L & W Holdings Pte Ltd v Management Corporation Strata Title Plan No 1601

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 25 September 1997
• Neutral Citation: [1997] SGCA 43
• Date: 25 September 1997
• Subject Matter: Rates of maintenance charges approved by Commissioner of Buildings,Strata titles,ss 9 & 10 Buildings and Common Property (Maintenance and Management) Act (Cap 30),Purchasers to pay maintenance charges pursuant to sale and purchase agreement,Contributions payable,Whether developer of property under duty to collect maintenance charges from purchasers of units,Duty of developer pending formation of management corporation,Sale of land,Whether developer in breach of duty,Construction of statute,Maintenance charges pursuant to sale and purchase agreement,Whether court could sanction rate not approved by Commissioner,Purposive approach,Statutory Interpretation,Whether developer under duty to take reasonable steps to collect charges after formation of management corporation,ss 9A(1) & 9A(3) Interpretation Act (Cap 1),Legislative intention behind enactment,Reference to Parliamentary speech,Land
• Docket Number: Civil Appeal No 199 of 1996
• Published date: 19 September 2003
• Defendant Counsel: Tang Khin Wai and Kannan Ramesh (Lee & Lee)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Lee Mun Hooi and Tan Lee Cheng (Lee Bon Leong & Co)

Judgment:

Cur Adv Vult

This appeal concerns the duty of a developer in the collection of maintenance charges for the maintenance fund of a subdivided building comprised in Strata Title Plan No. 1601 and known as Bukit Timah Shopping Centre ('Centre'). The appellants, L & W Holdings Pte Ltd, were the developers of the Centre and the respondent is the management corporation of the Centre which was constituted on 8 March 1991. In the proceedings before the High Court the respondent claimed against the appellants the arrears of the maintenance charges which, it was alleged, the appellants, in breach of their duty, had failed to collect from certain subsidiary proprietors of the units comprised in the Centre. The court allowed the claim and entered judgment in favour of the respondent in the sum of $956,970.32. Against the decision, the appellants have now appealed.

The facts

The relevant facts that gave rise to the dispute are these. The appellants are a company incorporated in Singapore with the issued shares being held in equal proportions by two persons, Loong Yoke Phin ('Loong') and Wing Hong How ('Wing'). Ms Loong Sweet Ying ('Ms Loong'), who is the daughter of Loong, is the appellants' company secretary and the alternate director of Loong.

Sometime around the late 1970s, the appellants developed the Centre, which consists of a podium (with a car park) and a tower. Shop units are located in the podium, while office and residential units are situated in the tower. The temporary occupation licence for the podium was issued on 1 May 1978 and that for the tower on 11 November 1981. Most of the units were sold to purchasers, and pursuant to the sale and purchase agreements, the purchasers were obliged under the respective sale and purchase agreements to pay the appellants service/maintenance charges at rates provided therein with effect from the date when possession of their units was delivered to them. The agreed monthly rate of service/maintenance charges for the units in the podium was $0.65 per sq ft, that for the offices in the tower was $0.50 per sq ft and for the residential units in the tower it was a flat rate of $150.

In August 1986 or thereabouts, those units which remained unsold were sold to Loong's and Wing's respective family holding companies, i e to Long Win Investment Pte Ltd ('Long Win') for Loong and to High Power Investment ('High Power') for Wing. The car park and cinema in the Centre were sold to Dolcen Agencies Pte Ltd ('Dolcen') which is equally owned by the Loong and Wing families. The units sold to Long Win include basements 1 and 2 of the podium; these and the units sold to Dolcen and also 10 units sold to other purchasers featured in the proceedings below.

Under s 7(1) of the Buildings and Common Property (Maintenance and Management) Act (Cap 30)('the Act') the appellants were not permitted to collect any charges for the maintenance and management of the Centre without the prior written approval of the Commissioner of Building ('the Commissioner'). In July 1984, the appellants as the developer applied to the Commissioner pursuant to s 7 of the Act for approval to collect charges for the maintenance and management of the Centre. On 10 August 1984, the Commissioner approved the following rates of monthly maintenance charges to be effective from 1 September 1984:

(a) Shops/Commercial Units/Emporium = $6.45/m²

(b) Office = $5.10/m²

(c) Flat = $1.90/m²

(d) Cinema = $3.87/m²

(e) Carpark = $4914.90/mth

For the purpose of this appeal only the rate of monthly maintenance charges approved for units in the podium is relevant. There is no issue as regards collection of maintenance charges from the owners or purchasers of the units in the tower. The approved rate of $6.45 per sq m is approximately equivalent to the rate of $0.60 per sq ft. Notwithstanding that the approved rate for the units in the podium was $0.60 per sq ft, the appellants continued to levy and collect from the owners or purchasers of such units monthly maintenance charges at the rate of $0.65 per sq ft as provided in the sale and purchase agreements.

