Smart Property Management (Singapore) Pte Ltd v Management Corporation Strata Title Plan No 4375 [2022] SGHC 219

The present appeal arose out of a dispute between the respondent (“the MCST”), the management corporation of a development known as Alexandra Central (“the Development”), and the appellant (“Smart”), who was at the material time the managing agent (“MA”) of the Development. The Development is a mixed-use strata title development comprising a shopping mall and a hotel. The MCST had commenced District Court Suit No 2074 of 2019 (“the Suit”) against Smart for breaching its contractual duties. The District Judge (“DJ”) allowed the MCST’s claims in part and ordered Smart to pay damages totalling $120,948.70. Smart appealed against the DJ’s decision in relation to three claims, as follows:

I dismiss the appeal in relation to the Landscape Works and Hoarding Works but allow the appeal on the EM Locks.

Background

Smart was the MA for the Development from January 2018, after the previous MA went through a merger and transferred the business to Smart. Subsequently, Smart was formally appointed by the MCST as the MA of the Development for one year from 1 July 2018 to 30 June 2019. The relationship between Smart and the MCST was governed by a management agreement (the “Contract”) that set out, inter alia, Smart’s duties and obligations to the MCST. I reproduce the relevant terms of the Contract:

The Contract was terminated with effect from 19 March 2019, by a termination notice the MCST issued to Smart on 20 February 2019. The MCST then appointed a new MA, Colliers International Consultancy & Valuation (Singapore) Pte Ltd (“Colliers”), and subsequently commenced the Suit on 11 July 2019. For purposes of my decision, I deal only with the claims that Smart appealed against, as elaborated below.

The DJ’s decision

The DJ’s grounds of decision are set out in The Management Corporation Strata Title Plan No 4375 v Smart Property Management (Singapore) Pte Ltd [2022] SGDC 38 (“the GD”).

I deal with each of the above claims in turn.

Landscape Works

In relation to the Landscape Works, Smart submitted that the DJ’s reasoning was premised on the following assumptions that were without basis, namely: (a) Smart’s duty to inspect and supervise contractors amounted to guaranteeing Oakland’s work such that evidence of breach by Oakland was treated as a breach by Smart; (b) the remedial works carried out by Lucky Garden was confined to remedying breaches of Oakland’s work; and (c) the sum the MCST paid Lucky Garden was automatically recoverable from Smart without deduction for the benefits procured.

In the above regard, Smart submitted that even if Oakland had breached the landscaping contract, this did not therefore mean that Smart had also breached its duty under the Contract to supervise Oakland. Further, there was no evidence to show the works done by Lucky Garden were solely to rectify the state of disrepair caused by Oakland. Finally, even if Smart were liable for damages arising out of its failure to supervise Oakland, the damages should be moderated to no more than $15,000.

The MCST submitted that Smart’s objections were premised on a wrong understanding of the DJ’s reasoning. The DJ had first considered whether Oakland was in breach of the landscaping contract before determining whether Smart breached its duty to supervise Oakland. It was only in respect of the latter that the DJ concluded that Smart had breached its contractual duty to supervise Oakland. Hence, the DJ did not regard Smart’s duty to inspect and supervise Oakland as a “guarantee” of Oakland’s work.

Whether Oakland had discharged its duties under the landscaping contract

It was not disputed that Smart had a duty to supervise Oakland in the carrying out of Oakland’s duties under the landscaping contract. I disagree with Smart that the DJ had conflated the issue of Oakland’s duty and liability with Smart’s duty and liability to the MCST. It was clear from the GD that the DJ considered the two issues separately, ie, whether Oakland had breached its duty to maintain the landscape, and whether Smart had breached its duty to supervise Oakland’s work.

I accept the DJ’s findings that the landscape was in a state of disrepair and that Oakland had fallen short of its duties to maintain the landscape during Smart’s tenure as MA (see the GD at [14]–[17]). The DJ had set out detailed reasons which included the following.

First, the photographs adduced through Angeline Tan (“Angeline”), the chairperson of the MCST, and Julie Neo (“Julie”), Colliers’ property manager, showed, among other things, weeds, withered plants and overgrown foliage at the Development. Smart did not dispute the photographs were taken during the site inspection on 19 March 2019 when Colliers took over as the MA. The state of the landscape was also attested to by Julie who had walked the ground.

