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Lai Chee Hoe

Lai Chee Hoe

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Strata Management Case Updates 7 – Can a JMB or MC compel the developer to supply information or documents?

Bandar Utama Development Sdn Bhd & Anor v Bandar Utama 1 JMB (CA)

Facts:

This is an appeal by the Developer (Bandar Utama Development Sdn Bhd) against the decision of the High Court in allowing a pre-action discovery pursuant to Order 24 R 7A of the Rules of Court 2012 in favour of Bandar Utama 1 JMB.

The main complaint by the Bandar Utama 1 JMB is that the developer has breached the sale and purchase agreement and failed to deliver strata titles despite delivering of vacant possession 10 years ago.

The developer in the appeal, argued, among other issues that the dispute must be referred to the Strata Tribunal pursuant to Section 105(1) of the Strata Management Act 2013 first to exhaust available remedies before filing of the originating summons for pre-action discovery.

Decision of the Court of Appeal:

The Court of Appeal allowed the appeal. The reasons are as follows:

(a) there is an alternative action available to the JMB, ie the Strata Tribunal;

(b) the JMB has not made out a strong case for a pre-action discovery.

The Court of Appeal in comparing a discovery and pre-action discovery ruled that they are different in jurisprudence.

(a) discovery orders will only be granted if it is relevant to the core issues. As a general rule, a discovery is related to parties to the action.

(b) pre-action discovery is not related to contractual parties but it is addressed to 3rd parties who may be tortfeasors or parties who are necessary for a purported plaintiff to succeed in a claim;

(c) the threshold test to satisfy an order for pre-discovery is higher compared to discovery in an action.

(d) Pre-action discovery is an equitable remedy, it will not be granted as of right. If there is an alternative remedy available that must be resorted or if an action can be filed without pre-action discovery, it ought to be filed and subsequent discovery order be obtained.

(e) pre-action discovery should not be allowed when identifiable cause of action has arisen. eg: for a tort like road accident case, file first and seek discovery thereafter. Asking for a pre-action discovery is an abuse of process

Takeaways:

In light of this case, if a JMB or MC wishes to compel a developer to furnish documents pursuant to Section 15 Strata Management Act 2013, it is more prudent to file a pre-discovery in the tribunal or if in court, proceed with an action first and seek discovery during court proceedings.

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Strata Management Case Update
(43-pages in PDF format)

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Lai Chee Hoe

Lai Chee Hoe

Partner at Chee Hoe & Associates. With 10+ years of experience under his belt, he specializes in civil and corporate litigation. He is also the current Chairperson of various Joint Management Bodies.

 
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