Management Corporation Strata Title Plan No 2567 v Tan Eng Siang [2024] SGHC 326

The present application is one for leave to be granted for the claimant, the Management Corporation Strata Title Plan No 2567, to proceed with a claim in the District Court (DC/OA 21/2024) (“OA 21”) to, inter alia, exercise its powers of entry into a strata lot owned by the two defendants (the “Unit”) in order to undertake necessary repair and repainting works (the “R&R works”). The issue arises as one of the two defendants in OA 21, Mr Tan Eng Siang (who is the sole defendant in the present proceedings), is an undischarged bankrupt. The second defendant in OA 21 is the defendant’s wife and other co-owner of the property, Mdm Quah Kim Lui @ Quah Kim Luan (“Mdm Quah”). The present application turns on an important question of practice: would leave be required for commencing proceedings against bankrupt individuals in relation to non-pecuniary matters that do not involve creditors?

For the reasons I have set out below, I am of the view that leave is not required where the proceedings in question do not involve any creditors or underlying debt. Accordingly, I am making an order that no leave is required in the present case. Given the nature of the legal question placed before the court (as well as the journey these proceedings have traversed which culminated in the application before me), and so that there is no misunderstanding as to the court’s reasoning for not making an order granting leave in this case, I thought it useful to set out the reasoning for my conclusions.

Background

The parties

The claimant is the management corporation (“MCST”) of a condominium development known as “Guilin View” (the “Development”). The defendant and Mdm Quah are the registered subsidiary proprietors of the Unit, which is located at the topmost level of one of the blocks in the Development. The defendant is an undischarged bankrupt, having been made a bankrupt some 12 years ago.

The parties have a long and unfortunately extremely strained relationship over the years, with the documents before me reflecting a considerable level of animus that has developed over the past decade and a half at least. Since at least 2008, the parties have engaged in litigation (often, through counsel) by correspondence, effectively making allegations followed by counter-allegations on various matters, including matters relating to the issue of access to the Unit to facilitate the R&R works. From time to time, police reports were lodged, hostile letters were written, legal suits were filed and orders of payments were made. OA 21 represents the latest instalment of such factious correspondence between the claimant on one hand and the defendant and Mdm Quah on the other.

The dispute regarding access to the Unit

There are five apartment blocks in the Development. Each block, including the block that the Unit is in (the “Block”), comprises multiple stacks as seen in the picture of the Block on the next page:

It would be observed from the picture above that, in contrast with the other stacks in the Block, the façade of the leftmost stack (the “Stack”) appears not to be particularly well-maintained, and seemingly in urgent need of a fresh coat of paint and ostensibly other repairs. According to the claimant, this is because the façade of the Stack has been left unrepaired and unpainted since 2008. The Stack appears to be in poor condition with its painted colour differing from that of the other stacks within the same block, as it retains the original painted colour of the Development when it was first constructed in 1999. The state of apparent disrepair and disamenity has apparently become sufficiently intolerable that a complaint was filed (by one or more subsidiary proprietors of the Development) with the Building and Construction Authority (“BCA”) regarding the need to effect the necessary R&R works on the Stack. The BCA, understandably, then wrote to the claimant urging that the necessary urgent remedial steps be undertaken. The BCA did so because pursuant to s 29(1)(b)(i) of the Building Maintenance and Strata Management Act 2004 (2020 Rev Ed) (“BMSMA”), the claimant is charged with the duty to properly maintain and keep the common property of the Development in a state of good and serviceable repair. Indeed, under r 3(1) of the Building Maintenance and Strata Management (Lift, Escalator and Building Maintenance) Regulations 2016 (“BMSMR”), there is a duty for all external walls of such developments to be repainted at least once every seven years unless otherwise directed by the Commissioner of Buildings.