Second, Smart’s own employee, Kaystal Koh (“Kaystal”) admitted in an email on 19 February 2019 to the MCST that the landscape had not been taken care of. In that email, Kaystal stated “Attached are the photos that I have taken of the landscape area that have been affected and not taken care off [sic].” I find Smart’s assertion, that the photographs were taken after the termination of its contract and therefore was not evidence that it was in breach, to be disingenuous. Smart remained as the MA until 19 March 2019, even if it was notified of its termination as the MA on 20 February 2019 (see [4] above). Thus, Kaystal’s photographs were relevant evidence to show the state of the landscape during Smart’s tenure as MA.

Third, Smart’s employees, including its managing director Desmond Tan (“Desmond”), were copied in an email sent by Colliers to the MCST on 20 March 2019 that highlighted the poor state of the landscape, stating, for example, that the landscape area was full of weeds and dead plants and that most of the planter creepers at the vertical wall along the car park ramp were dead. Smart never disputed these allegations.

Fourth, Smart pleaded that “Oakland had not performed its ‘landscaping duties’” which was why it had recommended to the MCST to engage a replacement landscape contractor to carry out rectification works. Desmond did not deny that Oakland had breached its contract and did not do the landscaping works properly. These are clear admissions by Smart that the landscape of the Development was not properly maintained during its tenure as MA.

Indeed, implicit in Smart’s submissions before me that: (a) Smart claimed to have performed its supervisory duties by purportedly recommending a replacement of Oakland (although Desmond confirmed during cross-examination there was no evidence to show that Smart had recommended a replacement contractor to the MCST); (b) Oakland did not discharge its duties even under Colliers’ supervision; and (c) the MCST was aware that Oakland was the blameworthy party, is Smart’s acknowledgment that Oakland had failed in its duties under the landscaping contract.

Whether Smart had breached its duty to supervise Oakland

Next, I find the DJ was correct to conclude that Smart had breached its duty under the Contract to supervise Oakland in the discharge of the latter’s landscaping duties.

Before me, counsel for Smart, Mr Liew, argued that Smart supervised Oakland by receiving service reports from Oakland and getting Oakland to increase its workforce by sending a float team. However, I find these actions were insufficient to fulfil Smart’s duties under the Contract to supervise Oakland.

First, Smart’s receipt of the service reports did not necessarily amount to a discharge of its duties under the Contract. Paragraphs (A)(a) and (A)(c) of Schedule 2 of the Contract provide that Smart was under a duty to “carry out weekly visit/inspection” [emphasis in original omitted; emphasis added in italics] of the Development “to ensure [the Development] is in satisfactory and serviceable condition and properly maintained” and “to ensure that all … routine maintenance works undertaken by the contractors are carried out properly and completed satisfactorily in accordance with the terms and conditions of the contract”. Clause 7(d) of the Contract states that Smart had to “supervise” its contractors for the purpose of their completing the works undertaken by them “in accordance with the terms of the relevant contract”. Thus, Smart’s duty to supervise included a duty to independently verify (including a physical verification) that the works undertaken by Oakland were satisfactorily completed in accordance with Oakland’s landscaping contract. The mere receipt of service reports from Oakland did not amount to adequate supervision by Smart to discharge its duties under the Contract.

In the above regard, the DJ had found, and I agree, that Smart did not show evidence of having made any attempt to supervise and manage Oakland. I accept the DJ’s analysis of the evidence on this matter, including the evidential burden being on Smart to show what efforts it had taken to supervise Oakland, after the MCST had established a prima facie case (see the GD at [18]–[19]).

I agree with the DJ that the service reports did not show how Smart supervised Oakland, despite Mr Liew’s submissions to the contrary. Pertinently, and as the DJ had observed correctly, many of the service reports were received in batches and not contemporaneously with the purported servicing by Oakland (see the GD at [20]). Smart accepted the service reports showed that the reports for servicing purportedly done in a particular month was only received in the following month in a batch. That the service reports were not received by Smart at the time of each purported servicing, but in many instances a few weeks later, contradicted Smart’s position that it supervised Oakland at the time Oakland serviced the Development’s landscape. Hence, Mr Liew’s reliance on Desmond’s testimony in relation to the service reports did not assist Smart’s case. Desmond did not explain how or what supervision Smart did vis-à-vis Oakland and instead conceded that the service reports were: (a) largely devoid of any explanatory comments on Oakland’s work; and (b) insufficient to prove contemporaneous supervision of Oakland’s work.

Second, Mr Liew argued that Smart had supervised Oakland by arranging for Oakland to increase its workforce by deploying a float team. However, Mr Liew’s argument that the float team was a result of Smart’s supervision of Oakland and had been deployed because Oakland was not performing its landscaping duties satisfactorily, is not supported by the evidence. Before me, Mr Liew agreed that Smart did not testify as such, and further that there was no correspondence to show that Smart had ever expressed dissatisfaction to Oakland over its performance of duties.

