A LACUNA IN THE LAW AND NOMINAL COSTS ORDER
In Management Corporation Strata Title Plan No 1788 v Lau Hui Lay William and another [2023] SGHC 284, Lee Seiu Kin J awarded nominal costs fixed at $1 to the defendants who won an action because the defendants had taken advantage of a “lacuna in the law”.
Facts. The claimant was the management corporation (“MCST”) of a condominium development, and the defendants were the subsidiary proprietors of a unit (at [3] – [4]).
The first defendant was a registered architect (at [4]). This turned out to be an important fact in the decision, as we will explain below.
The defendants purchased the unit from the developer in 1989 and claimed that they had received verbal confirmation from the developer’s representative to install mezzanine attics in the unit (at [5]).
But the defendants did not obtain planning permission from the Urban Redevelopment Authority (“URA”) under the statutory regime of the Planning Act (Cap 232, 1985 Rev Ed) (“Planning Act”) before the installation of the mezzanine attics (at [8]).
The MCST only discovered in August 2017 that the defendants had installed unauthorised mezzanine attics in the unit (at [9]).
Eventually, the defendants applied on 29 October 2021 to the URA for written permission to retain the unauthorized mezzanine attics in the unit (at [11]).
After the defendants duly paid to the URA the penalty of $2,400 pursuant to s 34 of the Planning Act (Cap 232, 1998 Rev Ed) (“1998 Planning Act”) (at [12]) and the sum of the development charge at $422,807 (at [13]), the URA granted written permission to the defendants on 8 September 2022 under s 14(4) of the 1998 Planning Act to retain the mezzanine attics in the unit (at [14]).
Issue. The key issue before Lee J in the High Court was whether the MCST could even establish a course of action.
Planning Act. Insofar as the originating application filed by the MCST was stated to be “[i]n the matter of … sections 9 and 10 of the then Planning Act 1987” (at [57]), Lee J considered the position before and after the written planning permission from the URA (i.e., before and after 8 September 2022).
Before 8 September 2022, the defendants’ contravention amounted to an offence under s 9(8) of the Planning Act during that period but provided no cause of action to the MCST in civil proceedings (at [61]).
As for the position after 8 September 2022, because the defendants obtained the written planning permission from the URA and the penalty had been paid to the URA, the short answer was that there was no longer any “continuing breach” of s 12 of the 1998 Planning Act that was actionable under law, even by the URA (at [65]).
BMSMA. Lee J then went on to consider whether s 37 of the Building Maintenance and Strata Management Act 2004 (Act No 47 of 2004) (“BMSMA”) – in relation to a subsidiary proprietor effecting any improvement in or upon his lot – was applicable.
It was undisputed that s 37 of the BMSMA only came into force on 1 April 2005, and there was no equivalent provision in its predecessor legislation (at [66]).
And by the time the BMSMA came into force, the defendants had completed the installation of the mezzanine attics (by around April or May 1993, per Lee J’s finding at [44]).
Therefore, there was no breach of s 37(1) of the BMSMA (at [75]).
“75 The statutory context to s 37(1) of the BMSMA and the particular word “effect” therein, therefore indicates that “effect” in s 37(1) refers solely to the effecting of physical works in or upon a subsidiary proprietor’s lot. Take, for example, the installation of the mezzanine attics in the present case. When one begins the construction of the mezzanine attics, that action starts at one moment in time and ends at another moment in time. The installation of the mezzanine attics is then physically completed at a definite moment in time. If the installation of the mezzanine attics was started and completed at a time when the BMSMA had not yet entered into force, then the effecting of this improvement in or upon the lot would not be in breach of s 37(1) of the BMSMA.”
(emphasis in original in italics; our emphasis added in bold)
Conclusion. Lee J found that the MCST had no cause of action and dismissed the application (at [81]).
Nominal costs. Since the defendants “won”, usually, they are entitled to costs as “costs follow the event”.
However, Lee J decided to award only nominal costs fixed at $1 to the defendants.
Lee J placed importance on the fact that the first defendant was a registered architect who “benefitted from the lacuna in the law”. See [79] and [82] which we excerpt below.
“79 Prima facie, I would have been inclined to agree with the MCST that the defendants had deliberately concealed the existence of the unauthorised mezzanine attics in the Unit. It was plain to me that Mr Lau ought to have known, as a registered architect, that the statutory regime of the Planning Act required him to obtain planning permission from the URA for the mezzanine attics. This was regardless of whether he had obtained Tuan Huat’s approval to install the mezzanine attics. …
…
82 Given the circumstances of this case, I awarded nominal costs fixed at $1 to the defendants. For much the same reasons as set out above at [79], Mr Lau ought to have known, as a registered architect and, much later, as the chairman of the MCST’s management council from 2009 to 2017, that he was required to obtain planning permission from the URA. Yet the defendants knowingly stayed silent and did not seek to obtain the requisite permission. They belatedly applied to the URA for written planning permission in 2021, prompted by the MCST’s discovery of the unauthorised mezzanine attics in the Unit. The defendants had benefitted from the lacuna in the law which was plugged by the enactment of s 37 of the BMSMA. In the circumstances, I considered that it was appropriate to order nominal costs to be paid by the MCST.”
(our emphasis added in bold)
So, this decision is an example of the court exercising its discretion against the winning party who knowingly “benefitted from the lacuna in the law”.
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