According to the claimant, the state of disrepair of the Stack is the result of the defendant’s and Mdm Quah’s refusal over the years to allow the claimant’s appointed contractors to access the Unit. For context, the only financially-feasible and safe way to undertake the R&R works is to install a rope rigging system that is tethered to the roof of the Stack which would allow the appointed contractors to paint the external façade of the Stack. As the Unit sits at the top floor of the Stack, access to the Unit, and the staircase within the Unit that leads to the roof, is necessary for the workers of the appointed contractors to get to the roof of the Stack to install the necessary equipment and carry out the R&R works. It appears to be undisputed that there is no other meaningful or feasible way to access the roof of the Stack that does not either result in a breach of the law (eg, by committing the tort of trespass) or the endangerment of the workers of any appointed contractor (eg, by requiring the said workers to access the roof of the Stack from the roofs of other stacks at the unacceptable risk of falling down 30 levels). As is apparent from the picture of the Block reproduced above at [5], the other stacks in the Development appear ostensibly to be in a much healthier and acceptable state as access was granted to the appointed contractors by the relevant unit owners for them to undertake the necessary work.

Mdm Quah does not deny that she and the defendant have been refusing entry to the Unit on the terms requested by the claimant and/or the appointed contractors. However, she highlights certain perceived unfair or improper conduct by the claimant and/or the appointed contractors over the years that, she contends, make it reasonable for them to refuse access. It would be unnecessary for me to go into the specifics of this as some aspects of these proceedings remain live in the District Court. Suffice it to say, such allegations broadly relate to what they perceived to be unacceptable behaviour by the claimant and/or the various contractors over the years as and when the defendant and Mdm Quah did initially grant permission for such contractors to access the Unit for the R&R works, as well as many other related and unrelated disagreements about matters within the Development over the years.

More recently, sometime earlier this year, there was also a dispute between the parties regarding a notice being sent to the defendant and Mdm Quah for the payment of interest for overdue maintenance payments when no such moneys were in fact actually owed – on this, I pause to observe that the claimant conceded that such a notice seeking these payments was sent out by the managing agent of the claimant in error and it had already rectified the error and apologised for the same. Mdm Quah, in one of her written submissions for OA 21, also alluded to an apparent failure on the part of the appointed contractors to take necessary care, causing defects that she contends could have “seriously injured or even killed [her]”.

Proceedings before the District Judge

The District Judge presiding over the matter then sought confirmation as to whether leave of the court was necessary and/or had been obtained for the purposes of commencing these proceedings to the extent it related to the defendant. In the present case, the apparent need for leave to commence proceedings against a bankrupt in respect of a provable debt stems from s 76(1)(c)(ii) of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (“Bankruptcy Act”). The claimant could not file the necessary application in the State Courts (as part of OA 21) because pursuant to ss 2 and 3 of the Bankruptcy Act, the court which may grant leave to proceed with or commence proceedings against the bankrupt (where such leave is necessary) is the High Court.

The District Judge then convened a preliminary hearing in order to deal with the specific point of whether leave would be required for the claimant to proceed against the defendant. The arguments advanced on behalf of the claimant are broadly as summarised in the preceding paragraph. The defendant did not participate in nor turn up for such proceedings as he did not obtain leave from the Official Assignee to defend the matter (as is required under the law for him to make such arguments). Mdm Quah similarly offered no submissions on the specific point being advanced as this was a legal matter.

The decision below

In coming to that conclusion, the District Judge noted that the issue of whether leave would be required turns on the proper interpretation of s 76(1)(c)(ii) of the Bankruptcy Act. The District Judge first opined that the purpose of the said provision was to prevent the liquidator’s or administrator’s task from being made difficult by a scramble amongst creditors to raise actions, obtain decrees or attach assets. He noted that the joint tenancy of the Unit would have been severed by law by virtue of the defendant’s bankruptcy (Chan Lung Kien v Chan Shwe Ching [2018] 2 SLR 84 at [66]) and the defendant’s share of the Unit would thus vest in the Official Assignee and become divisible to creditors by virtue of s 76(1)(a) of the Bankruptcy Act. As such, according to the District Judge, even the revised OA 21 would require leave under s 76(1)(c)(ii) of the said act as the action ultimately “seeks remedies against the property of the [defendant], and thus would affect the bankrupt’s estate”. The District Judge also observed that the claimant had previously, in a separate application (DC/OA 61/2023) against the defendant and Mdm Quah to have them remove objects from the common property of the Development, obtained leave from the High Court (HC/OA 874/2022) to proceed against the defendant. According to the District Judge, this was suggestive of the fact that the claimant in fact understood that leave would be required in such circumstances.

