Cheng Fu Zay and Another v Management Corporation Strata Title Plan No 1919 (Scott Vickers Engineering Pte Ltd, Third Party)

Woo Bih Li J:

[1] The plaintiffs, Cheng Fu Zay and Lai Foong Har (“the Owners”), are the subsidiary proprietors of units #29-03 and #30-01 (collectively “the Units”) in the condominium development known as Harbour View Towers (“the Development”). The Units are sited at the topmost level immediately below the common roof of Tower A of the Development. #29-03 is a double-storey apartment and #30-01 is a single storey apartment.

[2] The defendant is the Management Corporation Strata Title Plan No 1919 (“the MC”). At all material times, the MC had and has the sole control, management and administration of the common property of the Development.

[3] There was apparently a Third Party in the action, Scott Vickers Engineering Pte Ltd (“Scott Vickers”). Scott Vickers was the roof waterproofing contractor in the Development which had given a 10 year warranty on the common roof.

[4] In this action, the Owners had claimed against the MC for an order that the MC re-waterproof the common roof and for losses and damages, including loss of rental income, arising from the MC’s negligence and/or breach of its duty under the then Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“the Act”) in refusing and/or failing to properly maintain and keep the common roof in a state of good and serviceable repair under s 48(1)(b)(i) of the Act.

[5] The action was filed on 4 March 2002. The parties unsuccessfully attempted Court Dispute Resolution from 3 July 2003 to 20 January 2005 (for more than 1½ years).

[6] On 5 July 2005, the High Court allowed the action to be transferred from the District Court in view of the quantum of damages claimed.

[7] However, on 17 August 2005, all parties executed a Memorandum of Agreement pursuant to s 23 of the Subordinate Courts Act (Cap 321, 1999 Rev Ed). In so doing, the parties agreed that the District Court would continue to have jurisdiction to try the action even if the Owners’ claim exceeded the usual limit of the jurisdiction of the District Court.

[8] On 30 August 2005, the MC consented to interlocutory judgment being entered against it for, inter alia, damages to be assessed. In that judgment, the MC admitted that there was leakage to the Units from the common roof. Simultaneously, interlocutory judgment was entered in favour of the MC against Scott Vickers.

[9] On or about 21 November 2005, the Defendants re-waterproofed the common roof.

[10] On 10 and 19 April 2007, after hearing parties’ witnesses for six days (over about six months), the assessing Deputy Registrar (“the DR”) delivered his grounds of decision and granted the Owners the following:

(a) cost of repairs for the Units at $4,580.00;

(b) fees of building surveyors and valuers at $9,553.33;

(c) loss of rent for #30-01 from January 2003 to August 2006 at $97,440.00;

(d) loss of rent for #29-03 from February 2001 to August 2006 at $125,580.00;

(e) interest at 6% per annum from date of Writ to payment; and

(f) costs of $70,000.00 with reasonable disbursements to be paid by the MC to the Owners.

(a) $4,580.00 for costs of repairs to the Units;

(b) $9,553.33 for building surveyors’ and valuers’ fees;

(c) interest at 6% per annum from the date of Writ to payment.

[14] After hearing arguments on the cross-appeals, the District Judge (“the DJ”) issued his judgment on 11 September 2007. He decided that the Owners were not entitled to claim for loss of rent as they had not acted reasonably to mitigate their loss. Nevertheless, the DJ allowed the Owners to recover $16,093.33 which was conceded by the MC. This amount comprised the following:

(a) cost of jet-grouting at $6,000.00 ($1,000.00 for #29-03 and $5,000.00 for #30-01);

(b) cost of repairing the Units at $4,580.00;

(c) the building surveyors’ fees of $4,000.00 and $1,513.33;

[15] The DJ also allowed interest on the $16,093.33 at the rate of 5.33% p.a. from the date of the Writ until full payment.

[16] However, the DJ’s judgment did not state what order he was making as regards Scott Vickers.

