Management Corporation Strata Title Plan No 3322 v Mer Vue Developments Pte Ltd and others (King Wan Construction Pte Ltd and others, third parties)

JudgeChan Seng Onn J
Judgment Date02 March 2016
Neutral Citation[2016] SGHC 28
CourtHigh Court (Singapore)
Docket NumberSuit No 563 of 2011/L (Registrar’s Appeal No 238 of 2015)
Published date21 June 2016
Hearing Date19 October 2015
Plaintiff CounselSamuel Seow, Kelvin Chia and Jolene Lim (Samuel Seow Law Corporation)
Defendant CounselChristopher Chuah, Nikki Ngiam, Ng Pei Yin and Jasmine Low (WongPartnership LLP)
Subject MatterCivil Procedure,Pleadings,Amendment,Limitation,Limitation of Actions,Particular Causes of Action,Contract
Citation[2016] SGHC 28
Chan Seng Onn J: Introduction

This was an appeal by the Plaintiff against the dismissal of its application to amend its pleadings.

The Plaintiff, the management corporation (“MCST”) of the property known as “The Seaview Condominium” at 29 to 41 Amber Road (“the Development”), brought an action against, among others, the 1st Defendant, Mer Vue Developments Pte Ltd (hereinafter referred to as “Mer Vue”), the developer of the Development. The action was made on behalf of certain subsidiary proprietors in respect of building defects, relying on Section 85(1) of the Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed) (“BMSMA”). The construction of the Development commenced sometime in 2005 and was completed in 2008. The Temporary Occupation Permit (“TOP”) for the Development was issued in two stages—on 22 April 2008 and 28 May 2008—and the Certificate of Statutory Completion (“CSC”) was issued on or about 24 December 2008.1

Against Mer Vue, the Plaintiff brought claims for alleged defects in the Development: in contract, for breach of the sale and purchase agreements with the subsidiary proprietors who were the original purchasers (“Sale and Purchase Agreements”); in tort, for failing to ensure proper design and construction of the Development; and for breach of statutory duty under the BMSMA.

The issue at hand arose from the Plaintiff’s proposed amendments in Summons No 3193 of 2015 (“SUM 3193”). In this summons, the Plaintiff sought to amend its “Further and Better Particulars of the Statement of Claim filed pursuant to the 1st Defendants’ letter dated 12 October 2011” (“F&BPs”) filed on 31 October 2011 to include the names of an additional 113 subsidiary proprietors (to the initial list of 30 names) in Schedule 1 of its F&BPs. The Plaintiff’s application was dismissed by Assistant Registrar Chong Chin Chin (“AR Chong”) on 31 July 2015. I heard the Plaintiff’s appeal against AR Chong’s decision on 19 October 2015 on this matter and dismissed the appeal. I found that the Plaintiff’s proposed amendments were time-barred and were thus not permitted. I granted the Plaintiff’s application in Summons No 5228 of 2015 for leave to appeal to the Court of Appeal on 16 November 2015.

Representative capacity of MCST as the Plaintiff

This issue dealt with the characterisation of the Plaintiff’s application under the rules of civil procedure in light of the Plaintiff pursuing the suit in a representative capacity as a management corporation, on behalf of subsidiary proprietors, under Section 85(1) of the BMSMA. Section 85 of the BMSMA was ported from and based on the since-repealed Section 116 of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“LTSA”).

For the ease of reference, I reproduce Section 85 of the BMSMA (which is for our purposes largely in pari materia with Section 116 of the LTSA with the exception of edits to incorporate the two-tier management corporation scheme):

Management corporation, etc., may represent subsidiary proprietors in proceedings

85.—(1) Where all or some of the subsidiary proprietors of the lots in a parcel comprised in a strata title plan are jointly entitled to take— (a) proceedings for or with respect to the common property in that parcel against any person or are liable to have such proceedings taken against them jointly; or (b) proceedings for or with respect to any limited common property in that parcel against any person or are liable to have such proceedings taken against them jointly,

the proceedings may be taken by or against the management corporation in the case of paragraph (a), or the subsidiary management corporation constituted for that limited common property in the case of paragraph (b), 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 or subsidiary management corporation in any such proceedings shall have effect as if it were a judgment or an 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 — (a) the same proportion as the share value of the lot of the first-mentioned subsidiary proprietor bears to the aggregate share value, in the case of a judgment or an order for or against a management corporation; or (b) the same proportion as calculated in accordance with section 81, in the case of a judgment or an order for or against a subsidiary management corporation.