The present application

It is in the above context that the present application was filed by the claimant to seek leave to proceed with SUM 1009 and the revised OA 21 against the defendant in the District Court. In its written submissions, the claimant, noting the above developments, contends that the present circumstances warranted the granting of leave. Before me, upon my query on the matter, the claimant noted that its view remained what it had advanced initially before the District Judge, namely that as a matter of law, no leave was required. Nonetheless, given that the District Judge had concluded otherwise, they found themselves with little choice but to file this application. The defendant, who was in attendance, took no position on this application, once more noting that he was not given permission by the Official Assignee to defend himself, or make any arguments, here.

As such, the issue to be determined is whether leave is necessary for such an action to be commenced against the defendant and, if leave is necessary, whether such leave would be granted.

My decision

Leave is not necessary

As explained in greater detail later (see [29]–[33] below), if leave was indeed necessary for this action to be commenced, this would be an obvious case for the granting of such leave.

Nonetheless, having considered the arguments, as I take the view that leave is not required in the present case, I make an order in those terms instead. As the District Judge rightly noted, the matter of whether leave is required turns on the proper contours of s 76(1)(c)(ii) of the Bankruptcy Act. For ease of reference, s 76(1) of the Bankruptcy Act reads as follows:

On 30 July 2020, when the Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed) (“IRDA”) came into operation, s 76(1)(c) of the Bankruptcy Act was replaced by s 327(1)(c) of the IRDA. The former is largely in pari materia with its successor (Ong Jane Rebecca v Lim Lie Hoa and other appeals and other matters [2021] 2 SLR 584 (“Rebecca Ong”) at [64] and Da Hui Shipping (Pte) Ltd (in creditors’ voluntary liquidation) v An Rong Shipping Pte Ltd (in liquidation) [2024] 1 SLR 233 at [7]). Hence, much of the analysis of the interpretation of s 327(1)(c) of the IRDA would be equally applicable to s 76(1)(c) of the Bankruptcy Act.

The Court of Appeal observed in Rebecca Ong (at [63]) that s 327 of the IRDA (and thus, s 76 of the Bankruptcy Act) is “creditor-targeted” and “operates automatically and disallows creditors to commence or sustain actions in debt against the bankrupt without the leave of court” [emphasis in original omitted]. Additionally, based on the wording of s 327(1)(c) of the IRDA, the bar against commencing or continuing any action against the bankrupt is “in respect of that debt”, whereby “debt” is a reference to “any debt provable in bankruptcy” (Rebecca Ong at [64]).

The observations in the preceding paragraph align with the policy rationale behind these provisions in the IRDA and the Bankruptcy Act. The courts have repeatedly pointed out that the raison d’etre of the need for leave under our bankruptcy laws is to ensure that the court can exercise a certain level of supervision on court proceedings with a view to ensuring that there is no rush on the part of creditors to try and obtain or seize assets in order to secure repayment before other equally-situated creditors. The Court of Appeal in Overseas Union Bank v Lew Keh Lam [1998] 3 SLR(R) 219, for example, noted (at [35]) that the entire point of s 76(1)(c)(ii) of the Bankruptcy Act was to “prevent the liquidator’s or administrator’s task being made more difficult by a scramble among creditors to raise actions, obtain decrees or attach assets”. For that reason, in Caltong (Australia) Pty Ltd (formerly known as Tong Tian See Holding (Australia) Pty Ltd) and another v Tong Tien See Construction Pte Ltd (in liquidation) and another appeal [2002] 2 SLR(R) 94, the same court noted (at [51]) that the “requirement to obtain leave is to ensure that the court could guard against any inequity on account of such a scramble [amongst creditors]”. In the same vein and more recently, the Court of Appeal also noted in Rebecca Ong (at [68]), when discussing s 327(1)(c) of the IRDA (as I stated earlier, the progeny of s 76(1)(c) of the Bankruptcy Act which is, for our present purposes, effectively the same provision):

