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

• Jurisdiction: Singapore
• Judgment Date: 31 July 2001
• Date: 31 July 2001
• Docket Number: Suit No 1053 of 2000
• Court: High Court (Singapore)

Management Corporation Strata Title Plan No 473

Plaintiff

and

De Beers Jewellery Pte Ltd

Defendant

[2001] SGHC 206

Judith Prakash J

Suit No 1053 of 2000

High Court

Contract–Intention to create legal relations–Payments made by subsidiary proprietor as licensee to management corporation as licensing authority to obtain approval to subdivide units–Whether contractual relationship established–Equity–Defences–Laches, estoppel and change of position–Whether equitable defences to subsidiary proprietor's claim under mistake of law available to management corporation–Land–Strata titles–Management corporation–Powers–Management corporation levied contribution on subsidiary proprietor for improvement of common property as condition for approval to subdivide units–Whether management corporation had power to do so–Sections 3, 12, 30 (2), 42 and 48 Land Titles (Strata) Act (Cap 158, 1999 Ed)–Restitution–Mistake–Mistake of law–Subsidiary proprietor under mistaken belief that management corporation was entitled to levy contributions as condition for its approval–Whether involuntary payments made were recoverable–Whether claim for restitution of contributions time-barred

The plaintiff was the management corporation of a residential complex (“the MC”). The defendant (“De Beers”) was the subsidiary proprietor of four units in the complex, who then decided to subdivide them. Its plan was approved by the MC, after it was asked to make a contribution of $200,000 towards the cost of upgrading the existing lifts in the complex.

As De Beers' plan resulted in the creation of a new common corridor, it sought and obtained the MC's approval after it was asked to contribute $170,000 towards the cost of maintaining the new common property.

Pursuant to proceedings initiated by the MC against De Beers for arrears of maintenance, the latter counterclaimed for the return of the two contributions which it contended had been wrongfully extracted by, and mistakenly paid to, the MC as a condition for agreeing to its request for approval.

Held, allowing the counterclaim:

(1) Section 48 Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“the Act”) set out the duties of a management corporation, while its powers to collect money from the subsidiary proprietors was delineated in s 42. De Beers had to obtain the approval of the MC for its plans as stipulated in s 12 (2). However, there was no contractual relationship between the parties as there was no intention to create legal relations since De Beers was in the position of an applicant of the licence and the MC, the issuing authority: at [28], [29] and [32].

(2) The MC had no legal power to impose the contribution of $200,000. The amount was arbitrarily arrived at, and the MC should have levied a contribution based on the proportion that De Beers' share value of subsidiary lots bore to the total calculated cost of the lift upgrading. Further, the Act did not specifically authorise a management corporation dealing with an application for approval to levy a charge relating to the improvement of common property: at [38], [39] and [41].

(3) Although s 42 (5) permitted the MC to levy additional contributions on De Beers if it incurred additional expenditure due to maintenance of the new common corridor, the additional contributions had to be first approved by the Commissioner of Buildings. Hence, the MC had acted unlawfully by not following this procedure in asking De Beers to contribute the $170,000: at [44] and [45].

(4) On the facts of the case, De Beers made both payments involuntarily due to a mistaken belief that the MC was legally entitled to ask for the contributions as a condition for its approval. In this respect, payments made under a mistake of law were recoverable: at [53] and [58].

(5) De Beers' claim for restitution of the contributions was not time-barred. It was neither founded in contract nor in equity, and thus did not fall within the ambit of s 6 (1) (a) or 6 (7) of the Limitation Act (Cap 163, 1996 Rev Ed): at [77] and [78].

(6) The equitable defences of laches, estoppel and change of position were not available to the MC. First, De Beers was entirely unaware that the MC's demands were unlawful until it had consulted its new solicitors. Secondly, De Beers was not estopped as it did not represent that the contributions were lawful. Thirdly, the MC failed to substantiate any change in position: at [92], [96] and [101].

[Observation: The colore officii principle stated that where money had been paid to a public officer for him to perform a duty which he was bound to carry out for nothing, or for less than the sum paid, such money or, where some money was due, the excess was recoverable as money had and received. As the MC was neither a “public” nor “quasi-public” authority, the principle did not apply to the present case: at [60] and [63].]