(a) the DR’s order allowing $97,440.00 for loss of rent for #30-01 to be restored;

(b) $418,600.00 for loss of rent for #29-03;

(c) $4,580.00 for costs of repairs to the Units;

(d) $9,553.33 for surveyors’ and valuers’ fees;

(e) interest at 6% per annum from the date of the Writ to payment.

[18] After hearing arguments, I allowed the Owners’ appeal regarding loss of rent in principle but reduced the amount granted to the Owners by the DR for reasons which I shall elaborate on later.

[20] This sum of $4,580 was strictly speaking not an issue as the DR and the DJ had allowed this sum and the MC had not appealed against it before me. Nevertheless, as the parties saw it fit to include the $4,580 in the draft order they had prepared for my approval, I decided to allow the sum to remain in the draft so that the draft would encapsulate all sums payable by the MC and parties would not have to consider another order to find out what other sum was payable by the MC.

[21] As for the $9,553.33 for the building surveyors’ and valuers’ fees, this sum had already been allowed by the DR and again, should not have been included in the Owners’ appeal to the DJ but it was. Also, this item was not the subject of appeal by the MC but the DJ apparently overlooked this point and awarded the Owners $5,513.33 (instead of $9,553.33) for this item because that was the sum said to be conceded by the MC.

[22] I awarded the Owners the $9,553.33 for the building surveyors’ and valuers’ fees because it was really not in dispute in the arguments before me. In the first place, the DJ should not have allowed the smaller sum of $5,513.33 as these fees were not part of the MC’s appeal.

[23] The MC has filed an appeal to the Court of Appeal against my decision to allow the Owners their claim for loss of rent.

[24] As mentioned above, the DR had allowed the claim for loss of rent. I set out below his reasons for allowing this item, including his findings on the state of the Units, and his computation of the loss of rent. He said at [22] to [33]:

[24] As mentioned above, the DJ reached the opposite conclusion on the claim for loss of rent and disallowed such a claim. In summary, the DJ was of the view that while the Owners had tried to mitigate their loss by taking steps to try to rent out the Units, they had failed to mitigate in that they should have allowed jet-grouting to be carried out to the Units, although such a solution was temporary, instead of insisting on the re-waterproofing of the entire common roof. The DJ stressed that the evidence of various witnesses, i.e. Ong Chin Hoe Steven (PW2), Bruce Loggie (PW3) and Paul Crispin Casimir (DW2), had shown that jet-grouting as a rectification alternative would work, albeit temporarily (see [40] to [56] of the DJ’s grounds of decision).

[25] Before me, the Owners stressed that none of the expert witnesses referred to by the DJ had recommended jet-grouting as a remedial measure. Indeed, when the MC had commenced action in Suit No 182 of 2000 on 19 April 2000 against the developer and the architect, its own expert, Mr Casimir, was of the view that the waterproofing to the main roof had to be completely redone. Further, the parties (in the present action before me) had agreed to the joint appointment of Bruce Loggie to inspect and report on the problem of water seepage. Mr Loggie had also recommended that the waterproofing system be repaired/replaced and did not recommend jet-grouting. According to the Owners, the MC also did not suggest jet-grouting specifically until a letter dated 7 December 2004 from its solicitors. Although none of the experts had recommended jet-grouting as such, the DJ relied on their evidence for a different point i.e. that jet-grouting was a viable alternative. That is why he concluded that the Owners should have allowed jet-grouting to be done so as to avoid future loss of rent. I would add that it was not disputed that jet-grouting had, in the past, been carried out to one of the Units but that this was not a permanent solution.

[28] Accordingly, I allowed the Owners’ appeal on the issue as to whether loss of rent was claimable. However I reduced the quantum allowed by the DR for two reasons.

[30] However, I noted that the information that the MC had re-waterproofed the entire roof was already stated in an affidavit served by the MC on or about 5 January 2006 although the Owners’ counsel said it was not highlighted therein and was mentioned obliquely. He did not dispute that the Owners’ solicitors had received the same and a copy of the affidavit would have been sent to the Owners by their solicitors. However, counsel himself only noticed the relevant information on or about 24 April 2006 when he was preparing for cross-examination.

