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My neighbor won a SCT case against our MA

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My neighbor won a SCT case against our MA

Postby PNGMK » Thu, 09 Jun 2016 7:08 pm

The power of the small claims court should not be under estimated.

My neighbors aircon compressors were flooded when a down pipe came loose (which had been noted as needing maintenance) and dumped gallons of water on them - all on video. The water level was so high there was a high tide mark on the units. Of course she (rightly) claimed that they had been damaged by the flooding caused by a fault in the common property.

I sit on the MC and I have never seen such a bunch of blowhard bush lawyers claim she had no legal claim and no standing. I kept reminding them that this woman is a co-owner and pays her contributions on time. They tried to claim it on insurance but insurance declined because we have a shitty cheap policy. They then offered a tiny settlement (in the mean time she had gone to great efforts to get a cheap quote from OEM on replacing only the damaged parts and not replacing the entire unit) so she refused that.

She asked me what to do in private and I set her up with the SCT process. The committee chairman and his treasurer didn't believe she would sue or win but she did. They still claimed they would take it all the way to the supreme court and destroy her with legal fees. In the mean time the idiotic MA lawyer was talking them up - even as I kept reminding them that the SC doesn't like lawyers and almost always pushes for a fair and quick settlement - and that the SC judgements are not easy to appeal (the court has to give leave and that must be based on a mistake in evidence or procedure etc).

After THREE court sessions the magistrate had enough. He told the MA lawyer that there was no evidence against my neighbor making a fraudulent or invalid claim (The MC Chairman insists that the compressors were not working prior to the flooding with no evidence). He told them that they had one last chance for a settlement or he would most likely support her claim in FULL. So they settled - way above what I had negotiated with her on the side for a MC settlement. I'm curious to know what the costs for the MA lawyer will be - I bet the bastards will try to charge our MCST as well.

Bloody idiots but the best thing is we now have an open public judgement which we can use for future cases.
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Re: My neighbor won a SCT case against our MA

Postby JR8 » Thu, 09 Jun 2016 9:15 pm

PNGMK wrote:The power of the small claims court should not be under estimated.


Good one PNG!
And you're right. It reminds me of the expression -'Never underestimate an impugned [ie insulted] women'. The worst thing with a lower court is to not take them most seriously, as they WILL bite in my direct experience; luckily on my behalf that time.

PNGMK wrote:I sit on the MC and I have never seen such a bunch of blowhard bush lawyers claim she had no legal claim and no standing.


Yep, it's not uncommon in residents committees - 'bush lawyers' is spot on. Such people are a danger to themselves and to the funds they are duty-bound to wisely manage on behalf of others.

PNGMK wrote:I kept reminding them that this woman is a co-owner and pays her contributions on time.


FWIW it's my understanding that even if she was in arrears it would not impact the validity of any claim, like the one she made.

PNGMK wrote: They still claimed they would take it all the way to the supreme court and destroy her with legal fees. In the mean time the idiotic MA lawyer was talking them up


Nice :-P People like this are a danger to those they have been appointed to represent.
The lawyer talks it up as it just means more fees for himself... It's a circle, he strokes their egos, and gets more fees in return.

PNGMK wrote: - even as I kept reminding them that the SC doesn't like lawyers and almost always pushes for a fair and quick settlement - and that the SC judgements are not easy to appeal (the court has to give leave and that must be based on a mistake in evidence or procedure etc).


Exactly.
Lower courts do not like lawyers as it risks disadvantaging the little guy, and lawyers only complicate simple matters. And the whole point of lower courts, is it is meant to be a channel of justice giving fair and equal access to the little guy.
Point 2. Agreed. Either an error in legal procedure that merits elevation/re-trial - i.e. to do this you have to be completely clear that the adjudicating lawyer/judge misinterpreted the law. That is a BIG suggestion and claim to make.
Or, material, game-changing new evidence has come to light that was not considered in the original evidence.

PNGMK wrote:After THREE court sessions the magistrate had enough. He told the MA lawyer that there was no evidence against my neighbor making a fraudulent or invalid claim (The MC Chairman insists that the compressors were not working prior to the flooding with no evidence).


Three sessions, when one is meant to be enough for the typical case. Yes, that would have p'd the magistrate right off. The lawyer again stringing it out to churn fees.
The MC-Chairman's suggestion was ridiculous, how on earth might he have known this unless it was his unit. The cost of ego/vanity/self-importance once again.

