Dynamic Investments Pte Ltd v Lee Chee Kian Silas and Others

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 13 December 2007
• Neutral Citation: [2007] SGHC 216
• Docket Number: Originating Summons No 1421 of 2007
• Date: 13 December 2007
• Year: 2007
• Published date: 10 January 2008
• Plaintiff Counsel: Lawrence Tan Shien-Loon and Sandra Tan Pei May (Drew & Napier LLC) and Clarence Tan (UniLegal LLC)
• Citation: [2007] SGHC 216
• Defendant Counsel: Deborah Barker SC, Chia Ho Choon and Spring Tan (KhattarWong)
• Court: High Court (Singapore)
• Subject Matter: Land,Section 98(1) Building Maintenance and Strata Management Act 2004 (Act 47 of 2004),Appeal to High Court on Board's decision,Meaning of "point of law",Whether Board in error of law,Section 84A(9) Land Titles (Strata) Act (Cap 158, 1999 Rev Ed),Whether collective sale in good faith given method of distributing proceeds of sale,Collective sales,Strata titles,Strata titles board,Meaning of "transaction is not in good faith",Whether method of distributing proceeds of sale unfair

13 December 2007

Andrew Ang J:

1 This was an appeal against the decision of the Strata Titles Board (“the Board”) approving the collective sale of a condominium known as Holland Hill Mansions (“HHM”) under s 84A of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“LTSA”).

2 HHM comprises 118 apartment units with a total gross floor area of 21,695m² and a total share value of 452.

3 The plaintiff is the owner of unit 05-15 which has a strata area of 642m² and a share value of 6.

4 The defendants are members of the Sale Committee (“SC”) and authorised representatives of the majority owners of HHM.

5 The dispute herein concerned the method of distribution of the sale proceeds in the collective sale. Whilst not objecting to the collective sale price, the plaintiff contended that the method of distribution of the sale proceeds among the owners (“the SA–SV method” whereby 50% of the proceeds was to be divided among them based on the strata area of their respective apartment units and the other 50% was to be divided in proportion to their respective share value) was unfair to it and betrayed a lack of good faith.

6 Section 84A(9) of the LTSA provides that the Board shall not approve an application –

(a) if the Board is satisfied that —

(i) the transaction is not in good faith after taking into account only the following factors:

(A) the sale price for the lots and the common property in the strata title plan;

(B) the method of distributing the proceeds of sale; and

(C) the relationship of the purchaser to any of the subsidiary proprietors …

7 The plaintiff contended that the Board erred in law in failing to find that the transaction (ie, the collective sale) was not in good faith taking into account the method of distributing the proceeds of sale.

8 It was essential that the Board’s alleged error was one of law because s 98(1) of the Building Maintenance and Strata Management Act 2004 (Act 47 of 2004) (“BMSMA”) provides that no appeal shall lie to the High Court against an order of the Board except on a point of law.

9 Counsel for the defendants contended that the grounds of appeal set out in the originating summons herein did not disclose any question of law. She cited Northern Elevator Manufacturing Sdn Bhd v United Engineers (Singapore) Pte Ltd (No 2) [2004] 2 SLR 494 (“Northern Elevator”) where the Court of Appeal considered the meaning of the expression “question of law” in s 28(2) of the Arbitration Act (Cap 10, 1985 Rev Ed) which read:

Subject to subsection (3), an appeal shall lie to the court on any question of law arising out of an award made on an arbitration agreement …

The court then ruled at [19] that

… [A] question of law must necessarily be a finding of law which the parties dispute, that requires the guidance of the court to resolve. When an arbitrator does not apply a principle of law correctly, that failure is a mere “error of law” (but more explicitly, an erroneous application of law) which does not entitle an aggrieved party to appeal.

10 The Court of Appeal, in arriving at the above ruling, cited with approval the following statement by GP Selvam JC in Ahong Construction (S) Pte Ltd v United Boulevard Pte Ltd [2000] 1 SLR 749 (“Ahong Construction”) at [7]:

A question of law means a point of law in controversy which has to be resolved after opposing views and arguments have been considered. It is [a] matter of substance the determination of which will decide the rights between the parties. The point of law must substantially affect the rights of one or more of the parties to the arbitration. If the point of law is settled and not something novel and it is contended that the arbitrator made an error in the application of the law there lies no appeal against that error for there is no question of law which calls for an opinion of the court.