Therefore, when properly understood, the requirement for leave is engaged in cases where the claim could conceivably have financial implications or pertain to a debt or ostensible debt on the part of the bankrupt, such as where creditors are involved. In the absence of such features, there is very little for the court to meaningfully supervise. This is because if the entire premise for supervision is to ensure that no one unsecured creditor seeks to overcome the pari passu principle by way of engaging in a collateral court proceeding, such concerns possess no scope for application in a matter like the present, where the party seeking to take action against the bankrupt is not a creditor and/or is not otherwise seeking to deal with any of the assets of the bankrupt in a way that diminishes its value (in a bankruptcy) in any substantive or meaningful manner. In sum, these proceedings have no direct effect on the administration of the bankrupt’s estate, nor on the operation of the pari passu principle in the bankruptcy.

I pause here to note that such an understanding of s 76 of the Bankruptcy Act coheres with the statutory approach in other jurisdictions, in which analogue provisions with the same underlying motivations specifically limit the commencement or continuation of proceedings against a bankrupt without leave. To take a couple of illustrative examples, under s 285 of the Insolvency Act 1986 (c 45) (UK), the bar against commencing proceedings without leave applies to “a creditor of the bankrupt in respect of a debt provable in the bankruptcy”, while similarly, in Australia, under s 58(3) of the Australian Bankruptcy Act 1966 (Cth), creditors are barred from so commencing such actions without leave and only “in respect of a provable debt”. The approach taken in these jurisdictions only serves to reinforce the idea that in any jurisdiction, the mischief that the leave mechanism (involving proceedings taken against bankrupts) seeks to address is, generally speaking, the matter of creditors using the court process to engage in an opportunistic grab of the remaining assets of the bankrupt to the prejudice of other creditors.

If leave is necessary, the application would be granted

For completeness, in the event leave is required for the revised OA 21 to be advanced, I would have granted such leave. In assessing whether leave ought to be granted for proceedings to be taken against a bankrupt, this Court in Wang Aifeng v Sunmax Global Capital Fund 1 Pte Ltd and another [2023] 3 SLR 1604 (“Wang Aifeng”) observed (at [32]), albeit in the context of s 327(1)(c)(ii) of the IRDA (as I have noted above, it is, for present purposes, in pari materia with s 76(1)(c)(ii) of the Bankruptcy Act), that the following considerations are of salience:

In applying these factors, it would be pertinent to note, as I observed earlier, that these considerations are engineered with one eye to effectively ensure that granting leave does not result in a scramble from creditors to go after the bankrupt’s assets and to try and overcome the application of the pari passu principle. For that reason, none of these factors are decisive, and neither are the considerations set out in the preceding paragraph exhaustive (Wang Aifeng at [15]). Furthermore, as observed in Korea Asset Management Corp v Daewoo Singapore Pte Ltd (in liquidation) [2004] 1 SLR(R) 671 (“Korea Asset”) (at [45]), albeit in the context of granting leave to commence or continue proceedings against a company after the commencement of winding up, such discretion ought to be “exercised rationally in the context of the insolvency scheme”.