Third, if Smart had attempted, by pleading that it had: (a) brought the issue of the landscape maintenance to the attention of the MCST and Oakland; and (b) recommended to the MCST to engage a replacement landscape contractor to carry out rectification works as Smart had realised that Oakland did not perform its landscaping duties, to show that these amounted to supervision of Oakland, this is not borne out by the evidence. As Desmond conceded at trial, Smart did not lead evidence in support of its pleaded case.

Finally, Mr Liew’s attempt to show that Oakland was a “recalcitrant” contractor whom even Colliers had difficulty managing, is, as the DJ stated, a non-starter as there was no evidence that Smart had even supervised Oakland in accordance with the Contract. I fail to see how this amounted to a defence by Smart in relation to the breach of Smart’s duties under the Contract.

The MCST’s corresponding duty

Before me, Mr Liew submitted that the MCST also had a corresponding responsibility to ensure its contractors carried out their duties. Mr Liew submitted that as the MCST “owed co-extensive duties and obligations, insofar as they argue egregious breach by [Smart], they are admitting egregious breach on their part”. I do not understand Mr Liew’s point, which does not assist Smart’s case in relation to the MCST’s claim against it. As Mr Liew agreed, even if the MCST shared similar duties as the MA, the MA (ie, Smart) was not absolved from its liabilities under the Contract to the MCST.

Whether Lucky Garden’s work was confined to remedying Oakland’s breaches

I turn to the issue of whether Lucky Garden’s work amounting to $32,752.70 only involved rectification works to repair the damage caused by Oakland. In this regard, Lucky Garden submitted three invoices dated 26 August 2019 – two of which were titled “enhancement work” and one was titled “ad-hoc work” (the “Three Invoices”).

I disagree with Smart, and I find the DJ did not err in finding that the works performed by Lucky Garden pertained to reinstating the landscape and was thus fully recoverable by the MCST from Smart. Whilst Lucky Garden described its works as “enhancement work”, this did not mean that it had performed works over and beyond what was required in the first place of Oakland to maintain the landscape, but that such description had to be read in context of the scope of Lucky Garden’s engagement which was to rectify the damage to the landscape (see GD at [22]).

Lucky Garden’s invoices showed that the substance of its works corresponded to the proposed scope of rectification identified in a takeover report submitted to Colliers (“Takeover Report”). The Takeover Report was prepared in response to Collier’s request to Lucky Garden to rectify the landscaping of the Development. It was prepared on 30 April 2019, based on an inspection of the Development on the same date and reported various matters pertaining to the landscape of the Development that required attention. There was no evidence to suggest that what was observed and reported was fabricated.

A perusal of the Three Invoices showed that the works done by Lucky Garden matched the description of works in the Takeover Report. Hence, the DJ was entirely justified in concluding that Smart’s assertion – that the rectification works performed by Lucky Garden went beyond what was needed to restore the landscape on the basis that it was labelled “enhancement work” – was “pure speculation”.

On the same basis, I reject Mr Liew’s submission that the damages should be reduced to $15,000 because the MCST had sourced for a quotation of $15,000 to $20,000 and this therefore showed that Lucky Gardens’ works (which were more expensive) had included enhancement works. Smart’s reliance on an email from the MCST’s representative (one Victor) to Smart, to show that Victor had liaised with another landscape entity which had quoted the sum of $15,000 to $20,000 does not assist Smart’s case. Not only was the email dated 20 February 2019 when Smart was still the MA, the quotation was bereft of any details on the extent of rectification works to be done and which might have changed after Smart’s Contract with the MCST had been terminated.

As such, I find no reason to disturb the DJ’s award of damages at $32,752.70.

Hoarding Works

In relation to the Hoarding Works, Angeline attested that on or around July 2018, Smart had advised the first management council (“MC”) to implement a by-law to hoard up empty units in the Development. The first MC thus included motion 9.5 in the notice of the MCST’s 2nd AGM to empower the incoming MC to draft and implement a new by-law on the hoarding up of vacant units. On 29 August 2018 at the 2nd AGM, Resolution 9.5 was passed with a vote of 99.4% in favour. Resolution 9.5 is as follows:

Subsequently, during the first Council Meeting of the second MC held on 14 September 2018, Smart provided the following advice to the MCST:

In a “Recommendation for award of works” dated 5 October 2018 prepared by Smart for the MCST’s approval, Smart stated that the installation of hoarding for vacant units had been approved during the 2nd AGM under Resolution 9.5 and reiterated that “The hoarding will be charged back to the contractors of each unit before commencing renovation works”. It was on this basis that Smart asked for the MCST’s approval to pay for the works from the sinking fund.

