev Ed)

Land—Strata titles—Subsidiary proprietors applying to invalidate rulings made by chairperson during meeting—Whether subsidiary proprietors proper plaintiffs

Land—Strata titles—Whether subsidiary proprietors could have dispute heard by High Court without first bringing it before Strata Titles Board

The plaintiffs (‘the Plaintiffs’) were a group of subsidiary proprietors in the Management Corporation Strata Title Plan No 1024 (‘the 2nd Defendant’). The first defendant (‘the 1st Defendant’) was the chairperson of the 2nd Defendant's management council.

The Plaintiffs and several other subsidiary proprietors (‘the Plaintiffs' Camp’) were engaged in a dispute with the 1st Defendant and other subsidiary proprietors concerning the conduct of one Mok Wing Cheong (‘MWC’) while he was the chairperson of the 2nd Defendant. On 8 May 2012, the Plaintiffs filed a suit against MWC (‘S 311/2012’). The 2nd Defendant was joined as a third party to that suit by MWC on 2 November 2012.

On 5 June 2013, the Plaintiffs' Camp requisitioned an extraordinary general meeting (‘the 5 June 2013 EGM’) to consider and pass various motions by ordinary resolution. In particular, Motions 1 (b) and 1 (e) sought to reserve the appointment of legal representatives and any contractors or consultants or professionals whose fees exceed $500 to be determined only in a general meeting. Motion 2 called for the termination of Chancery Law Corporation as the legal representatives of the 2nd Defendant with immediate effect. Motions 3 (a) and 3 (b) sought to revoke past resolutions for the ratification of certain upgrading work expenses and the adoption of the financial reports for various years. Motion 8 sought to revoke and credit to the accounts of certain subsidiary proprietors the late payment interest charges levied on them. Motion 9 was to approve an application by some of the subsidiary proprietors to subdivide their lots.

At the EGM, the 1st Defendant ruled that Motions 1 (b), 1 (e), 3 (a), 3 (b), 8 and 9 (inter alia) were out of order for various reasons. He also ruled that the Plaintiffs' Camp was conflicted from voting on Motion 2 as it was involved in on-going litigation against the 2nd Defendant. Dissatisfied with his rulings, the Plaintiffs applied to the High Court for orders: (a) invalidating the 1st Defendant's ruling that the motions were out of order; (b) invalidating the 1st Defendant's rejection of votes; and (c) restraining the 1st Defendant or any other chairperson of the 2nd Defendant subsequently elected from ruling similar motions out of order or rejecting votes from subsidiary proprietors who were entitled to vote under the provisions of the Building Maintenance and Strata Management Act (Cap 30 C, 2008 Rev Ed) (‘BMSMA’).

Held, granting the application in part:

(1) The mere fact that the BMSMA provided for the establishment of Strata Titles Boards (‘STB’) to determine disputes under the BMSMA did not mean that the jurisdiction of the courts was thereby ousted. In the absence of a provision expressly ousting the court's jurisdiction or granting the STBs exclusive jurisdiction over strata management disputes, the position would simply be that a plaintiff had two possible forums to choose from. Thus, the Plaintiffs were entitled to bring this dispute before the court without having to first bring it before a STB: at [26] and [27] .

(2) The Plaintiffs were not barred by the proper plaintiff rule from bringing this action. This was because they were seeking to invalidate rulings made by the 1st Defendant that affected them personally. Further, under the BMSMA, individual subsidiary proprietors were entitled to apply to a STB for a determination of the issues raised by the Plaintiffs, and there was no reason why the position should be different where the subsidiary proprietors were applying to court: at [31] .

(3) The phrase ‘if he considers’ in para 4 of the First Schedule of the BMSMA (‘First Schedule’) conferred on the chairperson the discretion to decide whether a motion would conflict with the BMSMA or the by-laws or would otherwise be unlawful or unenforceable. The burden was therefore on the Plaintiffs to show that the chairperson's decision was made without rational basis or was in bad faith: at [34] .

(4) There is no settled definition of the word ‘unlawful’. At a minimum, the word would clearly encompass criminal offences and tortious acts; however, depending on the context, it might also extend to other types of wrongful conduct. As for the word ‘unenforceable’, it did not only mean impossibility in the strict sense, but also necessarily engaged the court's determination of whether it was improper or undesirable to give effect to something. Accordingly, for the purposes of the First Schedule, a motion, while not necessarily impossible to implement if carried, might nevertheless still be ‘unenforceable’ in the sense that a court would consider it improper or undesirable to enforce it: at [36] and [37] .