In my view, on an application of the factors in this case before me, it becomes even more clear that the courts have little supervisory role to play in bona fide applications of the present nature that do not involve creditors. I illustrate why this is so by dealing with each factor in turn:

(a) Timing of application for permission: As observed in Wang Aifeng (at [33] and [34]), early applications are generally viewed more charitably. The closer the application date is to the bankruptcy, the less likely the court would allow for such proceedings to continue, given that it could be inferred that the aim of such an application was to grab the bankrupt’s assets. Such a consideration simply has no scope for application in the context of the present application. In an application like the one before me, there is simply no way to meaningfully infer, from the timing of the application, that the applicant is out to seize assets and to avoid the strictures of the bankruptcy regime. In any event, as the claimant also points out, the defendant was made bankrupt some 12 years ago.

(b) Nature of the claim: In assessing this particular factor, the court would lean towards granting leave when “[t]he claim must be of a type which should proceed by action rather than through the proofing procedure in bankruptcy” (Wang Aifeng at [35]). It would be axiomatic that all claims like the present one cannot be properly handled by the proofing process which, by definition, is to deal with the creditor debt resolution process. In the present case, the claimant is only seeking an order against the defendant that it be allowed to exercise its powers of entry into the Unit, and any monetary claims (if at all) are only being sought in respect of Mdm Quah.

(c) Existing remedies: Under this head, the court considers whether the claim can be dealt with sensibly within the bankruptcy regime and/or whether such a claim may dissipate the bankrupt’s assets (Wang Aifeng (at [37] and [38]). Again, in my view, for rather self-evident reasons, an assessment of this factor clearly leans very much to the granting of leave for the present claim.

(d) Merits of the claim: As pointed out in Wang Aifeng (at [40]), the threshold here is whether the proposed claim has “a serious question to be tried”. In other words, the court must be satisfied that the proposed claim is “not clearly unsustainable”. To be sure, such a test applies whether a claim involves a creditor or otherwise. Having said that, there are, of course, other ways in which such a claim can be properly dealt with vis-à-vis the court process. After all, if, as Wang Aifeng (at [39]) suggests, the need to consider merits would be because “[i]t would be better to preserve the resources of the bankrupt for distribution, rather than expanding a part of those on defending sterile litigation”, then in theory, necessitating leave applications which are going to be largely pro forma would be potentially an even worse outcome, since this would just promote the outcome of escalating costs independent of the merits. In any event, for the avoidance of doubt, on the merits, I find that the case is clearly not an unsustainable one, though I make no specific finding on the merits as that question is not immediately before me.

(e) Existence of prejudice: Once more, the focus of this analysis lies in the matter of whether allowing the claim to proceed could seemingly negate or otherwise compromise the bankruptcy regime (Wang Aifeng at [42] and Korea Asset at [48]). It is clear that applications such as OA 21 involving no creditor debt claims will almost invariably never have this effect.

(f) Any other factors: It does not appear to me that any of the other factors are relevant. Certainly, on the facts, it would be odd to speak of majority creditors having a veto over whether the necessary R&R works should be done at the Development, or about whether repairs that relate to the safety and habitability of any development could invite a rash of litigation.

As can be seen above, the application of the test outlined in Wang Aifeng on these facts possesses a certain air of artificiality to it, since the test in question simply was not designed to deal with claims such as the one before me. Indeed, the difficulties stem again from the point I made earlier that the entire regime was designed to ensure that creditors do not try to overcome the pari passu principle through satellite action or litigation. That simply does not happen in most actions not involving creditor debt.

That said, to the extent leave is at all necessary, in my view, leave clearly ought to be granted since there is nothing that militates against the granting of leave when applying the Wang Aifeng framework. At the risk of reiterating what I had emphasised earlier, none of that, of course, changes the reality that the fact that leave would inevitably be granted as a matter of course only proves that the leave process represents a non-meaningful hurdle to the initiation of legal proceedings in cases such as the present and militates against the conclusion that leave is required to begin with.