Air Canada v British Columbia [1989] 1 SCR 1161; (1989) 59 DLR (4th) 161 (refd)

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

Bilbie v Lumley (1802) 2 East 469; 102 ER 448 (not folld)

Borneo Motors (S) Pte Ltd v William Jacks & Co (S) Pte Ltd [1992] 2 SLR (R) 419; [1992] 2 SLR 881 (distd)

British South Africa Company v De Beers Consolidated Mines, Limited [1910] 2 Ch 502 (refd)

Ching Mun Fong v Liu Cho Chit [2000] 3 SLR (R) 304; [2000] 4 SLR 610 (distd)

David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; (1992) 66 ALJR 768 (refd)

Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour, Limited [1943] AC 32; [1942] 2 All ER 122 (folld)

Jacklin v Proprietors of Strata Plan No 2795 [1975] 1 NSWLR 15 (folld)

Kelly v Solari (1841) 9 M & W 54; [1835-1842] All ER Rep 320 (not folld)

Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349; [1998] 3 WLR 1095; [1998] 4 All ER 513 (folld)

Lipkin Gorman (A Firm) v Karpnale Ltd [1991] 2 AC 548; [1992] 4 All ER 512 (refd)

MCST Plan No 980 v Yat Yuen Hong Co [1992] 3 SLR (R) 219; [1993] 1 SLR 555 (folld)

Rees v De Bernardy [1896] 2 Ch 437 (refd)

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

Serangoon Garden Estate Ltd v Chye Marian [1959] MLJ 113 (not folld)

Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; [1996] 2 All ER 961 (refd)

Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue [1992] (4) SA 202 (refd)

Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70; [1992] 3 All ER 737 (distd)

Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) ss 3, 12, 30 (2), 42, 48 (consd);s 25 (1), First Schedule

Limitation Act (Cap 163, 1996 Rev Ed) ss 6 (1) (a), 6 (7)

Benjamin Sim (Kelvin Chia Partnership) for the plaintiff

Harpreet Singh and Gerald Kuppusamy (Drew & Napier) for the defendant.

Judgment reserved.

Judith Prakash J

1 The plaintiffs (“the MC”) are the management corporation of the well-known commercial and residential development in Chinatown, People's Park Complex. In December 2000, the MC commenced what they thought was a straightforward action against the defendant company (“De Beers”) to recover arrears of maintenance contributions and other payments due from the latter in respect of the 18 residential units they own in the complex.

2 No doubt to their great surprise since no hint of such a claim had been made before, the MC found themselves faced with a counterclaim for reimbursement of $370,000 being the aggregate of two payments previously made to the MC by De Beers. The gravamen of the counterclaim was that the MC had been unjustly enriched by the payments. It was asserted that the MC had unlawfully demanded the same as a condition for approving certain conversion works that De Beers wished to undertake in respect of their units in the complex. There was also a claim for a declaration in respect of a proposed covenant relating to the maintenance of the roof above the units.

3 The MC's claim was for $341,596.05 being the aggregate of amounts accruing due from De Beers, as subsidiary proprietors, for their 18 lots during the period between 1 June 1996 and 1 November 2000. The MC also claimed interest at 10% pa up to the date of judgment and legal costs on the indemnity basis. The MC applied for summary judgment and this application was heard on 19 February 2001. In the result, the MC obtained judgment for the principal amount of their claim but execution on the judgment was stayed until the trial of De Beers' counterclaim. The MC was awarded interest on various amounts at 10% pa up to the date of judgment. Post-judgment interest was reserved to be determined by the judge hearing the trial of the counterclaim.

4 This judgment deals with the counterclaim and the question of interest.

The facts

5 People's Park Complex was constructed in the late 1960s and completed in about 1970. It is a mixed development containing over 650 units in both a podium block and a tower block. Over 200 of the units are residential units situated in the tower block. On the 31st and 32nd storeys of the tower block, there were, originally, four penthouse units that had a total area of 27,000sq ft. These penthouses were originally occupied as one unit by the moving spirit of the development company, Mr Ho Kok Chong.

6 Unfortunately, financial difficulties experienced by the then owner resulted in the penthouses being left vacant for several years before they were put up for auction in September 1988 by the mortgagees. De Beers purchased the four units at the mortgagee sale. The penthouses were in a state of considerable disrepair and in that condition were close to impossible to let. De Beers formed the view that in order to get the best return from their investment, they should convert and subdivide the four penthouses into 18 maisonette units that could then be rented out profitably.

7 In late 1988, Mr Ow Chor Seng, a director of De Beers, spoke with the company's architects and instructed them to commence work...