Tunas Pte Ltd v Management Corporation Strata Title Plan No 562

Belinda Ang Saw Ean J:

[1] The plaintiff, Tunas Pte Ltd, was at all material times, the subsidiary proprietor of units #27-01 to #27-08 and #28-00 in Hub Synergy Point, a commercial development located at 70 Anson Road, Singapore 079905 (“the Premises”). The defendant, the Management Corporation Strata Title Plan No 562, is the Management Corporation of Hub Synergy Point.

[2] This round of dispute between the parties started after the plaintiff sold the Premises in May 2014. It was common ground that instruments registered as IB24036N and IB31843D were still registered against the plaintiff’s estate and interest in the Premises despite full and final satisfaction of the plaintiff’s indebtedness in 2008. On 9 May 2014, the defendant for the first time claimed that it was owed substantial legal fees in the total sum of $112,176.37 (“the 2014 demand”). This 2014 demand surfaced after the plaintiff informed the defendant about the sale of the Premises on 7 May 2014 and asked that the registered instruments against the Premises be withdrawn or discharged.

[4] On 20 May 2015, I made the following orders on the amended prayers in OS 505:

(a) The defendant had wrongfully refused to withdraw the Writ of Seizure and Sale registered in the Land Titles Register as IB24036N under s 132 of the Land Titles Act (Cap 157, 2004 Rev Ed) (“the LTA”) despite the plaintiff’s demand made on or about 7 May 2014.

(b) The defendant had wrongfully refused to discharge the charge IB31843D registered under s 43 of the Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed) (“the BMSMA”) despite the plaintiff’s demand made on or about 7 May 2014.

(c) The defendant was not entitled to payment of $20,647.90 before discharging IB240336N and IB31843D.

(d) The defendant to pay costs on a standard basis to be taxed if not agreed.

[5] The defendant has appealed against the orders made on 20 May 2015.

[8] The facts are straightforward. I start with the two instruments that were lodged with the Registrar of Titles in 2008:

(a) The first instrument, IB24036N, was an Order of Court made on 4 March 2008 to execute on the Premises to satisfy a Judgment in MC Suit No 17644 of 2007/Z (“MC Suit 17644”). That Order of Court was entered as a memorial on the land register following the acceptance of the Application to Register the Order of Court made on 4 March 2008 pursuant to s 132 of the LTA (“the 2008 Memorial”).

(b) The second instrument, IB31843D, was a Management Corporation Charge registered pursuant to s 43 of the BMSMA (“the 2008 MCST Charge”).

[9] On 16 September 2009, the defendant lodged a second Management Corporation Charge which was registered as IB484820J (“the 2009 MCST Charge”). Even though the substantive dispute in OS 505 did not relate to the 2009 MCST Charge, the figure of $20,647.90 nonetheless included the legal fees connected with the lodgement and discharge of the 2009 MCST Charge.

[11] Thereafter, the defendant obtained a court order to execute against the Premises to satisfy the February Judgment. The ex-parte Summons No 2980/2008 (“SUM 2980”) filed on 3 March 2008 was for an order of execution. On 4 March 2008, an Order of Court to execute on the Premises and the Writ of Seizure and Sale No 1290/2008/D (“the 2008 WSS”) were issued. As stated, the Order of Court of 4 March 2008 was entered as a memorial on the land register under s 132 of the LTA on 18 March 2008 (ie, the 2008 Memorial). For present purposes, the parties treated the Order of Court of 4 March 2008 as the 2008 WSS.

[13] KhattarWong’s covering letter dated 6 May 2008 reads:

[14] After receiving full and final payment of $51,229.82, the defendant, according to the cause papers, filed a Request dated 20 May 2008 directing the Sherriff to release the Premises from the 2008 WSS. However, the 2008 Memorial remained entered on the land register.

[15] The 2008 MCST Charge was lodged on 21 April 2008 to recover arrears of contributions amounting to $103,641.89. Again, the contributions levied were for upgrading works inclusive of interest from August 2007 to an unspecified date.

[16] Despite the 2008 MCST Charge, the outstanding contributions were not paid and further contributions levied for upgrading works together with interest continued to accrue. On 25 February 2009, solicitors for the defendants, Rajah & Tann LLP (“Rajah & Tann”) sent a statutory demand for payment of the sum of $181,099.78 being “outstanding contributions … due and payable from [the plaintiff] to [the defendant]”.