Coda

Before I end, it would be apt for me to make one final observation. It is sometimes said that litigation is a win-lose proposition as outcomes from litigation are almost always binary, in that one party wins and the other loses. However, on these facts, litigation appears clearly to be a lose-lose proposition. No matter which party wins the (court) battle here, both sides will lose the war. No good can be had from prolonging these proceedings in the State Courts.

Indeed, it would seem obvious that the only feasible outcome in this case would be for the defendant and Mdm Quah to permit access to be granted to any appointed contractor(s) with reasonable conditions imposed and advance notice given to minimise the inconvenience to them. I say this because, when one understands the statutory schema, no other outcome, to my mind, is legally tenable. If the defendant and Mdm Quah are allowed to deprive the claimant of access to the roof of the Stack indefinitely, this would mean that the R&R works would never be undertaken. Such an outcome would contradict the law and may even amount to the commission of criminal offences by the claimant, the defendant and Mdm Quah by virtue of s 31 of the BMSMA and r 3 of the BMSMR. If the claimant enters the Unit by force without notice, they potentially commit trespass, resulting in potential civil and criminal liability as such forced access would typically only be allowed in an emergency as set out in s 31(e) of the BMSMA – I might add that doing so would also be acting in contradiction to the hallowed principle that an MCST simply has no right, save an emergency, to enter a subsidiary proprietor’s unit, or for that matter, to deprive them of access to the unit, without due notice being given and only for the specific reasons that the law affords.

All of what I have highlighted in the preceding paragraph underscores the self-evident point that the entire litigation in this case seems futile. The outcome in this case must necessarily cohere to the law, and the obvious, if not inevitable, outcome would be along the lines of the claimant giving reasonable notice of the R&R works to be undertaken and the defendant and Mdm Quah granting reasonable access to the Unit. While it is, of course, entirely possible for the parties to mediate an arrangement where the terms of access are defined in a way that meets the needs of the various parties (since there is, of course a spectrum of “reasonable” options that exist that would achieve that underlying aim), there is simply no other entirely distinct factual outcome possible that is outside the parameters set out in the preceding paragraph. It would seem to me to be self-evident that s 31 of the BMSMA necessarily requires the outcome I have stated above.

The parties, and I say this in particular to the defendant and Mdm Quah, can therefore decide whether they wish to mediate to set their own terms for access that would be most meaningful to them, as is obviously more ideal, or whether they wish to expand even more moneys and energies for the court to eventually dictate the terms for all of them to live with, however inconvenient such court-ordered terms might be for them. Should they choose to pursue the former scenario, the parties should ultimately be reasonable and meet each other halfway. With respect, suggestions that the claimant and/or their appointed contractors do not require sustained access to the Unit as “4 days is more than enough [for the completion of the R&R works]”, and that the claimant’s intended installation of the rope rigging system, amongst other equipment, was unnecessary since “the workers just need [to install] some rope to abseil from the rooftop [to do the R&R works]”, cannot be taken as a proposal for serious terms of access.

On the present facts therefore, it is plain that any mediated conclusion would be much more beneficial to all parties than litigation. No benefit is to be had from litigation save to sate bruised egos that demand a court victory for its own sake. Indeed, even then, mediation is the better platform to deal with these issues. After all, bruised egos are akin to leaky tyres in that if one does not get to the underlying problem in order to fix it, the onward journey will never be a smooth one. As Mdm Quah herself notes, “[t]his has been going on for 14 years”. This is, with respect, a journey that is already 14 years too long. The parties, and indeed, everyone in the Development who represent interested, and affected, spectators to this unfortunate series of events, rightfully deserve better.

With those observations in mind, as I informed the parties during the oral hearing as well, I very much urge the parties to seriously consider mediating the matter to resolve the underlying simmering issues that have gone on for far too long at the expense of the entire Development.

Conclusion

For the reasons above, I make an order that no leave is required in the present case. For the avoidance of doubt and for completeness, as I observed earlier, if leave were required, it would have been granted as a matter of course on these facts.