Management Corporation Strata Title No 473 v De Beers Jewellery Pte Ltd

• Judgment Date: 06 March 2002
• Date: 06 March 2002
• Docket Number: Civil Appeal No 600105 of
• Court: Court of Appeal (Singapore)

Management Corporation Strata Title Plan No 473

Plaintiff

and

De Beers Jewellery Pte Ltd

Defendant

[2002] SGCA 13

Yong Pung How CJ

,

Chao Hick Tin JA

and

Tan Lee Meng J

Civil Appeal No 600105 of 2001

Court of Appeal

Land–Strata titles–Management corporation–Management corporation demanding $170,000 from subsidiary proprietor for maintenance of new common corridor created–Whether demand ultra vires–Whether management corporation having incidental powers to raise contributions–Whether parties could contract out of statute –Sections 3, 42 (5), 48 (1) (b) (i), 48 (1) (m) (i) and 48 (1) (q) Land Titles (Strata) Act (Cap 158, 1999 Rev Ed)–Land–Strata titles–Management corporation–Management corporation demanding $200,000 from subsidiary proprietor for lift upgrading–Whether demand ultra vires–Whether parties could contract out of statute–Sections 42 (2), 48 (1) (n) (ii) and 48 (1) (q)Land Titles (Strata) Act (Cap 158, 1999 Rev Ed)–Land–Strata titles–Management corporation–Whether management corporation having duty to maintain roof above units–Whether parties could contract out of statute –Sections 3 and 48 (1) (b) (i) Land Titles (Strata) Act (Cap 158, 1999 Rev Ed)–Res Judicata–Applicability of doctrine–Whether defence of abuse of process/extended res judicata satisfied–Restitution–Change of position–Whether defence of change of position recognised–Whether payee changing position–Whether change bona fide–Whether inequitable to require restitution–Restitution–Compromise–Whether defence of compromise recognised and satisfied–Restitution–Estoppel–Whether defences of estoppel by convention and promissory estoppel recognised–Restitution–Laches–Length of delay–Whether payee prejudiced by acts done during delay–Restitution–Limitation–Whether claim for unjust enrichment within scope of Limitation Act (Cap 163, 1996 Rev Ed)–Section 29 Limitation Act (Cap 163, 1996 Rev Ed)–Restitution–Mistake–Mistake of law–Whether defences of honest claim, honest receipt, payment made under closed transaction and payment made under settled view of law recognised–Whether defence of settlement of honest claim satisfied–Restitution–Mistake–Mistake of law–Whether recovery of payments made allowed by law–Whether and how law should be changed–Whether payment made under completed transaction recoverable–Whether payments made under mistake of law–Section 29 Limitation Act (Cap 163, 1996 Rev Ed)–Restitution–Passing on–Whether defence of passing on burden of payment available in private law claims

In 1988, the subsidiary proprietor bought four penthouse units at the People's Park Complex, which it intended to convert into 18 maisonette units. The conversion required the permission of the management corporation (“MC”), which imposed conditions for granting such permission. The conditions included the payment of $200,000 towards the costs of upgrading the lifts, and $170,000 towards the costs of maintaining the new common corridor. Believing that the MC had the authority to impose the conditions, the subsidiary proprietor accepted them and paid the demanded amounts in 1992 and 1993.

In December 2000, the MC sued the subsidiary proprietor for maintenance contributions and other payments. In March 2001, the subsidiary proprietor counterclaimed for the $370,000, on the grounds, inter alia, that the conditions were ultra vires and that it had paid the sums under a mistake of law. It also sought declarations to the effect that the MC, not the subsidiary proprietor, was responsible for maintaining the roof above the 18 units.

In 2001, Judith Prakash J (“the judge”) held that the conditions were ultra vires the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“LTSA”). She abrogated the common law rule against the recovery of payments made under a mistake of law, and upheld the subsidiary proprietor's counterclaim. She also granted the declarations requested. The MC appealed.

Held, dismissing the appeal:

(1) There was no reason to overturn the judge's finding that the impetus for upgrading the lifts was not the increased traffic that would allegedly have resulted from the conversion of the penthouse units: at [7].

(2) Contributions for the upgrading of the lifts should have been raised in accordance with s 42 (2) of the LTSA, which required payment by the subsidiary proprietors in shares proportional to the share value of their respective lots. As the MC had demanded a flat-rate contribution of $200,000, it had acted ultra vires the LTSA. Any contract circumventing s 42 (2) would have been void: at [8].

(3) Contributions for maintaining the new common corridor should have been raised in accordance with s 42 (5) of the LTSA, which required approval by the Commissioner. As the MC had demanded the contribution of $170,000 without complying with s 42 (5), it had acted ultra vires the LTSA. Section 12 (2) of the LTSA did not afford another route to raise contributions. Any contract circumventing s 42 (5) would also have been void: at [12] to [15].