[19] Before completion of the sale of the Premises, on 22 May 2014, the defendant’s solicitors, TanLim Partnership, sent the 2014 demand to the plaintiff’s solicitors, Mak & Partners (representing the plaintiff in the sale of the Premises). A breakdown of the 2014 demand for legal fees is found in the table provided by TanLim Partnership. The table is reproduced here:

[22] Counsel for the plaintiff in OS 505, Mr Cheong Yuen Hee (“Mr Cheong”), argued that the 2014 demand was untenable and without merit. Evidently the defendant must have reviewed its 2014 demand after OS 505 was filed. On 5 June 2014, TanLim Partnership, put forward a revised amount of $20,647.90 together with the following proposal to the purchaser’s solicitors, Wee, Ramayah & Partners:

[23] Upon payment by the plaintiff of the total sum of $20,647.90 on 10 June 2014, the defendants filed: (a) Total of Discharge of Charge to discharge the two MCST Charges; and (b) Application to withdraw the 2008 Memorial. As stated, the payment of $20,647.90 was made under protest and with reservation of the plaintiff’s right to reclaim the payment.

[24] As stated, the 2008 Memorial was entered on the land register pursuant to s 132 of the LTA, and the 2008 MCST Charge was lodged pursuant to s 43 of the BMSMA. Both the current version of the BMSMA and the older version of the Act (viz, the Building Maintenance and Strata Management Act 2004 (Cap 30C)) are applicable to aspects of the present case. For convenience, I will refer only to the current version of the BMSMA since the applicable provisions in both versions of the Act are identical.

[25] Under s 40 of the BMSMA, subsidiary proprietors are required to pay contributions levied by management corporations. If a subsidiary proprietor fails to pay the contribution levied that is due and payable, a management corporation may recover the amount due, together with interest, as a debt (see s 40(6) of the BMSMA). If the subsidiary proprietor fails to pay the outstanding contributions after a written demand has been served, the management corporation may lodge an instrument of charge on the subsidiary proprietor’s lot (see s 43 of the BMSMA).

[27] I now turn to the main question which is whether the plaintiff could reclaim payment of the defendant’s lawyer’s professional fees in connection with: (a) the execution of the February Judgment amounting to $11,230.80, and (b) the withdrawal of the 2008 Memorial in the sum of $750 (see [22] above).

According to the defendant, legal costs on a “full indemnity basis” would include S&C costs incurred by the management corporation.

[34] Fourthly, the claim for legal fees in the sum of $11,230.80 was time-barred. Mr Lim conceded that the claim of $11,230.80 was time-barred. This was an appropriate concession. The claim for legal fees would have accrued under s 6(1) of the Limitation Act (Cap 163, 1996 Rev Ed), at the latest, when the CCLC Bill was rendered. The CCLC Bill was rendered on 13 May 2008 and the payment term was stated as “immediate”. The defendant did not sue for legal fees and it could no longer do so after 12 May 2014.

[35] All in all, the four points, in my view, provided sufficient and cumulative reasons for the disposal of the defendant’s claim of $11,230.80. Before moving on to the next topic, I wish to comment on Mr Lim’s contention that the claim of $11,230.80 was protected by s 43(5) of the BMSMA despite the limitation defence.

[38] The fallback on s 43 stemmed from the suggestion that the defendant could “piggyback” on the 2008 MCST Charge to demand payment of its lawyer’s bill as existing registered charges like the 2008 MCST Charge would have somehow protected the claim of $11,230.80 from the defence of limitation. As stated earlier, Mr Lim did not really argue and develop the “piggyback” argument. In any case, the “piggyback” argument was a non-starter for several reasons.

[39] Firstly, the legal fee of $11,230.80 was not an amount “secured by the charge” within the meaning and ambit of s 43. I will elaborate on this point at [71] to [72] below.

[45] I now come to the third point which is Mr Lim’s argument that the plaintiff as a subsidiary proprietor was bound by the defendant’s AGM resolution. In this particular case, the defendant had not produced the defendant’s by-laws, and unless the by-laws provide otherwise, the general rule governing the nature of a resolution is against Mr Lim’s contention.

[47] Resolutions of similar effect were passed at the defendant’s 2008 and 2009 Annual General Meetings. As for the defendant’s 2010 to 2013 Annual General Meetings, the minutes were not produced, but Mr Lim’s position was that the 2010 to 2013 resolutions were of similar effect.

[49] The general rule is that a resolution is not a contract between the entity and the members or between the entity and third parties, but is instead a decision of the entity, made by the members of that entity. It may however be binding on members of the entity if this is provided for statutorily, or in the constitutional documents of the entity (eg, the strata plan’s by-laws) (Koh Sin Chong Freddie v Singapore Swimming Club [2015] 1 SLR 1240 at [74]; see also Tan Cheng Han SC gen ed, Walter Woon on Company Law (Sweet & Maxwell, 2009) at para 6.69).

[50] As stated, the defendant did not produce its by-laws. In any event, standard by-laws would ordinarily deal with the use and enjoyment of the parcel comprised in the strata title plan (see ss 32(2) and 32(3) of the BMSMA and the Second Schedule of the Building Maintenance (Strata Management) Regulations 2005 (Cap 30C, S 192/2005)).

