Management Corporation Strata Title Plan No 1938 v Goodview Properties Pte Ltd another

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 28 April 2000
• Neutral Citation: [2000] SGHC 69
• Date: 28 April 2000
• Subject Matter: Representative action by management corporation on behalf of affected subsidiary proprietors,Defects in common property not affecting all subsidiary lots,Whether management corporation entitled to sue developer in contract in its own right,Strata titles,Not all individual purchasers were subsidiary proprietors,Land,Whether management corporation can rely on agreements between purchasers and developers and sue in contract,Ambit of s 116(1) of the Land Titles (Strata) Act (Cap 158),Operation of s 116(1), Land Titles (Strata) Act (Cap 158),Whether need to establish substantive cause of action against developers,Management corporation,ss 33(1), 33(2) Land Titles (Strata) Act (Cap 158)
• Docket Number: Suit No 1374 of 1999 (Registrar's Appeals Nos 600046 and 600047 of 2000)
• Published date: 19 September 2003
• Defendant Counsel: Philip Jeyaretnam and Paul Wong (Helen Yeo & Partners)
• Court: High Court (Singapore)
• Plaintiff Counsel: Woo Bih Li SC and Rodney Keong (Bih Li & Lee)

: Background

The plaintiffs are the management corporation for the condominium known as Orchid Park (hereinafter referred to as `the condominium`). The defendants were the developers of the condominium.

The plaintiffs brought an action in contract for and on behalf of 24 subsidiary proprietors who had entered into direct sale and purchase agreements (the `agreements`) with the defendants for the purchase of units in the condominium, for alleged breaches of the agreements, specifically cll 8, 9, and 11, relating to faulty and defective construction of certain areas of the common property of the condominium. Damages were sought by the plaintiffs for the loss and damage suffered by those 24 subsidiary proprietors occasioned by the defects in the common property.

By SIC 600355/2000 (the defendants` application), the defendants applied, pursuant to O 18 rr 19(1)(a), (b), (c) and/or (d) of the Rules of Court 1996 (`the Rules`) or under the inherent jurisdiction of the court, to strike out the statement of claim and to dismiss the action filed by the plaintiffs. The affidavit in support of the application deposed that the plaintiffs` claim is not sustainable in law. The defendants submitted that a claim in contract is only sustainable if all the present subsidiary proprietors of the condominium were purchasers who had entered into agreements with the defendants.

By a notice under SIC 600425/2000 (the plaintiffs` application), the plaintiffs sought a determination of a question of law pursuant to O 14 r 12 of the Rules, namely, whether the plaintiffs are entitled at law to sue the defendants on behalf of two or more of the subsidiary proprietors who had entered into agreements with the defendants for the purchase of units in the condominium and to strike out parts of the defence in the event that the court answers the question in the affirmative.

Both applications were heard together on 31 January 2000. On the defendants` application, the learned senior assistant registrar (`SAR`) determined the issue under the plaintiffs` application with the consent of the defendants. The SAR ordered that:

(a) the statement of claim in the action be struck out;

(b) the action be dismissed;

(c) costs fixed at $5,000 be paid by the plaintiffs to the defendants.

No order was made on the plaintiffs` application. The plaintiffs appealed against both orders to a judge-in-chambers.

I dealt with both appeals on 16 February 2000. After hearing counsel for both parties, I dismissed both appeals with costs fixed at $4,000 to be paid to the defendants on RA 600047/2000 (relating to the order made under the defendants` application). I made no order for costs on RA 600046/2000 (which related to the plaintiffs` application). I also certified that no further arguments were required.

The plaintiffs have since filed a notice of appeal against my orders (in CA 29/2000).

Issue of law

In brief, the issue which arose for determination before me was whether the plaintiffs are competent to sue the defendants in contract, on behalf of two or more of the subsidiary proprietors who had entered into sale and purchase agreements with the defendants for the purchase of units in the condominium, for alleged defects in construction of the common property.

Before me, the plaintiffs relied on s 116(1) of the Land Titles (Strata) Act (Cap 158) (the `Strata Act`), stressing that the action is only commenced on behalf of those subsidiary proprietors who have an agreement with the defendants, numbering 24 out of a total of 615 strata lots in the condominium. The plaintiffs argued that since these 24 subsidiary proprietors are entitled to sue the defendants for alleged contractual breaches relating to the common property, s 116(1) operates to vest the authority in the management corporation to sue in a representative capacity.

The defendants relied on the Court of Appeal decision in RSP Architects Planners & Engineers v Ocean Front Pte Ltd and another appeal [1996] 1 SLR 113 (the ` Ocean Front case`) and submitted that the plaintiffs would only be competent to sue for defects in the common property if all the subsidiary proprietors are themselves entitled to sue the plaintiffs in contract. The defendants further argued that the plaintiffs have not pleaded or shown that the 24 subsidiary proprietors were especially affected or damaged by the alleged defects in the common property.

The decision in the Ocean Front case

I shall set out briefly the decision in the Ocean Front case which is germane to the central issue in the case before me. One of the preliminary issues which the Court of Appeal had to determine in that case was whether the management corporation was competent to institute and maintain an action in its own name. There, the management corporation sued the developers of that condominium in tort and/or contract for damages arising out of faulty construction of the common property which had led to spalling of concrete in the ceilings of the car parks of the various blocks and water ponding in the area surrounding the lift.

The Court of Appeal held that the management corporation was entitled to bring the action under s 33 or s 116 of the Strata Act. The court went on to hold that the management corporation had no cause of action in contract and could not rely on contractual clauses in the sale and purchase agreements made between the developers and the individual purchasers, some of whom may or may not be the present subsidiary proprietors of the lots. LP Thean JA, delivering the judgment of the court, rejected counsel`s further argument based on s 57(2) of the Conveyancing and Law of Property Act (Cap 61) (`the CLPA`), stating as follows (at p 123 E- F):

It would really be straining the language of the sale and purchase agreements to say that it was the intention of the developers and the purchasers that cll 8 and 9 of their sale and purchase agreements would run with the land. Such agreements are intended to govern the relations only between the developers and their purchasers, and clearly the developers did not intend to extend the benefit of these provisions to others down the line. In our judgment, the management corporation had no cause of action in contract against the developers.

The Court of Appeal eventually held that the management corporation had a cause of action in tort.

Locus standi or legal capacity of management corporation

I now move on to the case before me. Since the argument revolves around the interpretation and scope of application of s 116(1) of the Strata Act, I shall set out the provision for convenient reference. Section 116(1) states:

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.

Section 116 was taken (with some amendments) from s 147 of the New South Wales Strata Titles Act 1973, which now appears as s 227 of the New South Wales Strata Schemes Management Act 1996 (`SSM`). However little assistance can be gleaned from the Australian provisions. Section 227 of the SSM has the effect of making the owners` corporation the representative of owners in situations where proceedings may be taken by or against all the owners jointly in respect of the common property. Significantly, there is no equivalent to that part of s 116(1) in our Strata Act which enables the management corporation to represent only some of the subsidiary proprietors. As observed by the Court of Appeal in the Ocean Front case (at p 121B), `the purpose of our s 116 may well be different from that of s 147 of the New South Wales Act.`

The insertion of the phrase `all or some of` into s 116(1) was recommended by the Select Committee on the Land Titles (Strata) (Amendment) Bill (No 10/86), Parl 10 of 1987 at D63, on the basis that the amendment serves to clarify `that a management corporation may represent all or some of the subsidiary proprietors in proceedings against any person.` Apart from that brief explanation, the Select Committee Report does not shed any further light on the legislative intent and scope of the provision.

In...