Purport of Resolution 9.5

Whether Smart was liable to the MCST for the advice given

Given the above, I accept the DJ was correct to find that Smart’s advice was wrong. I will not repeat the DJ’s detailed findings (see the GD at [27] to [38]) which I accept, save to mention a few points.

It is pertinent to note that Smart held itself out to be a leading MA with more than 160 residential and commercial developments under its charge. Desmond agreed that Smart would be familiar with property management and the laws in this area and in particular the requirements under the Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed) (“BMSMA”). As an established MA, Smart should have had a basic understanding of the statutory requirements for passing a by-law and should have known that the MCST would require proper authorisation to use the sinking fund to pay for the Hoarding Works.

As provided in clause 7(i) of the Contract, Smart had to be familiar with the provisions of the BMSMA in order to provide good and sufficient guidance and assistance to the MCST in complying with the provisions therein. It thus cannot be said that it was unreasonable for the MCST to have relied on Smart’s advice on the Hoarding Works. Hence, I agree with the DJ that Smart breached its duties under the Contract to act competently and to provide good and sufficient guidance to the MCST in complying with the provisions of the BMSMA when it incorrectly advised the MCST to install the Hoarding Works.

In this regard, Mr Liew argued before me that “even if the advice was wrong… that does not automatically translate into actionable negligence” as “wrong advice of itself does not give rise to a cause of action”. It is unclear what further point Mr Liew was making, as the MCST’s cause of action was premised on a breach of the Contract (and which I have found to have been made out).

Quantum of damages

EM Locks

It is common ground that Smart advised the MCST to install the EM Locks at the entry and exit points of the Development. The issue is whether Smart’s advice was wrong, given that the EM Locks were purportedly never activated for their intended use.

The MCST claimed that Smart did not activate the EM Locks because they were not functioning well after they were installed, and there were also safety concerns that if the EM Locks were activated without a security guard being present to ensure there was no one in the shopping mall, patrons of the mall could be trapped in the mall. Hence, the EM Locks “became a white elephant and an unnecessary expense”.

Smart submitted that there was no evidence that the EM Locks were not functioning well and that it was the MCST who had changed its mind and decided that it could do without the EM Locks. Smart submitted that the DJ’s finding that its advice to install the EM Locks was “poorly thought through” went against the weight of the evidence and was factually unsupportable. Accordingly, Smart could not be liable and no question of quantum of loss could arise. Smart further submitted that even if it were liable, the MCST had suffered no loss because it continues to retain and use the EM Locks.

Counsel for the MCST, Mr Wah, submitted that Smart has raised facts that were not in evidence and without making an application to adduce new evidence. The MCST objected to Smart’s submission that the EM Locks were working well and that it was the MCST who did not want to activate the EM Locks in the absence of any underlying evidence in the record of proceedings.

Whether Smart had wrongly advised on the installation of the EM Locks

In determining whether Smart’s advice to install the EM Locks was wrong and which led to their installation being unnecessary and wasteful, it is necessary to examine whether the concern raised by Smart that necessitated the installation was legitimate and whether it was Smart who did not activate the EM Locks because they were not functioning well and there was a safety concern that patrons of the mall could be trapped in the mall. Contrary to the MCST’s submission, Smart’s arguments before me were not premised on any new evidence it was seeking to introduce. Instead, Smart was merely asking this court to re-examine the DJ’s findings in light of the evidence already adduced in the court below and on the basis of who bore the burden of proving the assertions.

Having considered the context behind Smart’s advice, I find that there was a legitimate and reasonable basis for Smart to recommend the installation of the EM Locks to prevent property damage within the Development after the usual operating hours. I briefly set out the context which led to Smart’s advice to install the EM Locks.

On 7 June 2018, Smart received a formal complaint from a tenant that operated a kindergarten at the Development (“7/6/18 Email”). In gist, the tenant complained against the proposal for a bar to be operated on the same floor as the kindergarten on the basis that the bar would negatively impact the kindergarten’s business, and further stated that there were already six bars operating at the mall. The tenant also noted in the 7/6/18 Email that “the Central Management [was] experiencing great difficulty clearing the smell of smoke from the corridor each morning on Level 3 due to the bars already operating at the Mall” and highlighted that there were “a number of unsavoury and illegal activities” operating at an establishment on the first floor.