(5) The 1st Defendant's ruling on Motions 1 (b) and 1 (e) was inconsistent with s 59 of the BMSMA. By ruling that it was ‘out of order’ for the Plaintiffs to table Motions 1 (b) and 1 (e), the 1st Defendant was depriving the subsidiary proprietors of the 2nd Defendant of their right to reserve certain matters to be determined only by them in a general meeting. Such a ruling was clearly unreasonable and was accordingly invalidated: at [41] .

(6) Paragraph 13 of the First Schedule necessarily implied that it was possible to revoke an ordinary resolution by a subsequent ordinary resolution. Nonetheless, the 1st Defendant's ruling on Motion 3 (a) was validated for the simple reason that there was no resolution to ratify any previous upgrading work expenses passed during the 27th AGM: at [45] and [46] .

(7) The Plaintiffs' indiscriminate and blanket opposition to adopting the audited accounts for all four years suggested that their issue was not with any specific inaccuracy in the accounts per se;rather, they were concerned that the adoption of the audited accounts would prejudice their case in S 311/2012 wherein they were alleging that MWC had used management and sinking funds without authorisation. But the approval and adoption of audited accounts had nothing to do with whether individual expenditure items in the accounts were authorised. In the absence of any other explanation from the Plaintiffs for wanting to revoke the adoption of the accounts, the 1st Defendant was justified in ruling Motion 3 (b) out of order for being improper and unenforceable: at [51] to [53] .

(8) Once interest charges had been paid into the management fund, it became part of the management fund and could not be disbursed otherwise than for the purposes stated in s 38 (3) (a) - (c) of the BMSMA. A refund of late payment interest was not one of the stated purposes. Therefore, the 1st Defendant's ruling on Motion 8 was validated: at [58] .

(9) The 1st Defendant had obtained an architect's opinion stating that the subdivision proposed in Motion 9 would likely require a 90% resolution. As the Plaintiffs' Camp had requisitioned the 5 June 2013 EGM to pass its motions by ordinary resolution, the 1st Defendant had a reasonable basis to rule that Motion 9 was out of order for being unenforceable: at [60] and [61] .

(10) Allowing the Plaintiffs to terminate immediately the 2nd Defendant's counsel in proceedings wherein the Plaintiffs' interests are opposed to that of the 2nd Defendant would occasion a serious breach of the rules of natural justice as it would effectively deny the 2nd Defendant its right to be heard in S 311/2012. Such a motion could not be voted on by parties whose interests were adverse to the 2nd Defendant in that suit. Thus, the 1st Defendant's decision to reject the Plaintiffs' votes with respect to Motion 2 was validated: at [64] .

(11) The evidence showed that the 1st Defendant was a careful chairperson who sought legal and professional advice before making the rulings he did, and there was no evidence of bad faith on his part. There was no reason to believe that he would continue to make rulings similar to those that were invalidated with respect to Motions 1 (b) and 1 (e). Consequently, the injunction sought by the Plaintiffs was not granted: at [69] .

Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 (refd)

Kwok Wai Hon v Teo Kim Hui [2008] SGMC 4 (folld)

Revenue and Customs Commissioners v Total Network SL [2008] 1 AC 1174 (refd)

Teo Kim Hui v Kwok Wai Hon [2008] SGHC 232 (folld)

Ting Sing Ning v Ting Chek Swee [2008] 1 SLR (R) 197; [2008] 1 SLR 197 (refd)

Building Maintenance and Strata Management Act (Cap 30 C, 2008 Rev Ed) ss 38 (3) , 40 (6) (b) , 40 (7) , 104 (1) (a) , First Schedule paras 2 (1) (a) , 4, 5, 13 (consd) ;ss 24 (1) (b) , 59, 61, 61 (3) (a) , 98 (1) , 101 (1) (c) , 397 (3) , 397 (5) , First Schedule paras 8, 9 (3)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 5 r 6 (2)

Leo Cheng Suan and Teh Ee-von (Infinitus Law Corporation) for theplaintiffs

Lee Peng Khoon Edwin and Poonam Bai d/o Ramakrishnan Gnanasekaran (Eldan Law LLP) for the first defendant

Tan Tian Luh and Lin Zixian (Chancery Law Corporation) for the seconddefendant.

Chan Seng Onn J

Introducti...