[31] Given the importance of the re-waterproofing of the roof, I agreed that some criticism could be levelled against the omission to highlight the fact of the completion of the re-waterproofing to the Owners or their solicitors. Nevertheless, as it was mentioned in the affidavit for the MC which was served on or about 5 January 2005, I was of the view that the Owners’ claim for loss of rent should stop by end February 2006 instead of end August 2006. I allowed the period from 6 January 2006 to 28 February 2006 in order to take into account the time required to obtain access from the MC, conduct the requisite test and allow for drying out and internal repairs (attributable to the water seepage) to be done.

[32] Secondly, I was of the view that the damages for loss of rent should be reduced by the income tax which the Owners would have paid had they received the rent. Rent is subject to income tax but damages are not. Although this point had apparently not been raised before the DR or the DJ, the Owners’ counsel quite readily accepted the point when I raised it.

[33] The Owners produced documents in respect of their respective tax rates over the years and I left it to both counsel to agree, if they could, on the quantum of damages for loss of rent taking into account the findings of the DR and the two points I mentioned above. The eventual figure agreed on was $171,266.13 for loss of rent.

[34] I should mention two points which counsel for the MC raised. He argued that the Owners should have tried to let out the Units at a reduced rent in view of the water seepage. However, the DR had already not imposed the full loss of rent onto the MC. As mentioned in his grounds of decision, he had allowed the Owners 70% of the loss of rent for #30-01 and 30% of the loss of rent for #29-03. This would have addressed the argument about a reduced rent. I saw no reason to disagree with the DR’s assessment.

[35] The second argument raised by counsel for the MC which I wanted to mention was that, at one point of time in or about April 2003, the Units were occupied by relatives of the Owners and hence the Units were not uninhabitable. Counsel for the Owners countered this by the argument that even a void deck of a block of flats could be said to be habitable. I was of the view that the issue was whether the Units could be let out to paying tenants and that the Owners would not have been able to receive the full market rent. As stated above, the DR had already not imposed the full loss of rent on the MC.

[36] I was of the view that the MC had only itself to blame. It knew about the water seepage problem and that its own expert Mr Casimir and the joint expert Mr Loggie had recommended that the common roof be re-waterproofed. It chose to rely on Scott Vickers who had given a warranty on the original waterproofing to take remedial action but Scott Vickers was not going to re-do the waterproofing. In such circumstances, the MC should not have been overly concerned that any initiative that it took to re-waterproof might render the warranty void. There was no use in clinging to the warranty when Scott Vickers was not carrying out its obligations thereunder. It was only much later, around November 2005 as I have mentioned, that the MC finally re-did the waterproofing.

[37] There is one other point I should mention. The Owners had sought an order pursuant to s 118 of the Land Titles (Strata) Act, (Cap 158, 1999 Rev Ed) (“LTSA”) that the MC was not to levy against the Owners, as subsidiary proprietors of the Units, any claim for contribution for any money payable by the MC pursuant to any order which the court might make in favour of the Owners. Sections 118 (1) and (2) LTSA state:

[38] Counsel for the Owners submitted that since it was the Owners who had contested and won against the MC, they should not be made to bear a pro-rata portion, based on their status as subsidiary proprietors, of the money which the MC would otherwise have to raise from all subsidiary proprietors to pay their claim for damages.

[39] On the other hand, if the Owners were not required to pay their pro-rata portion, then the other subsidiary proprietors would have to bear their portion. It seemed to me that the other subsidiary proprietors were, in their capacity as such proprietors, just as blameless as the Owners and I therefore declined to make the order sought under s 118 LTSA.

[40] I should also mention that with effect from 1 April 2005, s 118 was replaced by s 87 of the Building Maintenance and Strata Management Act 2004 (Act 47 of 2004). For present purposes the differences between the two provisions are insignifcant.