Management Corporation Strata Title Plan No 3556 (suing on behalf of itself and all subsidiary proprietors of Northstar @ AMK) v Orion-One Development Pte Ltd (in liquidation) and another

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 27 March 2019
• Neutral Citation: [2019] SGHC 70
• Citation: [2019] SGHC 70
• Date: 27 March 2019
• Published date: 21 November 2019
• Hearing Date: 19 October 2016,21 October 2016,17 October 2016,22 May 2017,31 July 2017,24 October 2016,30 March 2017,20 October 2016,06 March 2018,27 March 2017,29 March 2017,18 October 2016,23 May 2017,28 March 2017,29 March 2018
• Plaintiff Counsel: Edmond Pereira, Goh Chui Ling and Lim Chee San (instructed) (Edmond Pereira Law Corporation)
• Docket Number: Suit No 652 of 2014
• Defendant Counsel: Josephine Choo, Wilbur Lim, Jeffrey Koh and Valerie Quay (WongPartnership LLP),Christopher Chuah, Lydia Yahaya and Alyssa Tan (WongPartnership LLP)
• Court: High Court (Singapore)
• Subject Matter: Admissibility of evidence,Negligence,Duty to design,Building and construction law,Hearsay,Contract,Contractors' duties,Duty as to materials and workmanship,Breach,Construction torts,Evidence

Vinodh Coomaraswamy J:

This dispute concerns a development known as Northstar @ AMK (the “Building”).¹ The management corporation of the Building brings this action against both the developer of the Building and the main contractor in respect of a number of alleged defects. The claim against the developer is brought on behalf of the subsidiary proprietors of strata title lots in the Building² and alleges various breaches by the developer of the sale and purchase agreements (“SPAs”) between the developer and the subsidiary proprietors. The claim against the main contractor is a claim in tort which the management corporation brings in its own capacity. The management corporation also pursues a claim in contract against the main contractor based on alleged breaches of various warranties given by the main contractor to the developer and later assigned to the management corporation.

The background The Building and its construction

The Building is a nine-storey commercial building.³ It comprises a total of 654 light industrial units and offices.

Management Corporation Strata Title Plan No. 3556 (the “MCST”) is the management corporation of the Building and the plaintiff in this action.⁴

Orion-One Development Pte Ltd (“Orion-One”) is the developer of the Building and is the first defendant in this action. It has been in members’ voluntary liquidation since May 2014.⁵

Sanchoon Builders Pte Ltd (“Sanchoon”) was Orion-One’s main contractor in the construction of the Building⁶ and is the second defendant in this action. Sanchoon in turn engaged various sub-contractors.⁷

Sanchoon and its sub-contractors jointly provided several warranties to Orion-One (the “Warranties”). The Warranties covered various aspects of the Building, such as its cladding, waterproofing and roof.⁸ Orion-One purports to have assigned the Warranties to the MCST by a deed of assignment dated 22 November 2013 (the “Deed”).⁹ As I explain later (see [87]–[89] below), the effect of the Deed is disputed.

The Temporary Occupation Permit for the Building was issued in July 2009. The Certificate of Statutory Completion was issued in December 2009.¹⁰ Orion-One handed over management of the Building to the MCST in November 2010.¹¹

Discovery of the defects

In or around February 2012, the chairman of the MCST, Mr David Ong, began to notice defects in the Building. These defects included cracks in the walls, water seepage, and water ponding.¹² Mr David Ong instructed the MCST’s managing agent to compile a list of defects.¹³ This list of defects was then sent to Orion-One.¹⁴ A joint inspection of the Building was conducted in October 2012.¹⁵

Following the joint inspection, Sanchoon carried out works to rectify the defects.¹⁶ The MCST and certain subsidiary proprietors remained dissatisfied even after the rectification. The MCST passed a special resolution in January 2014 authorising litigation against Orion-One.¹⁷ The MCST commenced this action in June 2014.

Issues to be determined

The issues to be decided in this action are: Does the MCST have the requisite locus standi to bring its claim against Orion-One? Has Orion-One breached the SPAs? Does Sanchoon owe the MCST a duty of care in tort, and if so has it breached its duty? Has Sanchoon breached the Warranties?

Locus standi

The MCST’s claim against Orion-One is a contractual claim founded on the SPAs between Orion-One and those subsidiary proprietors of the Building who are participating in this action.¹⁸ The MCST represents these subsidiary proprietors in a claim against Orion-One as permitted under s 85(1) of the Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed) (the “BMSMA”).

The effect of s 85(1) is purely procedural. It does not confer upon a management corporation any cause of action in its own right. All that s 85(1) does is to facilitate an action by a large number of subsidiary proprietors in a development by allowing the management corporation to sue on their behalf, thereby avoiding having to name all of the participating subsidiary proprietors as parties to the action. The substantive parties to an action brought by a management corporation in reliance on s 85(1) remain at all times the individual subsidiary proprietors who have authorised the management corporation to act on their behalf. A management corporation which relies on s 85(1) is therefore required to identify the specific subsidiary proprietors whom it claims to represent in the action by naming them individually in an annex to its statement of claim: Management Corporation Strata Title Plan No 3322 v Mer Vue Developments Pte Ltd [2016] 4 SLR 351 at [18]–[19] and Management Corporation Strata Title Plan No 2297 v Seasons Park Ltd [2005] 2 SLR(R) 613 (“Seasons Park”) at [14]–[18].