(4) The rule against the recovery of money paid out under a mistake of law should be abrogated. A payment made under a mistake of law could be recovered even if it had been made under a completed transaction. There was no need for s 29 of the Limitation Act (Cap 163, 1996 Rev Ed) to be amended to cover the change: at [23] and [24].

(5) As the roof above the units was “common property” within the meaning of s 48 (1) (b) (i) of the LTSA, the MC had a duty to maintain it. Any contract circumventing s 48 would also have been void: at [30].

(6) The defence of time bar pleaded by the MC failed as the subsidiary proprietor's counterclaim did not fall within the scope of the Limitation Act. The MC's defence of laches also failed as the subsidiary proprietor did not know of the mistake until during the trial, and the MC had not been prejudiced by the alleged delay: at [32] to [34].

(7) The defence of change of position pleaded by the MC was a specific defence to a claim for money paid out under a mistake of law. However, although the MC had changed its position with regard to the $200,000, and the change was bona fide, it would not have been inequitable to require the MC to make restitution in full: at [35] and [36].

(8) The defences raised by the MC for the first time on appeal were allowed. The defences of settlement of an honest claim and compromise were recognised but not satisfied as the subsidiary proprietor believed that the MC had the authority to impose the conditions and that the demands were legal: at [39] to [41].

(9) The defence of honest receipt raised by the MC was not recognised as a defence: at [42].

(10) The defence of estoppel by convention raised by the MC was not accepted as a defence. In any case, the MC failed on this point: at [43] and [44].

(11) The defence of abuse of process/extended res judicata raised by the MC failed: at [45].

[Observation: The defence of payment made under a closed transaction should not be recognised: at [48].

The defence of payment made under a settled view of the law should be accepted as a defence, and the definition of the Law Reform Committee of the Singapore Academy of Law should be adopted: at [51].

It was unlikely that promissory estoppel would be accepted as a defence to a restitutionary claim given that change of position had been specifically recognised as a defence: at [52].

The defence of passing on the burden of the payment was not available in the context of private law claims: at [53].]

A-G for the Straits Settlements v Pang Ah Yew [1934] MLJ 184 (folld)

Avon County Council v Howlett [1983] 1 WLR 605; [1983] 1 All ER 1073 (refd)

Beale v Kyte [1907] 1 Ch 564 (refd)

BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352; [1982] 1 All ER 925 (folld)

David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (not folld)

Elgindata Ltd (No 2), Re [1992] 1 WLR 1207; [1993] 1 All ER 232 (folld)

Kleinwort Benson Ltd v Birmingham City Council [1997] QB 380; [1996] 3 WLR 1139; [1996] 4 All ER 733 (refd)

Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349; [1998] 4 All ER 513 (folld)

Lindsay Petroleum Company, The v Prosper Armstrong Hurd, Abram Farewell, and John Kemp (1874) LR 5 PC 221 (folld)

Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 (folld)

Nurdin & Peacock plc v DB Ramsden & Co Ltd [1999] 1 WLR 1249; [1999] 1 All ER 941 (folld)

Seagate Technology Pte Ltd v Goh Han Kim [1994] 3 SLR (R) 836; [1995] 1 SLR 17 (refd)

Serangoon Garden Estate Ltd v Chye Marian [1959] 1 MLJ 113 (overd)

Tasmania, The (1890) 15 App Cas 223 (refd)

Tullio Planeta v Maoro Andrea G [1994] 2 SLR (R) 501; [1994] 2 SLR 489 (folld)

Civil Law Act (Cap 43, 1999 Rev Ed) ss 12, 12 (1)

Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) ss 3, 42 (2), 42 (5), 48 (1) (b) (i), 48 (1) (m) (i), 48 (1) (n) (ii), 48 (1) (q) (consd);ss 12 (2), 42, 48, 48 (1) (b)

Limitation Act (Cap 163, 1996 Rev Ed) s 29 (consd);s 29 (1)

Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 59 r 19

Law Reform (Miscellaneous Provisions) Act 1934 (c 41) (UK) s 3 (1)

Michael Hwang SC, Andrew Chan, Desmond Ho, Mohd Reza (Allen & Gledhill) and Benjamin Sim (Kelvin Chia Partnership) for the appellant

Harpreet Singh Nehal, Gerald Kuppusamy and Shirin Tang (Drew & Napier LLC) for the respondent.

Judgment reserved.

Yong Pung How CJ

(delivering the judgment of the court):

1 This was an appeal from the decision of Justice Judith Prakash (“the judge”), in which she upheld the respondent's counterclaim for a reimbursement of certain sums which it had paid to the appellant. She also granted two declarations in terms requested by the respondent.

The facts

2 The appellant is the management corporation of People's Park Complex, a mixed-use development in the Chinatown area. In 1988, the respondent bought four penthouse units (occupying the top two storeys), which it intended to convert into 18...