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

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JA
• Judgment Date: 15 November 2019
• Neutral Citation: [2019] SGCA 66
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeals Nos 90 and 93 of 2019
• Published date: 20 November 2019
• Year: 2019
• Hearing Date: 01 November 2019
• Plaintiff Counsel: Chuah Chee Kian Christopher, Low Ching Wei Justin and Mindy Yap (WongPartnership LLP)
• Defendant Counsel: Lim Chee San (Tan Lim Partnership) (instructed counsel), Edmond Pereira, Goh Chui Ling and Jessica Cheung (Edmond Pereira Law Corporation)
• Subject Matter: Building and construction law,Construction torts,Negligence Building and construction law,Contractors' duties,Duty as to materials and workmanship,Duty to design,Contract,Breach,Evidence,Admissibility of evidence,Hearsay
• Citation: [2019] SGCA 66

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

Both appeals arose from a dispute concerning a development known as Northstar @ AMK (“the Building”), a nine-storey commercial building. The management corporation of the Building (“the MCST”) brought an action against both the developer of the Building (“Orion-One”) and the main contractor (“Sanchoon”) in respect of a number of alleged defects.

The claim against Orion-One was brought on behalf of the subsidiary proprietors (“SPs”) of strata title lots in the Building and alleged various breaches by Orion-One of the sale and purchase agreements (“SPAs”) between Orion-One and the SPs. The claim against Sanchoon was a claim in tort which the MCST brought in its own capacity. The MCST also pursued a claim in contract against Sanchoon based on alleged breaches of various warranties given by Sanchoon to Orion-One and later assigned to the MCST (“the Warranties”).

As the proceedings below were bifurcated, the High Court judge (“the Judge”) had only to address the question of liability. The first half of his decision covered the question of whether the MCST had the requisite locus standi to bring its claim against Orion-One. It was common ground that the MCST did not itself have locus standi to sue under the SPAs and that it must be authorised by the SPs to do so. In this context, the MCST initially tendered letters of authorisation (“LOAs”) signed by various SPs. However, the Judge held that the LOAs which the SPs signed were hearsay evidence because the SPs did not initially affirm or swear affidavits, nor did they give oral evidence. Nevertheless, the Judge subsequently granted the MCST leave to reopen its case and to file an affidavit of evidence-in-chief for each participating SP, some of whom gave oral evidence in court. The Judge placed great weight on the fact that, if he had not done so, the MCST’s claim against Orion-One would fail entirely.

As for the substantive claims, it was common ground that Sanchoon owed the MCST a duty of care in tort. The Judge held that Sanchoon could also in principle be liable to the MCST in contract under the Warranties. Ultimately, having regard to the evidence, the Judge allowed the MCST’s claims against both Orion-One and Sanchoon in part. Dissatisfied, both Orion-One and the MCST appealed to this court in Civil Appeals Nos 90 and 93 respectively. Sanchoon did not appeal against the Judge’s decision.

The decision of the Judge can be found at 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 [2019] SGHC 70 (“the Judgment”).

The parties’ submissions

In its appeal, Orion-One submits: The Judge ought not to have allowed the MCST to reopen its case after concluding that the LOAs were hearsay evidence. The Judge erred in finding that the standard of “good and workmanlike manner” in cl 10.1 of the SPAs (“cl 10.1”) required that the common property be constructed with proper care and skill. The Judge erred in finding that Orion-One’s obligations under cl 10.1 extended to defects caused by the lack of proper care and skill on the part of the architect. Contrary to what the Judge held, Orion-One had provided evidence that that the MCST had failed to mitigate its losses. In any event, mitigation issues should be conclusively determined at the later tranche on the assessment of damages. The Judge ought not to have decided against Orion-One on the issue of mitigation at this stage.

In its appeal, the MCST submits: The Judge erred in deciding that the LOAs were hearsay evidence. The Judge erred in deciding that the walls separating the neighbouring units and along the corridors (“Corridor Walls”) as well as the façade walls at the roof levels and basement were not common property. The Judge erred in rejecting its various claims for alleged defects.

The locus standi issue

We first deal with two preliminary issues: whether the LOAs were hearsay and whether the Judge correctly exercised his discretion in allowing the MCST to reopen its case. This is because if the first question were to be answered in the affirmative and second in the negative, the MCST’s entire claim against Orion-One would fail.

