Management Corp Strata Title Plan No 1272 v Ocean Front Pte Ltd (Ssangyong Engineering and Construction Co Ltd and Others, Third Parties)

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 04 November 1994
• Neutral Citation: [1994] SGHC 275
• Docket Number: Suit No 1353 of 1991
• Date: 04 November 1994
• Year: 1994
• Published date: 19 September 2003
• Plaintiff Counsel: Jimmy Yim and Lau Kok Keng (Drew & Napier)
• Citation: [1994] SGHC 275
• Defendant Counsel: Thio Ying Ying (Chor Pee & Co),Ong Boon Leng (Lee Brothers),JG Advani and Chee Wei Lin (PK Wong & Advani),Mariam Ng (Lee Chang & Pnrs)
• Court: High Court (Singapore)
• Subject Matter: Whether pure economic loss,s 116(1) Land Titles (Strata) Act (Cap 158, 1988Ed),Locus standi,Competency to sue,Tort,'Jointly entitled',Civil Procedure,Land,O 33 r 2 Rules of the Supreme Court,Whether recoverable,Action for defects in common property,s 116(1) Land Titles (Strata) Act (Cap 158, 1988 Ed),Breach occurring before management corporation formed,'Subsidiary proprietors',Strata titles,Management corporation not party to contract between developers and subsidiary proprietors of building,Negligence,Whether management corporation competent to sue in its own name on behalf of individual purchasers,Cost of repairs,Management corporation,ss 13(1), 33, 48, 116(1) & 120 Land Titles (Strata) Act (Cap 158, 1988 Ed),Proximity of relationship between management corporation and developers,Words and Phrases,Parties,Damages

Cur Adv Vult

The plaintiffs are the management corporation of a condominium known as Bayshore Park. In the development of this condominium, the defendants were the developers, the first third party were the building contractors, the second third party were the architects and the third third party were the structural engineers.

The plaintiffs claim damages arising from alleged faulty construction of certain areas of the common property. It is alleged that the faulty construction of the ceiling of certain basement car parks has resulted in the spalling of concrete. It is also alleged that the faulty construction of certain common areas and corridors around the lift lobbies has resulted in a problem of water ponding in those areas.

The defendants obtained an order for certain points of law to be determined as preliminary issues under O 33 r 2 of the Rules of the Supreme Court 1990. The questions as framed were in rather elaborate terms, but they can, I believe, be reduced to two basic questions. Firstly, is it competent for the management corporation to sue in its own name for the alleged defects in construction of these parts of the common property? Secondly, since the damages recoverable would be damages for a pure economic loss in the form of the cost of repair, is the management corporation barred from making such a claim on that ground?

At the hearing, plaintiffs` counsel objected to the participation of counsel for the third parties on the ground that the proceedings concerned only the plaintiffs and the defendants. On the counsel of the third parties undertaking that their respective clients would be bound by the decision of the court on the questions submitted for determination, counsel for all the third parties were allowed to take part in the proceedings.

Relevant provisions of the Act

The ownership, control, management and administration of condominiums are regulated by the Land Titles (Strata) Act (Cap 158, 1988 Ed). The word `condominium` is nowhere used in the Act, but it is a popular and convenient term and I shall use it in this judgment. The concept is based on the subdivision of a building or buildings containing units for which separate certificates of title are intended to be issued. Physically, a condominium basically consists of two parts, the units owned by the individual owners and the shared facilities outside the individually-owned units referred to collectively as the common property. The individually-owned units are referred to in the Act as `lots`, and the building or buildings containing the units is, or are collectively, referred to as the `subdivided building`. The owners of the individual lots are referred to as `subsidiary proprietors`. The whole of the land comprised in the condominium is referred to as the `parcel`.

The developer of a condominium has to submit to the Commissioner of Buildings for his approval a schedule of share values allotted to the lots in the condominium. The share value attached to a lot is of importance in at least three ways. Firstly, it determines the voting rights of a subsidiary proprietor in meetings of the subsidiary proprietors or of the management corporation. Secondly, it determines his share of the amount of contribution to be made to the management fund of the management corporation. Thirdly, and of relevance to the matter at hand, it determines the subsidiary proprietor`s share in the ownership of the common property, for it is provided by s 13(1) of the Act that the common property is owned by the subsidiary proprietors as tenants in common in proportion to the share values attached to their respective lots.

