Management Corporation Strata Title Plan No 2297 v Seasons Park Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 29 March 2005
• Neutral Citation: [2005] SGCA 16
• Docket Number: Civil Appeal No 77 of 2004
• Date: 29 March 2005
• Published date: 01 April 2005
• Year: 2005
• Plaintiff Counsel: Leo Cheng Suan and Teh Ee Von (Infinitus Law Corporation)
• Citation: [2005] SGCA 16
• Defendant Counsel: Christopher Chuah Chee Kian and Lee Hwai Bin (Wong Partnership)
• Court: Court of Appeal (Singapore)
• Subject Matter: Evidence,Principles,Strata titles,Appellant management corporation taking out interlocutory motion seeking leave of court to amend pleadings,Civil Procedure,Fresh evidence,Motion,Building Control Act (Cap 29, 1999 Rev Ed), Housing Developers (Control and Licensing) Act (Cap 130, 1985 Rev Ed),Whether court should allow fresh evidence to be adduced,Action in contract against developer for defects in common property of condominium,Management corporation asserting authorisation to bring action in contract on behalf of all subsidiary proprietors by virtue of s 116 of Land Titles (Strata) Act,Action in tort against developer for defects in common property of condominium,Appellant management corporation seeking to adduce fresh evidence at appeal,Whether developer can rely on defence of "independent contractor",Subsidiary proprietors of condominium units not purchasing units directly from developer,Land,Applicable principles,Development,Subsidiary proprietor,Land titles (strata) act,Respondent developer objecting on ground that evidence not forming part of record at hearing below,Section 116 Land Titles (Strata) Act (Cap 158, 1999 Rev Ed),Whether developer entitled to delegate to independent contractor duty to build condominium in good and workmanlike manner,Whether s 116 conferring cause of action upon management corporation,Whether such subsidiary proprietors can claim in contract against developer,Whether appropriate for appeal court to hear motion,Developer,Housing developers

29 March 2005 Judgment reserved.

Chao Hick Tin JA (delivering the judgment of the court):

1 This is an appeal brought by the Management Corporation Strata Title Plan No 2297, the appellant, against the rulings made by the trial judge, Choo Han Teck J, on certain preliminary questions of law raised by the respondent in relation to the action instituted by the appellant on account of defects appearing in the common property (see [2004] SGHC 160).

The facts

2 The appellant is the management corporation of a condominium called the Seasons Park Condominium (“the condominium”) which was developed by the respondent, Seasons Park Ltd. The condominium, located along Yio Chu Kang Road, consists of four blocks of residential buildings and other amenities. It has a total of 390 residential units. It was alleged that in the year 2000, defects began to appear in the common property of the condominium. The appellant accordingly brought the action on behalf of all the subsidiary proprietors of the units to claim for damages on account of the defects that surfaced. The action is in contract as well as in tort.

3 The appellant had called for tenders to assess the cost required to rectify the defects. The tenders indicated a mean figure of about $2.2m. The respondent disputed the extent of the alleged defects and the cost of rectification.

4 At the commencement of the trial, the respondent asked the court to determine three preliminary issues which might facilitate the disposal of the case. They were:

(a) in relation to the claim in contract, whether the appellant was entitled to sue on behalf of all the subsidiary proprietors of the condominium who had entered into sale and purchase agreements with the respondent, and if not all the subsidiary proprietors, which of them;

(b) in relation to the claim in tort, whether the respondent could avail itself of the defence of “independent contractor” against the appellant’s claim; and

(c) whether the appellant was entitled to seek a declaration of indemnity from the respondent.

5 On the evidence placed before Choo J, it would appear that of the 390 units, the owners of only 319 units bought them directly from the respondent. With regard to the remaining 71 units, the present owners of those units did not purchase them directly from the respondent. They were sub-purchasers.

6 Before the institution of the present action, there was an annual general meeting (“AGM”) of the appellant held on 31 March 2002, where only 49 sub-proprietors attended and voted in favour of the appellant instituting an action against the respondent in respect of the defects.

The decision below

7 In relation to the first issue, Choo J answered in the negative. In his opinion, s 116 of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“the LTS Act”) merely empowered the management corporation of a development to sue or be sued. It did not as such confer any cause of action upon the management corporation. It was a provision which empowered the management corporation, which was a separate legal entity, to sue on behalf of one or more subsidiary proprietors in relation to claims which the subsidiary proprietors had against any person, including the developer. As some of the subsidiary proprietors who had authorised the appellant at the AGM of 31 March 2002 to sue the respondent were not original purchasers from the respondent, they, being third parties, were not entitled to sue the respondent in contract. They therefore had no right to authorise the appellant to sue, on their behalf, the respondent in contract. Thus, Choo J held that it was essential, as far as the claim in contract was concerned, for the appellant to identify who the subsidiary proprietors on whose behalf the appellant was suing were, which was not done. All that the pleadings indicated was that the appellant represented the 390 subsidiary proprietors, which was not correct. He also rejected the appellant’s submission that the resolution of 31 March 2002 provided the authority. Accordingly, Choo J held that the appellant was not properly authorised to institute the action in contract.

