Management corporation ordered to repeal by-law

It has to refund charges to unit owners affected by 'unclear' rule

The management corporation (MC) of an industrial building has been ordered to repeal a by-law on charges for use of common areas, after the Strata Titles Board found it to be "unclear, badly drafted and punitive".

In a rare case, the MC that runs Alpha Industrial Building in Toh Guan Road East was also ordered to refund any charges to affected unit owners that may have been made regarding the rule. Six of the owners had received payment demands totalling $103,825 in February.

Eight applicants owning 22 units launched a class action claiming the two by-laws passed at an annual meeting in 2011 were not properly made, one of which imposed charges of at least $200 a month that the MC was not empowered to charge.

One by-law involved charges for the use of common areas outside the canteen, while the second pertained to charges for the use of common areas outside units for placing of items.

Their lawyers Toh Kok Seng and Daniel Chen from Lee & Lee further argued the by-laws were "vague, caused confusion and were difficult to adhere".

The MC, defended by lawyers Alfred Lim, Keith Lim and Jaime Lye, countered that the by-laws were passed validly, pointing out the ballot on a poll of unit owners was 49,623 share values for the resolution and none against.

The board, presided by Mr Seng Kwang Boon with Mr Leo Cheng Suan and Mr Richard Tan Ming Kirk as members, found the two by-laws were made properly through a special resolution under Section 32 of the Building Maintenance and Strata Management Act.

It held that the by-law which involved charges for the use of space outside the canteen to be enforceable as it is "clear and unambiguous".

But the second by-law which involved common space outside the units that affected seven of the eight applicants was found to be "unclear, badly drafted, as well as punitive".

The board said it was unclear because although the MC claimed there is no free usable space, the applicants had questioned if the usable space was a 1.2m-wide rectangular space or some other area. It also noted the by-law provided for a minimum charge but no maximum and could be seen as a penalty provision.

Several of the applicants contacted yesterday expressed relief, noting others had not joined in out of fear and costs involved.

"We have suffered, others have just walked off, we insisted on fighting to be heard and we were able to share the costs as a group," said company director Peter Teo, who was charged over $40,000 for use over five years.

Mr Jonn Tan,who owned one unit and was billed $5,000 for the period, added: "The decision is unprecedented and serves as an eye-opener to others of the challenges faced."

Fire safety firm managing director K. S. Kumar, who was also in the group, said he moved out in September as he needed " a peaceful area to work in". He owns two units and was faced with a $15,000 invoice.

MC chairman-cum-secretary Lim Chin San told The Straits Times yesterday that he was considering an appeal against the board's decision on the second of the two by-laws.

"The use of the common property is by a minority, the income loss is about $500,000 in the last five years which affects all subsidiary proprietors as a whole."

A version of this article appeared in the print edition of The Straits Times on November 18, 2016, with the headline 'Management corporation ordered to repeal by-law'. Print Edition | Subscribe