Smart then wrote to the MC on 11 June 2018 to update them on the 7/6/18 Email. In its update to the MC, Smart also highlighted two incidents caused by intoxicated patrons within the span of a month that resulted in damage to the Development, namely a “broken wire mesh glass for 4 way breeching inlet box” and a “car crashing into [the] carpark barrier during exit”. Smart then informed the MC that it would be taking measures in the form of “installing electromagnetic locks at the entry/exit doors of the mall and the doors will be locked based on the shopping mall closing hours” with the EM Locks being “deactivated and released if the fire alarm is triggered”.

On the same day, the MC replied, inter alia, suggesting the parties “brain storm [sic] for better solutions before implementation”. In response, Smart sent another email also dated 11 June 2018 as follows:

Smart subsequently obtained quotations for the EM Locks and submitted a “recommendation for award of works” dated 19 July 2018 for the EM Locks to be installed on the first six floors of the Development. The MCST accepted Smart’s recommendation and the EM Locks were installed in or around November 2018.

It is clear that the impetus for Smart’s recommendation to install the EM Locks was due to a complaint from a tenant as well as the incidents of damage to the property of the Development and of improper behaviour of unruly patrons. It was therefore reasonable for Smart to have been concerned about further property damage to the mall (particularly after operating hours) and the reputation of the mall.

Indeed, Angeline agreed during the proceedings below that the EM Locks were considered to be essential for the safety of the Development, especially in relation to the late-night patrons at the pubs and bars. Angeline also agreed that the MC did not blindly accept Smart’s recommendation to install the EM Locks but had deliberated on the matter before making a decision. She further agreed that the MC had also, in its deliberation, discussed what would happen to patrons in the mall if the EM Locks were activated, but nevertheless agreed to the installation of the EM Locks. As such, it could not be said that Smart’s advice to install the EM Locks was wrong, or that the EM Locks were an unnecessary expense which should not have been incurred in the first place.

My conclusion that there was a legitimate basis for Smart’s advice to install the EM Locks is also supported by Angeline’s testimony in court that the EM Locks were actually activated about a year after they were installed and during the Covid-19 period and in fact continue to be utilised at the Development as a safety feature. Pertinently, Angeline stated that the bars and pubs moved out of the Development due to their business being affected by the Covid-19 restrictions. Hence, even if the original purpose of the EM Locks (to deal with unruly patrons of bars and pubs) was not a concern at that time, this was due to an unforeseen supervening event (Covid-19) which could not be attributed to Smart. As Angeline attested, while the bars and pubs have left the Development, the concerns of unruly patrons damaging the mall in future should the bars and pubs return as tenants would be addressed by the EM Locks.

Following from the above, I also disagree with the DJ’s finding that it was Smart who decided not to activate the EM Locks (GD at [45]). Angeline’s answers in cross-examination showed that the decision not to activate the EM Locks was made by both Smart and the MCST. Angeline attested that the MC had a meeting with Smart about a month after the EM Locks were installed but not yet activated. At this meeting, the activation of the EM Locks was discussed. When cross-examined as to why the MC did not simply instruct Smart to activate the EM Locks given that they had been installed, Angeline replied that “we can’t because we were concerned there were safety concerns for the patrons”, in that patrons could be trapped in the mall if the EM Locks were activated after the mall was shut.

In any event, I note that the safety concerns raised by the MCST were acknowledged by Angeline to be easily addressed. As the EM Locks would be activated by a central control centre, Angeline accepted that a sign with the security office’s contact number would be sufficient to assist a patron who might inadvertently be trapped in the mall.

The MCST’s other argument that it could not activate the EM Locks because they were defective was also not supported by the evidence. Indeed, Angeline’s testimony that the one lock that was not functioning properly was rectified when Colliers took over as MA (a few months after the EM Locks were installed) and then the MCST activated the EM Locks, further supported that they could have been activated (albeit after some repairs) at the time they were installed but for the MCST’s decision not to do so.

In the round, I find the MCST failed to prove on a balance of probabilities that Smart’s advice to install the EM Locks was wrong and which resulted in them becoming a white elephant and an unnecessary expense because it was purportedly never used. The MCST had at that time considered it to be an essential feature to meet its purposes and accepted that it would have addressed the legitimate concern of unruly patrons damaging the shopping mall (see [69] above). Moreover, the MCST decided not to activate the locks at the material time although it could have resolved the safety issue (of patrons being trapped in the mall) in some other manner (see [72] above) and, in the end, the EM Locks were eventually used and continues to be used.

Conclusion