The MCST has duly identified the specific subsidiary proprietors whom it claims to represent in this action in an annex to its statement of claim. I shall refer to that group of subsidiary proprietors as the “participating subsidiary proprietors”. The MCST has attempted to prove its authority to represent the participating subsidiary proprietors by adducing letters of authorisation (“LOAs”) signed by each of them. The MCST closed its case at trial without calling any of the participating subsidiary proprietors, other than Mr David Ong, to give evidence.

Orion-One took the following objections to the LOAs: The LOAs are hearsay and therefore inadmissible.¹⁹ 28 of the LOAs are not signed by all of the joint subsidiary proprietors of the unit in question.²⁰ 76 of the LOAs are either undated or are dated after the MCST commenced this action.²¹ 123 of the LOAs are signed by employees or directors of subsidiary proprietors who are corporations but without adducing any proof of the employees’ or directors’ authority to sign those LOAs on behalf of the corporate subsidiary proprietor.²² The jurats of the affidavits of evidence in chief of eight subsidiary proprietors does not record that the affidavits were translated to their deponents, even though those deponents do not understand English.²³ Two LOAs contain certain discrepancies.²⁴

Orion-One also took issue with the standing of certain participating subsidiary proprietors to bring an action in contract against Orion-One for the following reasons:²⁵ The names of the participating subsidiary proprietors for 13 units do not match the names of the purchasers set out in the SPAs for those 13 units. Eight of the participating subsidiary proprietors have since transferred their units to third parties, who have no contract whatsoever with Orion-One. The SPA for #07-27 is incomplete. I deal with these objections in turn.

Objections to the LOAs Admissibility of the LOAs

As I have mentioned, the MCST included the LOAs in the agreed bundle, but closed its case at trial without calling any of the subsidiary proprietors who executed the LOAs to prove the LOAs and give evidence. Orion-One consistently took the point, both before and after the MCST closed its case at trial, that the LOAs were inadmissible hearsay.²⁶ In response, the MCST applied in the course of the closing submissions:²⁷ (i) for permission to reopen its case and to file affidavits of evidence in chief from the participating subsidiary proprietors exhibiting their respective LOAs; and (ii) to dispense with cross-examination of the participating subsidiary proprietors.

At the hearing of the MCST’s application, I accepted Orion-One’s argument that the LOAs were inadmissible hearsay. I nevertheless granted the MCST leave to reopen its case and to file affidavits of evidence from the participating subsidiary proprietors exhibiting their respective LOAs.²⁸ I now set out the reasons for my decision.

In the discussion which follows, I leave aside the LOAs executed by Mr David Ong. He filed an affidavit of evidence in chief and testified at trial, before the MCST closed its case. He therefore gave direct evidence of the contents of his LOAs within the meaning of s 62(1) of the EA. His LOAs are not inadmissible hearsay.

The LOAs were indeed hearsay

In response to Orion-One’s hearsay objection, the MCST argued that the LOAs were not hearsay because: The MCST relied on each LOA only to prove that the statement in the LOA (that the subsidiary proprietor signing the LOA had authorised the MCST to bring this action on his behalf) was made, and not as proof of the truth of the statement in the LOA.²⁹ Further or in the alternative, the LOAs fell within the exception to the rule against hearsay which is set out in s 32(1)(b)(iv) of the Evidence Act (Cap 97, 1997 Rev Ed) (the “EA”).³⁰ Further or in the alternative, the LOAs fell within the exception to the rule against hearsay which is set out in s 32(1)(k) of the EA.³¹ In any event, Orion-One had waived its right to object to the admissibility of the LOAs.³²

I did not accept any of the MCST’s arguments on this point.

First, it is true that evidence which is adduced to prove that an out-of-court statement was made (and not to prove the truth of the contents of that statement) is not within the hearsay rule: Saga Foodstuffs Manufacturing (Pte) Ltd v Best Food Pte Ltd [1994] 3 SLR(R) 1013 at [11]. But the MCST adduced the LOAs not to prove that the out-of-court statements in the LOAs were made. For the MCST to represent a subsidiary proprietor in this action, it has to prove that it has authority from that subsidiary proprietor to do so. In other words, the MCST has to prove the truth of the statements in that subsidiary proprietor’s LOA, i.e. that that subsidiary proprietor did authorise the MCST to represent him. It is not sufficient for the MCST simply to prove that the subsidiary proprietor made a statement to that effect. The MCST has to prove that the subsidiary proprietor in fact authorised the MCST to represent them in this action.

Second, the LOAs did not fall under s 32(1)(b)(iv)...