Whether the LOAs were hearsay

The Judge held that the LOAs were hearsay evidence for the reasons given in the Judgment at [19]–[28]. In Soon Peck Wah v Woon Che Chye [1997] 3 SLR(R) 430, this court endorsed the following definition of hearsay evidence (at [26]):

[T]he assertions of persons made out of court whether orally or in documentary form or in the form of conduct tendered to prove the facts which they refer to (ie facts in issue and relevant facts) ...

The LOAs were assertions of the SPs made out of court because they initially did not file any affidavit, nor did they testify in court. Further, the MCST adduced the LOAs to prove the facts that the LOAs refer to (ie, that the SPs had authorised the MCST to claim against Orion-One). The LOAs therefore appeared, on their face, to constitute hearsay evidence.

The MCST’s submission that the LOAs were not hearsay because the purpose of the LOAs was to show that the MCST had the required authority to sue Orion-One in contract, not to give evidence of the main issues at trial, did not, with respect, appear to meet the objection based on hearsay. The MCST’s submission that the Judge disregarded the fact that the authenticity of the LOAs was not contested is open to a similar objection (although it will, as explained below, nevertheless prove to be a crucial point with regard to the present case). Indeed, the authenticity of a document and the truth of its contents are two different things (see the decision of this court in Jet Holding Ltd and others v Cooper Cameron (Singapore) Pte Ltd and another and other appeals [2006] 3 SLR(R) 769 (“Jet Holding”) at [44]). Further, the MCST’s submission that the LOAs were not signed by the respective SPs under duress or fraud or misrepresentation is beside the point. The absence of any vitiating factors has nothing to do with the question of whether the LOAs were hearsay.

We also note that the Judge found (see the Judgment at [27]) that Orion-One had consistently indicated that it objected to the LOAs as being inadmissible hearsay before the MCST closed its case at trial. As far back as the time when Orion-One filed its defence (amendment no 3), Orion-One had put the MCST to “strict proof” of its authority to act for the SPs. Further, the Judge noted that Orion-One had stated in its opening statement that “[g]iven that the subsidiary proprietors have not given evidence on these LOAs, [Orion-One] will show that these LOAs are purely documentary hearsay” and that in these circumstances, Orion-One cannot be said to have waived its right to object to the admissibility of the LOAs.

However, whilst the Judge’s finding that the LOAs were hearsay appears to be a compelling one, one cannot ignore the precise nature of the LOAs themselves. Put simply, the precise facts and circumstances as well as the need to look to the substance (rather than the mere form) of the documents concerned (here, the LOAs) are of the first importance. Returning to the LOAs in the present appeal, whilst the authenticity of each LOA must, strictly speaking, be distinguished from its contents (see [11] above), one must also have regard to what were the precise contents of each of the LOAs – bearing in mind that the underlying rationale of the hearsay doctrine is concerned with the issue of the truth of such contents. Whilst it is generally the case that agreement by the parties as to the authenticity of a document does not ipso facto dispense with the proof of the truth of the contents of that document, the sole point of the document concerned in the present case relates to the fact that the SP concerned had in fact authorised the MCST to act on its behalf. Indeed, each LOA only states that the undersigned SP authorises the MCST to sue on its behalf. Since Orion-One had not objected to the authenticity of the LOAs (see the index of the Agreed Bundle filed below, a sample of which can be found at para 15 of Orion-One’s respondent’s case for the MCST’s appeal), it must necessarily have accepted the truth of the contents of the LOAs since those contents constituted the entire pith and marrow of the LOA – put simply, the substance (content) and form of each LOA coincided with each other and were two sides of the exact same coin. Therefore, having accepted that the form of each LOA was authentic (ie, was properly executed), Orion-One would necessarily (and simultaneously) have (despite its vigorous objections based on hearsay (see [12] above)) accepted its contents as well. In the circumstances, no issue of hearsay arises.

We should emphasise the fact that our decision on this particular issue relates, in the final analysis, to one of application and does not in any way detract from the general legal principle stated in Jet Holding (see [11] above). Much will obviously depend on the precise facts and circumstances before the court concerned.

Notwithstanding our decision on the issue of hearsay in the context of the particular facts and circumstances of the present case, we nevertheless also note the Judge’s observations that “Orion-One’s objection to the admissibility of the LOAs was a highly technical objection” and that “the objection, well-founded as it was, was not conducive to determining the real matter in controversy in this action, which is whether Orion-One breached the SPAs” (see the Judgment at [31]). Returning to the specific facts of the present case, since the LOAs indicate on their face the names of the SPs, their unit numbers in the Building and their signatures together with the statement of their authorisation, and since authenticity of...