JCW

[Unlawful accessorizing of carparks accessory parcels in the strata title and definition of “accessory parcel”, unlawful rental of Carparks and commercial business within a Residential Condominium] Justin was counsel for the Respondent in this case. In this case, the developer (D2) in this case sold 45 units of condominium to a closely related company (D1) with 439 accessory carparks attached to the said units, with 40 of the units having 8 to 15 accessory car parks each. The Respondent contend that this caused a shortage of carparks at the condominium including lack of visitors’ carparks and the D1/D2 proceeded to rent the extra carparks to residents/third parties.   The important points of law canvassed by this case from the report include the following :   (i)The Strata Titles Act 1985 prohibits the commercial usage of carparks, where in this case the Defendants were renting out the carparks in a residential condominium to third parties. (ii)Each condominium unit which is about 1000 square feet at most would require one or two carparks. The usage of the 394 carparks ( excessive carparks ) constitute a breach of Section 34 (2) and 69 of the Strata Titles Act 1985 namely that the accessory carparks is used or intended to be used not in conjunction with a parcel unit and dealt with independently of the main parcel unit. (iii)“Dealt” in the said Section 34 ( 2) and 69 include “tenancy” where Section 5 of the National Land Code defines “dealing” as transactions under Division 4 and Division 4 of the NLC include Part 14 and 15 with provisions  on “tenancies”. (iv)There is a breach of the Development Order where the requirement of the DO is a requirement under the law pursuant to Sections 22 (2) , 22 (3) and 22(4) of the Town and Country Planning Act 1976, where D2 failed to provide 10% of the 2180 carparks as visitors carparks. Here, we are not talking about the number of carparks required to be built by D2, which appear to be regular on paper but the dealing of the carparks for business purpose which caused an acute shortage of carparks. (v)There was evidence that the accessory carparks were not sold or transferred with any consideration and/or valuable consideration. (vi)The 40 SPAs were not arms length transactions where vacant possession were given to D1 before purchase price were fully paid, D1 took 3 years to pay the purchase price when the SPA require 3 months and there are instances the 10% deposit were made after balance purchase price made. All these could only happen when D1 and D2 have close relationship and controlled by the “Lee” family. (vii)Carpark transactions are illegal and ordinarily if the SPAs are struck down as void, the carparks after deducting the visitors’ carparks should revert to D2. However, as no approved strata plan was adduced by D2 as the developer, although available, there is no evidence that these carparks are “accessory parcels” or “comprise in any parcel”. Therefore, an adverse inference under Section 114 (g) Evidence Act is invoked against D2 and these carparks are ruled as common property. (viii)Section 143 (2) and (3) of the Strata Management Act 2013 provides that the plaintiff as the management corporation can lawfully sue for the recovery of common property. (ix)The fact that the carparks are already comprised in the strata tiles alone is not a determining factor that they do not form part of common property. If the Court were to agree with the submissions of the defendants in this regard, it will produce an absurd result i.e. any party like the developer can take advantage of the situation by ‘accessorizing” property which should have been “common property”. (x)Once the carparks are no longer part of the strata title, they are no longer accessory parcels and not subjected to Sections 4, 34 and 69 of the Strata Title Act.