PNGMK wrote: So they settled - way above what I had negotiated with her on the side for a MC settlement. I'm curious to know what the costs for the MA lawyer will be - I bet the bastards will try to charge our MCST as well.


Lol - nice.
Well the MA lawyer's costs will be billed of course. And from what you've said about the MA committee don't be surprised if they stick the service charge account for it. In the UK fines cannot be billed to the SC a/c, but legal expenses can. The MC were representing all owners in their action, whether they knew it or not, so they're liable to all share the costs. [This is just my understanding].

When you issue service charge demands, and then later accounts, do you issue them based on estimates, then account for actuals, and explain any estimate/actual variances? If so in your shoes I'd press for an explanation in the Legal Expenses 'line item' along the lines of 'MC Chairman bull-headedly sought to defend case against one resident which was thrown out. This exceptional cost/item is the price of his negligent stupidity'.
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Re: My neighbor won a SCT case against our MA

Postby PNGMK » Thu, 09 Jun 2016 11:05 pm

You have an interesting point. I have queried the legal costs and NOT received a good answer yet. I suspect they'll try to bury in ancillaries or somewhere but there's enough of us on the committee that want this opened up we will succeed. It's been fascinating seeing this in action. The court order includes a note that the court will enforce action if the amount if not paid within a certain date so the MA cannot duck this issue. On the other hand now we have a judgement the MC can at least justify the payment to the co-owner (if not the BS legal expenses).

The part that really irritated me is that this ia co-owner; our neigbour! This is not some stranger launching a frivilous lawsuit because he tripped on a broken tile or something. These tards clearly want to build up the sinking fund with some medium term objective to enbloc (good luck in this market) even though many of us repeatedly have told them we will not support an enbloc (where am I going to find 1550 ft2 at $600 / ft again?).
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Re: My neighbor won a SCT case against our MA

Postby JR8 » Fri, 10 Jun 2016 8:28 pm

The MA might be trying to decide where the cost can be most discreetly booked. It's quite hard for me to mentally reconcile. I mean usually there is legal separation between freeholder and leaseholders. It seems here it's more of a 'share of freehold' type arrangement, i.e. the owners all have a say in how the building is run, represented by a committee of residents that they elect. But in your case it seems like the MC have acted almost unilaterally against one resident, and over something arguably subjective/petty to the building as a whole, but objective/a real issue to the resident. Did they have proof (in evidence) that her claim was bogus? Otherwise what evidence were they relying upon to initiate action?
I'd be interested if they acted within the scope of what their position permits. This might be in the MA Pte's 'Articles of Association'... not sure.

Coincidentally sinking funds are something over which I have a major bug-bear.
They're not uncommon in buildings which will incur occasional but large > very large expenses. That said I've never owned a flat in a building that has one, or succeeded in instituting one [grrr!]. In a smaller building a sinking fund might be used towards say periodic resurfacing of the roof; a big expense in the overall scheme of things. It's more common when a building has a lift, as they seem to merit replacement every 25-30 years or so, and it's very expensive. It would be likely impossible to raise all the funds right at the point in time of need, hence the future cost is collected over many years. Fair enough, if that's in your lease. To have a sinking fund the lease has to explicitly allow for one to be raised. If it doesn't, then the annual Est/Act process I mentioned earlier, together with the occasional process of issuing demands for 'Major Works' is how it goes. RCs (and their agents) don't like this, as raising funds for major works always takes time, admin etc.

But I've had a few occasions where the RC/MA has tried to ram through a sinking fund, which is not permitted by the lease. Two of the biggest inter-neighbour disputes I've had have been over this very thing. You cannot be forced to pay towards a sinking fund that is not specifically provided for by the lease. Estimated periodic [annual?] outgoings + reasonable contingency is all that is permitted; unless a leaseholder chooses to effectively 'over-pay' their SC account. Sounds odd but I've had neighbours who favour being coerced into over-paying like this, as they worry they're not very good with money and fear large periodic bills. To me it's like participating in an enforced saving scheme from which I earn nil interest.

The other thing with sinking funds is to justify raising one you have to know the sum of funds needed in the future, and a good estimate of when. So lifts replacing every x years/cost, roof resurfacing every y years/cost, exterior repainting every z years/cost, and so on. From such you amortise the costs and know what you need and can justify raising in steps each year for these outgoings.

