Defects in common property of strata developments in Singapore: Representative actions against developers

Abstract

Purpose - The paper seeks to consider the basis on which a management corporation can represent original and subsequent purchasers of units in strata developments in a representative action against developers; the significance of unit owners' share values when courts award compensation; vicarious liability; and developers' use of the "independent contractor" defence in relation to its liability for defects in common property. Design/methodology/approach - The paper analyses cases from several common law jurisdictions, with a focus on Singapore Court of Appeal decisions. Findings - The paper highlights the problems posed as a result of the doctrine of privity in relation to management corporations' claims against developers for defects in common property; the implications of unit holders' share values; and the circumstances in which developers can avail themselves of the independent contractor defence. Practical implications - The paper will be instructive to developers, contractors, management corporations and both original and subsequent purchasers of units in strata developments. Originality/value - The paper brings to focus the importance of due consideration by the management corporation before it commences a representative action on behalf of the subsidiary proprietors; and also highlights procedures and/or legislation that need to be implemented, failing which there may be financial implications that can render a "successful" litigation against the developer a pyrrhic victory.