The developer of a condominium is required to apply to the Registrar of Titles for registration of a strata title plan approved by the Chief Surveyor. The strata title plan is required to show, among other things, the share values of the lots comprised in the subdivided building, the boundaries of the lots and a legend of all the common property. Section 33(1) of the Act provides that upon the registration of the strata title plan by the Registrar, the subsidiary proprietors of the lots in the subdivided building shall constitute the management corporation.

Common property: developers` contractual duty as to construction

Developers of condominiums are more likely than not controlled by the Housing Developers (Control and Licensing) Act (Cap 130), and the sale and purchase agreements which they enter into with purchasers of the units in the condominium are in the standard form prescribed by the Controller of Housing. That is the position in the instant case. Of the provisions of the sale and purchase agreements entered into between the defendants and the purchasers, cll 8(1) and 9 are of special relevance. Clause 8(1) provides as follows:

8(1) The housing unit and the building project together with all the common property thereto shall be constructed in a good and workmanlike manner in accordance with the specifications described in the second schedule hereto and in accordance with the plans approved by the assistant director, or other competent authority, which specifications and plans have been accepted and approved by the purchaser as the purchaser hereby acknowledges.

Clause 9 provides as follows:

(9) The vendor shall at its own cost and expense cause to be constructed the roads, driveways, car parks, drains, culverts, sewerage mains, water works, sewerage plant, serving the housing unit and the building project in accordance with the requirements and standards of the local authority. The vendor shall at its own costs and expense cause to be laid all necessary water, electricity and sewerage mains to serve the housing unit and the building project and cause the internal mains and the sanitary installations of the housing unit to be connected to the water, electricity and sewerage mains of the local authority or the sewerage plant for the building project.

Maintenance of common property prior to taking over by management corporation

The initial responsibility for keeping the common property of a condominium under development, or immediately after completion of development, rests with the developer himself, and there are statutory provisions to ensure that he carries out this responsibility. Thus, under s 4 of the Buildings and Common Property (Maintenance and Management) Act (Cap 30), where any building or common property has not been kept or maintained in a state of good and serviceable repair or in a proper and clean condition, the Commissioner of Buildings may by notice require the owner to carry out such repairs or maintenance as he thinks fit. An owner who fails to comply with the notice is guilty of a offence. If the notice is not complied with to his satisfaction, the Commissioner or any person authorized by him may carry out the works required. The Commissioner may require the owner of the building or common property to deposit an amount necessary in his opinion for the purpose of carrying out the works required, and he may deduct from the deposit any cost incurred in carrying out the works required.

Under s 9 of the same Act, if the developer has sold units in the development to more than two purchasers, then, as soon as a temporary occupation licence has been issued in respect of any flat in the development, he has to set up a maintenance fund to be used for the maintenance of the common property. He has to pay into this fund all the maintenance charges which he is authorized by the Commissioner of Buildings to collect from the purchasers. He has himself also to contribute and pay into the management fund maintenance charges in respect of units which have not been sold. Upon the formation of the management corporation, any balance of the management fund must be transferred to the management corporation.

Section 16 requires the developer of a condominium to deposit with the Commissioner a sum determined in accordance with rules made under the Act, and the Commissioner is authorized to use the deposit for the purpose of carrying out any work which is necessary to rectify any defects in the common property of the development.

In summary, it can be seen that the developer of a condominium has a responsibility, both under statute and under his contracts with the purchasers, to see to the proper construction, management and maintenance of the common property in a condominium. The management and maintenance of the common property passes to the management corporation when the latter comes into being. There are transitional provisions concerning the common property before the holding of the first annual general meeting of the management corporation which, however, I do not need to refer to in any detail.

Management corporation: Responsibilities and powers

The management corporation is charged by s 48 of the Land Titles (Strata) Act (Cap 158, 1988 Ed)) with the duties of controlling managing and administering the common property for the benefit of all subsidiary proprietors. It is required to properly maintain the common property and keep it in a state of good and serviceable repair, renewing and replacing any fixtures and fittings when necessary.

To enable the management corporation to carry out its duties under the Act, the Act empowers the management corporation in general meeting to determine the amount of contributions to the management fund (by reference to the share value of each lot) to be levied on the subsidiary proprietors .

There is provision in s 120 of the Act imposing a criminal liability for breach by the management corporation of its duties under Pt IV of the Act (containing inter alia provisions regarding the management corporation`s duties in relation to the common property). In the event of a breach of the duty to keep and maintain common property in good and serviceable repair, s 4 of the Buildings and Common Property (Maintenance and Management) Act, mentioned above, is also...