[To be clear the above is UK law, but the broad principles carry over into much Commonwealth law re: Landlord & Tenant, accounting standards, and so on].
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Re: My neighbor won a SCT case against our MA

Postby PNGMK » Fri, 10 Jun 2016 8:37 pm

JR8...we had a large expenditure a few years ago - a major repaint - we raised a levy for it. The sinkin fund also contributed but you have raised a very interesting point. Is the sinking fund mandated by law, the constitution of the MC or by common practice?

I agree the MC have unilaterally acted against a co-owner and in bad faith. In their defense they would say they were trying to avoid a precedent (raiding of the funds for privately owned aircon repairs).
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Re: My neighbor won a SCT case against our MA

Postby JR8 » Fri, 10 Jun 2016 11:44 pm

Oh and another thing with sinking funds is if you sell a property with one, you tend not to get your accrued contribution to the SF back during the conveyancing process. Especially in places where SFs are not an everyday thing. After all, you advertise a property at $x because that is what it is worth, rather than that's what it's worth plus with an intangible accrued SF.

Interesting you raised an interim levy for redecs. I wonder why that wasn't in any sinking fund.

IME any SF is dictated as a requirement by the lease. That'd be my first stop to recheck how service charge demands are calculated and raised.
I'm not sure what might be needed to over-ride the lease, and legitimise an amendment to it's terms. Perhaps 100% agreement amongst the leaseholders, and then having the variation formalised... don't know. But the lease is a protection as much as anything else, so it can't just be arbitrarily changed at the whim of a small sub-set.

Your point 2. But if the MC knew the drains were a problem, and they damaged a residents property then surely they have a liability? Sounds like negligence on their part to me. Isn't there insurance in place for such things? Or won't the insurance pay out due to director negligence?
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Re: My neighbor won a SCT case against our MA

Postby PNGMK » Sat, 11 Jun 2016 9:36 am

The MC/MA admitted negligence in the maintenance of the downpipe in our first meeting on the matter hence why I pushed so hard internally in the MC meetings to (unsuccessfully) settle prior to the court hearings. Our insurance deductible for common property or liability starts at $5000 which was more than the damages. The reason is that some of the MC are pushing to hard to conserve sinking funds is that in an enbloc sale (as opposed to an individual sale) the SF are actually distributed as part of the closing of the strata title company. At present we have roughly $300,000 for 60 units - that's $5000 per unit which doesn't sound like a lot to me and doesn't factor into a property sale really but seems to matter to the current MC chairman and vice-chair who are trying to get > 80% support for an enbloc.
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Re: My neighbor won a SCT case against our MA

Postby PNGMK » Sat, 11 Jun 2016 9:41 am

From a very interesting booklet I found on the BCA website;

The sinking fund is a fund collected to provide for future capital needs. The amount
in the fund must be enough to cover the following expenses.
♦ Painting of the common property
♦ Acquiring movable property
♦ Renewing or replacing any fixtures on the common property and other
property belonging to the MC
♦ Replacing, repairing or making good the common property
♦ Any debts other than amounts covered by the management fund
♦ Other capital expenses

Linky: https://www.bca.gov.sg/bmsm/others/strata_living.pdf
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Re: My neighbor won a SCT case against our MA

Postby JR8 » Mon, 13 Jun 2016 1:38 am

So anyone who has a claim for say $5k or less, prior to this potential en-bloc itself potentially years away can sing for it?... Sounds like getting some kind of potential 'cash-back' matters more than carrying out the duties for which they have been appointed.

Interesting outline of the use of a sinking fund. Some items I wouldn't really expect, since they're more 'short-term' [not really depreciable capital assets] like routine painting, and particularly repairs and so on.
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Re: My neighbor won a SCT case against our MA

Postby x9200 » Mon, 13 Jun 2016 7:31 am

JR8 wrote:Your point 2. But if the MC knew the drains were a problem, and they damaged a residents property then surely they have a liability? Sounds like negligence on their part to me. Isn't there insurance in place for such things? Or won't the insurance pay out due to director negligence?


What is the base the MC operates on? Any agreement? Or they are just elected by the owners and the responsibility is not defined? Are they paid for doing their job?

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Re: My neighbor won a SCT case against our MA

Postby PNGMK » Mon, 13 Jun 2016 10:03 am

MC are elected; they aren't paid. Performance can be an issue - they could be voted out at an AGM or potentially via an EGM. We have a few who are dead wood and should go.

JR8 - you certainly are correct on that.
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Re: My neighbor won a SCT case against our MA

Postby PNGMK » Mon, 25 Jul 2016 3:26 pm

Follow up. Our MA issued a cheque to my neighbour the day after the order was published.
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