In 1986, the appellants appointed Steven Loh Valuers and Property Managers ('SVPM') as the managing agents of the Centre and they were responsible for the day to day running of the Centre. The sole proprietor of the firm was Steven Loh himself.

In the following year the appellants appointed Lee Yeok Chai of Y C Lee & Co as special accountant to act 'as a neutral party in overseeing the financial affairs' of the Centre. He prepared and audited the accounts of the maintenance fund of the Centre covering the period from 1 September 1984 to 7 March 1991. The accounts were made up to 7 March 1991, because the strata title plan of the Centre was registered on 8 March 1991 with the Registry of Titles under s 93 of the Land Titles (Strata) Act, and the respondent pursuant to s 33 of that Act was thereby constituted with effect from that day.

Non-provision of services

In September 1986, Emporium Holdings Ltd, the anchor tenant of basement 2 terminated their lease. Long Win were unable to find tenants for the area and basement 2 was left vacant. However, SVPM as managers of the Centre continued to record a monthly maintenance charge at the rate of $0.65 per sq ft as payable in respect of the whole of basement 2. In a letter dated 8 September 1987 to SVPM, Long Win drew attention to the fact that during the vacancy of the entire basement 2, services such as air-conditioning, common area lighting, escalators, lifts and cleaning services were not provided. In view of the non-provision of services, they urged SVPM to reduce the rate charged for the unoccupied area, and they proposed a rate of $0.30 per sq ft as the monthly maintenance charge. Following that, on 12 September 1987, Steven Loh referred the matter to the Commissioner seeking his assistance on the question of reduction of the maintenance charges payable in respect of basement 2. On 28 September 1987, the Commissioner replied that he had no authority under the Act to approve a reduction. In addition, he pointed out that even for unsold units, it was a requirement that the developer should contribute towards the maintenance fund account at the same rate as that applicable to the units that had been sold. This reply was relayed to Long Win, but on 14 October 1987 they made a second request to SVPM to reduce the maintenance charge. Steven Loh spoke to Ms Loong of Long Win but no agreement was reached as to the reduction and no payment was made. Steven Loh continued to record the maintenance charges as payable by Long Win based on the rate applicable to other owners or purchasers.

Conversion of staircases

In March 1989, approximately three years after the transfers had been effected, Long Win, having obtained the necessary planning permission, converted approximately 999.40 sq ft in basement 1 and 5,692.72 sq ft in basement 2 into additional staircases. The strata plan registered on 8 March 1991 incorporated these areas as part of the common property. Maintenance charges for basement 2 in respect of the period prior to this date remained a disputed issue. In a letter dated 27 June 1991 written to the accountant, Lee Yeok Chai, the appellants discussed Long Win's request to readjust the maintenance charge with effect from the date of planning approval for the construction of the staircases to take into account the actual physical change in the areas occupied by Long Win. The appellants suggested that an adjusted maintenance charge should be based on the strata plan which was registered on 8 March 1991. Lee Yeok Chai, however, decided to leave the matter to the respondent to decide with the result that the dispute remained unresolved. During the months of September and October 1990, on instructions given by Steven Loh on behalf of the appellants, letters of demand were issued to the purchasers for payment of arrears of maintenance charges, and these purchasers included Long Win and Dolcen. But no payment was made. Apart from these letters, no further action was taken.

Although the respondent was constituted on 8 March 1992, its first annual general meeting was held only on 7 April 1993. At that meeting, the audited accounts for the financial years ending 29 February 1992 and 31 January 1993 were tabled and discussed. A query was then raised as to why the outstanding sum of $1,152,416.32 shown in the accounts as at 31 January 1993 as owed by the appellants to the maintenance fund had not been received. Steven Loh explained that the outstanding sum was not owed by the appellants but by several purchasers, the major part of which was owed by Long Win, that there were disputes over the maintenance charges for basement 2, and that Long Win were making claims for a reduction of maintenance charges for the areas that had been converted into staircases which were then part of the common property. After further discussions, the accounts were not passed at the meeting. However, at the meeting, 14 council members were elected.

The claim

Since 31 January 1993, the appellants had made two payments to the maintenance fund: $4,566.48 on 2 April 1993 and $190,878.82 on 20 July 1993, thus leaving a balance of $956,970.32. At a council meeting held on 24 May 1993, the outstanding amounts owing by Dolcen and Long Win were discussed. It was decided that the respondent should demand payment of the entire sums and that Dolcen and Long Win be given two weeks to effect full payment. In consequence, demands were made but no payments were forthcoming from both of them. On 23 July 1993, the respondent took out a writ against the appellants in the High Court in Suit 1560 of 1993, claiming an order for an account to be taken and an inquiry be held and a sum of $956,970.32 or such sum as may be found due upon the taking of the account or the inquiry.

The principal sum of $956,970.32 as claimed represented the shortfall of the maintenance...