8 With regard to the second issue, Choo J answered in the positive, namely, that the respondent was entitled to rely on the defence of “independent contractor”. However, he added that for the respondent to successfully plead this defence, it must show that it had exercised reasonable care and skill in engaging the independent contractor for the development. This was a question of fact and would have to be determined by the court on the evidence to be adduced.

9 With regard to the third issue, the judge answered in the negative. In order for the appellant to be entitled to an indemnity, ordinarily it must be shown that there was a contract between the parties or that this obligation arose by operation of law. None of these two conditions was found to exist.

10 The net result of these rulings is that the appellant may not proceed with the action in contract against the respondent because it does not have the locus standi. Only the action in tort may continue and at the trial, the defence of “independent contractor” will be available to the respondent unless the respondent is found to be in breach of its duty of care in appointing the contractor.

11 In this appeal, the appellant is only challenging the answers given by the judge to the first two issues. The answer to the third issue is no longer being pursued.

Claim in contract

12 We will now examine the two issues in turn. Under the LTS Act, the subsidiary proprietors of individual units in a private development, like the condominium here, own the common property as tenants-in-common. For every such development, the LTS Act constitutes all the subsidiary proprietors of the development as a corporate entity called the management corporation. The management of the common property is entrusted to the management corporation. The powers, rights and duties of the management corporation are set out in the LTS Act. The management corporation may represent all the subsidiary proprietors in a development vis-à-vis third parties.

13 Essentially, the appellant relies on s 116 of the LTS Act to contend that it is authorised to institute the claim in contract on behalf of all the subsidiary proprietors of the units in the condominium. In order to fully appreciate the scope of s 116, it is necessary that we set out the provision in extenso:

(1) Where all or some of the subsidiary proprietors of the lots in a subdivided building are jointly entitled to take proceedings against any person or are liable to have proceedings taken against them jointly (any such proceedings being proceedings for or with respect to common property), the proceedings may be taken by or against the management corporation as if it were the subsidiary proprietors of the lots concerned.

(2) Any judgment or order given or made in favour of or against the management corporation in any such proceedings shall have effect as if it were a judgment or order given or made in favour of or against the subsidiary proprietors.

(3) Where a subsidiary proprietor is liable to make a contribution to another subsidiary proprietor in respect of a judgment debt arising under a judgment referred to in subsection (2), the amount of that contribution shall bear to the judgment debt the same proportion as the share value of the lot of the first-mentioned subsidiary proprietor bears to the aggregate share value.

14 It is apparent that of the three subsections of s 116, the main one is
sub-s (1). Subsections (2) and (3) are really consequential provisions. It is plain that sub-s (1) does not confer a cause of action upon the management corporation. It is a provision to facilitate the institution of action by or against subsidiary proprietors in the development and nothing more. It authorises the management corporation to institute or defend actions on behalf of subsidiary proprietors. The scope of this subsection has been the subject of consideration in several previous cases.

15 In MCST Plan No 1279 v Khong Guan Realty Pte Ltd [1995] 1 SLR 593 at 596, [14], G P Selvam J said:

[T]he plain words of s 116(1) entitle a management corporation to represent the subsidiary proprietors where the subsidiary proprietors have a cause of action whether it be an action in tort or contract. It is an action in a representative capacity authorized by statute.

16 This statement as to the meaning and scope of s 116(1) was approved by this court in RSP Architects Planners & Engineers v Ocean Front Pte Ltd [1996] 1 SLR 113 (“Ocean Front”) at 121, [17] where the court added that the purpose of s 116 is “to simplify the procedural aspect of the proceedings so as to avoid naming all the subsidiary proprietors or some of them who are concerned in the proceedings”.

17 In MCST Plan No 1938 v Goodview Properties Pte Ltd [2000] 2 SLR 807, Lai Siu Chiu J said (at [16]):

In interpreting and applying s 116(1), it must first and foremost be noted that s 116(1) is a procedural provision and does not confer any separate substantive right on the management corporation. Clearly, any party wishing to rely on this procedural provision must point to an underlying substantive cause of action against the intended defendants.

We would respectfully agree with this statement too.

18 In the light of the foregoing, we do not think that the appellant can obtain much help from s 116. It is a procedural provision to facilitate action by a large number of subsidiary proprietors. It does not confer upon the management corporation any cause of action. The appellant can undoubtedly sue on behalf of subsidiary proprietors and as not all the present subsidiary proprietors of the condominium bought their units directly from the respondent, the appellant must specify on which of the subsidiary proprietors’ behalf is the action in contract instituted. The substantive party is not the management corporation but the...