A line of local cases have authoritatively held that Section 116(1) of the LTSA, which was taken with amendments made from Section 147 of the New South Wales Strata Titles Act 1973, procedurally facilitates the institution of actions by or against subsidiary proprietors by allowing management corporations to institute or defend actions on their behalf. This is done in a representative capacity, and the statutory provision does not confer a separate right or cause of action on the management corporation. Management corporations relying on this procedural provision would still have to demonstrate an underlying substantive cause of action on the part of the subsidiary proprietors they represent: see MCST Plan No 2297 v Seasons Park Ltd [2005] 2 SLR(R) 613 (“Seasons Park”) at [14]–[18] where the Court of Appeal also referred to relevant observations by G P Selvam J and Lai Siu Chiu J in MCST Plan No 1279 v Khong Guan Realty Pte Ltd [1994] 3 SLR(R) 527 and MCST Plan No 1938 v Goodview Properties Pte Ltd [2000] 1 SLR(R) 861 (“Goodview Properties”) respectively.

Thus, where the underlying cause of action is a contractual claim, a management corporation bringing a claim on behalf of its subsidiary proprietors must specify “on which of the subsidiary proprietors’ behalf is the action in contract instituted [as] [t]he substantive party is not the management corporation but the specific subsidiary proprietors” (Seasons Park at [18]). Another important reason for this (other than to enable the defendant to know which subsidiary proprietors authorised the management corporation to bring the action and to know as to whom the eventual judgment would bind) is the rule of abatement as enunciated by the Court of Appeal in the appeal decision of Goodview Properties in [2000] 3 SLR(R) 350 at [32] and applied again in Seasons Park (at [29]–[32]).

This rule of abatement flows from the principle of privity of contract as well as the fact that each subsidiary proprietor is only a tenant-in-common of the common property to the extent of his share value in the development. Thus, under Section 85(1) of the BMSMA, a management corporation can only sue in contract on behalf of its subsidiary proprietors who have had direct sale and purchase contracts with the developer and claim only a proportionate part of the damages suffered in respect of defects to common property. Damages awarded to the management corporation would thus “abate corresponding to the ratio that the collective share value of the units owned by subsidiary proprietors of the units on whose behalf the action was taken bore against the total share value of all the units in the development” (Seasons Park at [29]).

In the present case, it is thus not surprising that the Plaintiff sought to include more subsidiary proprietors in its F&BPs. By its own estimation, this would increase the potential damages awarded for a successful contractual claim from 5% to 25% of the eventual damages assessed.2

For completeness, I should state that management corporations do not need to rely on Section 85(1) of the BMSMA for tortious claims as they are entitled in their own right to sue in tort with respect to the common property of developments (see Section 24(2)(b) of the BMSMA and Seasons Park at [19]).

Nature of application Only subsidiary proprietors with causes of action can be included

Before deciding on the characterisation of the Plaintiff’s application, a preliminary point must be made. Out of the 113 additional subsidiary proprietors proposed by the Plaintiff to be included in its F&BPs, 33 were not original purchasers of their apartment units and thus had no direct Sale and Purchase Agreements with Mer Vue.3 These 33 subsidiary proprietors therefore had no causes of action in contract against Mer Vue; the Plaintiff clearly could not bring a contractual action on their behalf in the first place. The Plaintiff themselves accepted this point.4 In addition, I did not find that the original purchasers’ agreements with Mer Vue conferred upon subsequent purchasers any right to sue in contract pursuant to Section 2(1) of Contracts (Rights of Third Parties) Act (Cap 53B, 2002 Rev Ed).

Application did not amount to adding new parties for the purposes of O 15 r 6

Mer Vue contended that the Plaintiff’s application to represent additional subsidiary proprietors was an attempt to add new parties to the existing action, akin to an application for joinder of parties under O 15 r 6 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the ROC”). Here, Mer Vue essentially argued that the Plaintiff was asking the court to intervene to make the additional 113 subsidiary proprietors parties to the action, in which case the Plaintiff should have proceeded under O 15 r 6 and not under O 20. However, I found that this interpretation of the application was misconceived and that it did not comport with the nature of representative proceedings.

Who are “parties” to an action? At least under the scheme of O 15 r 6, “parties” are envisaged as those whose names are reflected on the Writ of Summons (or Originating Summons). Thus, O 15 r 8(4)(a) of the ROC requires the writ (or any other originating process) to be amended to include the new...

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