[54] The position under the BMSMA may be contrasted with the position in New South Wales. The relevant provision in New South Wales may be found in s 80 of the Strata Schemes Management Act 1996 (No 138 of 2009) (NSW) (“SSMA”), an Act which deals with the management and dispute resolution aspects of strata schemes in New South Wales. Section 80 of that Act provides:

[59] I now turn to the defendant’s claim of $750 as legal fees for the withdrawal of the 2008 Memorial. The defendant argued that the 2008 Memorial had lapsed and the plaintiff could have applied for the 2008 Memorial to be cancelled without the defendant’s assistance.

[60] Section 134(4) of the LTA states that the Registrar shall cancel the registration of a lapsed writ upon the application of the proprietor. It does not limit the persons who may apply for the cancellation of the lapsed writ only to the proprietor. In fact, s 136(1) of the LTA states that a writ or order of court may be withdrawn by the judgment creditor. Under s 136(2), the Registrar may cancel the writ where sufficient evidence has been produced to show that the writ has been satisfied. Crucially, under r 38(2) of the Land Titles Rules (Cap 157, R 1, 1999 Rev Ed), an application to withdraw the registration must be signed by the party who applied to register the writ or order of court (ie, the defendant in this case). The defendant was therefore wrong in submitting that the plaintiff should or could have procured the withdrawal without its assistance.

[62] For all these reasons given above, I concluded that the defendant was not entitled to be paid the further sums of $11,230.80 and $750. Consequently, the defendant wrongfully refused to unconditionally withdraw the 2008 Memorial when requested by the plaintiff to do so.

[63] The 2008 MCST Charge was lodged against the Premises under s 43 of the BMSMA on 21 April 2008. The defendant argued that the plaintiff was not entitled to an instrument of discharge until the plaintiff paid the legal fees incidental to the lodgement and discharge of the 2008 MCST Charge (see [22] above).

[69] The views of Professor Teo Keang Sood in Strata Title in Singapore and Malaysia (LexisNexis, 4th Ed, 2012) were also instructive. He states (at p 235–236):

[72] I digress to state that the above interpretation of s 43 puts paid to the defendant’s “piggyback” argument (see [39] above). The sum of $11,230.80 was not incurred in respect of unpaid contributions that arose after the registration of the 2008 MCST Charge. On the defendant’s case, the sum of $11,230.80 was legal fees relating to the enforcement of the February Judgment, which in turn concerned sums owed by the plaintiff to the defendant for the period March to July 2007. The 2008 MCST Charge secured outstanding contributions due from August 2007. Hence, the legal fees incurred in respect of the enforcement of the February Judgment are not sums which are “secured by the charge” within the meaning of s 43(8).

[74] TanLim Partnership’s table in [19] above stated that the September 2009 Bill of $3,583.55 was for the 2009 MCST Charge. Indeed the relevant portions of the September 2009 Bill state as follows:

[75] It is clear that this bill related to work done from 21 July 2009 to 17 September 2009. In contrast, the 2008 MCST Charge was lodged against the Property more than a year earlier, on 21 April 2008, for unpaid contributions in the sum of $103,641.89.

[76] The September 2009 Bill was for a different matter and this is discernible from the words “work done in connection with drafting a reply letter to Robert Wang & Woo LLC”. Rajah & Tann’s statutory demand explained that Robert Wang & Woo LLC represented the plaintiff in a separate matter that concerned the non-payment of contributions towards maintenance and sinking funds.

[78] I now refer to the September 2009 Bill for $3,583.55. The defendant copied this amount to pass off as its legal fees in respect of the 2008 MCST Charge. This approach was detrimental. There was nothing to show that the legal fees as claimed were reasonably incurred or were connected to the collection or attempted collection of the unpaid contributions, and above all were reasonable in amount.

[79] Finally, I return to [15] to [18] above. As explained, the defendant did not require the plaintiff to pay any legal fees in exchange for full and final payment of $181,099.78. On an objective view of the overall evidence, the matter of legal fees concerning the 2008 MCST Charge was by necessary implication compromised by the full and final payment of $181,099.78.

[84] The 2009 MCST Charge was not part of the substantive dispute of OS 505. However, sums that related to the lodgement and withdrawal of the 2009 MCST Charge were part of claim figure of $20,647.90 which the plaintiff in OS 505 sought to reclaim (see [22] above).

[85] I have explained in [77] above why certain amounts in the September 2009 Bill could not be secured by the 2008 MCST Charge. In any case, the defendant had not discharged the legal and evidential burden of showing that the full amount in the September 2009 Bill was reasonable and reasonably incurred in connection with the collection or attempted collection of outstanding contributions. Merely producing a bill, without more, would not satisfy the requirements of s 43.

[87] In the circumstances, the defendant was not entitled to any further payment of money in the sum of $20,647.90 before discharging the 2008 Memorial and the 2008 MCST Charge.

[88] For the reasons stated, I granted the orders set out in [4] above.