11 Counsel for the plaintiff, however, cited an earlier decision by Selvam JC in MC Strata Title No 958 v Tay Soo Seng [1993] 1 SLR 870 (“Tay Soo Seng”), a case involving an appeal from a decision of the Board as in the present case where the learned judicial commissioner considered the then s 108(1) of the Land Titles (Strata) Act (Cap 158, 1988 Rev Ed) which read as follows:

No appeal shall lie to the High Court against an order made by a Board except on a point of law.

Selvam JC quoted with approval the following statement in Halsbury’s Laws of England, vol 1(1) (Butterworths, 4^th Ed Reissue, 1989), para 70:

Errors of law include misinterpretation of a statute or any other legal document or a rule of common law; asking oneself and answering the wrong question, taking irrelevant considerations into account or failing to take relevant considerations into account when purporting to apply the law to the facts; admitting inadmissible evidence or rejecting admissible and relevant evidence; exercising a discretion on the basis of incorrect legal principles; giving reasons which disclose faulty legal reasoning or which are inadequate to fulfil an express duty to give reasons; and misdirecting oneself as to the burden of proof.

This apparent inconsistency was considered in [15] to [27] of my recent decision in Ng Swee Lang v Sassoon Samuel Bernard [2007] SGHC 190. In the interest of expedition, I shall merely refer to the conclusion reached, viz:

(a) that the Court of Appeal’s ruling in Northern Elevator ([9] supra) and that of Selvam JC in Ahong Construction ([10] supra) were given in the context of an application for leave to appeal from an arbitral award and must be understood in that context; and

(b) for the purposes of s 98(1) of the BMSMA, guidance as to the meaning of “point of law” may be found in the passage from Halsbury’s Law of England referred to by Selvam JC in Tay Soo Seng and Lord Radcliffe’s statement in Edwards (Inspector of Taxes) v Bairstow [1956] AC 14 (“Edwards v Bairstow”) where he said:

My Lords, I must apologise for taking so much time to repeat what I believe to be settled law. But it seemed to be desirable to say this much, having regard to what appears in the judgments in the courts below as to a possible divergence of principle between the English and Scottish courts. I think that the true position of the court in all these cases can be shortly stated. If a party to a hearing before commissioners expresses dissatisfaction with their determination as being erroneous in point of law, it is for them to state a case and in the body of it to set out the facts that they have found as well as their determination. … If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination upon appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law and that this has been responsible for the determination. So there, too, there has been error in point of law. [emphasis added]

12 The question whether a transaction is “not in good faith” is a question of mixed law and fact. It is a question of law what meaning is to be given to the words “good faith”. The statute, however, does not supply a precise definition of “good faith”: much less does it prescribe a set of rules to apply to any factual matrix.

13 Be that as it may, determining whether a transaction is lacking in good faith is not as difficult as determining questions of degree where it could not be said to be wrong to arrive at a conclusion one way or the other. Typical of this latter type is the question in income tax law whether a payment is in the nature of capital or income, so much so that it has been said somewhat cynically that –

… [I]n many cases it is almost true to say that the spin of a coin would decide the matter almost as satisfactorily as an attempt to find reasons.

(per Sir Wilfrid Greene MR in Commissioners of Inland Revenue v British Salmson Aero Engines, Limited [1938] 2 KB482 at 498). The question before us, whether the transaction is “not in good faith”, does not, in my view, suffer from this uncertainty. This is because, as I shall explain below, the words “good faith” have a core meaning.

14 But in a particular set of circumstances the question whether a transaction is lacking in good faith nevertheless requires an application of the primary facts to the legal criteria as to what “good faith” is. As such, it is traditional (if somewhat inexact) to describe it as a question of fact. The Board’s holding that it was not satisfied that the transaction was not in good faith (regard being had to the method of distributing the proceeds of sale) was a decision on the facts of the case and could not be challenged unless there was an error of law either ex facie (as to which there was none) or such as was described in Edwards v Bairstow ([11(b)] supra).

15 I note also that whether or not the transaction was lacking in good faith was something on which the Board had to be “satisfied”. To my mind, that further suggested that the legislature, recognising an element of subjectivity in such a decision, intended to preclude challenge to the Board’s finding save where there was an error of law.

16 Adopting the broader formulation in Edwards v Bairstow ([11(b)] supra) as to what constitutes an error in point of law, it was for the plaintiff to show that the finding of the Board was such that “no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal”.

17 Is it an inevitable conclusion that in arriving at its decision the Board misapprehended what “good faith” is? The term “good faith” has been characterised as a “protean one having longstanding usage in a variety of statutory and, for that matter, common law contexts”: per Finn J in ...