Lim Li Meng Dominic and others v Ching Pui Sim Sally and another and another matter

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 02 October 2015
• Neutral Citation: [2015] SGCA 54
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 52 of 2015 and Summons No 266 of 2015
• Year: 2015
• Published date: 09 October 2015
• Hearing Date: 07 July 2015
• Plaintiff Counsel: Adrian Tan Gim Hai, Kenneth Chua Han Yuan and Lim Siok Khoon (Morgan Lewis Stamford LLC)
• Defendant Counsel: Giam Chin Toon SC and Yeo Zhen Xiong (Wee Swee Teow & Co),Lim Seng Siew and Susan Tay Ting Lan (OTP Law Corporation)
• Subject Matter: Land,Strata titles,Collective sales
• Citation: [2015] SGCA 54

Andrew Phang Boon Leong JA (delivering the grounds of decision of the court): Introduction

This appeal concerned the collective sale of the condominium development known as Gilstead Court. In the court below, the judge (“the Judge”) approved the application for collective sale, notwithstanding the fact that he had considered a number of controversial terms in the underlying Collective Sale Agreement (“CSA”) to be unenforceable and had struck them out (see Choo Liang Haw (alias Choo Liang Hoa) and others v Chua Seet Mui and others and another matter [2015] 2 SLR 931 (“the Judgment”)). The appellants, who were three of the eight subsidiary proprietors (“SPs”) who did not sign the CSA, contended that the Judge’s order for sale should be set aside on the following two grounds: (a) first, that the transaction was not in good faith as is required under s 84A(9)(a) of the Land Titles (Strata) Act (Cap 158, 2009 Rev Ed) (“LTSA”); and (b) secondly, that the respondents’ application to the High Court under s 84A(1) of the LTSA for an order approving of the collective sale was made without authority.

After hearing the parties’ submissions, we allowed the appeal. These are the detailed grounds for our decision.

The background Events leading to the application for collective sale

Gilstead Court is a condominium development comprising 48 units of residential properties. After a previous attempt at a collective sale between 2005 and 2007 failed, some of the SPs decided to try again in 2008. For this purpose, a seven-member Collective Sale Committee (“CSC”) was appointed on 12 April 2008.

For the avoidance of doubt, we use the terms “CSC” and “CSA” to refer to this particular sale committee and this particular collective sale agreement respectively, as opposed to sale committees and collective sale agreements in general.

The members of the CSC were as follows: Sally Ching (“Ching”); Warren Khoo (“Khoo”); Choo Liang Haw (“Choo”); Chan Ju-Lian (“Chan”); Loke Wan Tche; Lok Kok Poh; and Charles Ng Pooh Cheok.

Ching, Khoo and Choo were subsequently appointed as the chairperson, secretary and treasurer of the CSC, respectively, in 2009. They formed the Executive Committee (“the Exco”) of the CSC. Ching and Khoo were the respondents in this appeal.

Khoo was the principal draftsman of the CSA. A preliminary version of that document was circulated to the SPs for their comments in May 2011. After some revisions, the final version of the CSA was released on 9 July 2011 for the purpose of procuring the signatures of the SPs. The relevant terms of the CSA are set out in Annex A to these grounds of decision.

The CSA contained a number of controversial clauses which the Judge termed “the Objectionable Clauses” (see the Judgment at [8]). These clauses can also be found in Annex A of these grounds of decision. We briefly summarise the Objectionable Clauses as follows: Clause 7 consisted of several sub-clauses which, when read together, essentially required each SP to pay an initial contribution of $2,000 per unit (later reduced to $1,000 (see below at [11])) towards the cost and expenses of the collective sale, which would be refunded to him with interest (of 12% per annum) should the collective sale be successful (see cll 7.1 and 7.3); however, significantly, if any SP did not pay the initial contribution amount, he would have twice this amount withheld from his share of the net sale proceeds, which would then be shared equally among the contributing SPs (see cl 7.5). Clause 11 had two key sub-clauses: Clause 11.2 operated in certain circumstances to charge to an SP who did not sign the CSA the entirety or an appropriate part of the costs and expenses of any approval proceedings before the Strata Titles Board (“STB”) and/or the High Court; and Clause 11.3 authorised the CSC to seek legal advice and then obtain approval from the SPs to sue for losses sustained from the delay in the receipt of the sale proceeds as a result of approval proceedings that had to be instituted before the STB and/or the High Court. We note that the Judge did not include cl 11.3 as part of his definition of the Objectionable Clauses. However, as objections had been raised before the STB as well as the High Court against the whole of cl 11, including cl 11.3, we include cl 11.3 in all our references to “the Objectionable Clauses” hereafter. Clause 12 penalised any SP who gave, received or solicited any consideration for certain acts relating to the collective sale process by, inter alia, deducting a sum equivalent to twice the amount of consideration from that SP’s share of the net sale proceeds.

On 1 August 2011, Khoo disseminated an updated “Guide” to the collective sale. The Guide was signed off by the CSC and it set out the CSC’s philosophy towards the collective sale. The Guide also explained the compulsory nature of the collective sale process, using occasionally colourful language, eg, “The three wise monkeys’ see-nothing say-nothing hear-nothing is definitely not an option for anyone in a condo undergoing a collective sale”. The Guide highlighted the Objectionable Clauses and their respective effects as well.

The CSC, and Khoo in particular, had high hopes of obtaining 100% consent for the collective sale, which would obviate the need to apply to the STB or the High Court for an order of sale. However, the signatures did not come as quickly as they might have liked. By September 2011, the SPs of 27 units had signed the CSA and paid the contribution of $2,000 per unit pursuant to cl 7.1 of the CSA. But no more SPs came forward after that.

Measures were then taken in order to encourage more SPs to sign up. On 5 April 2012, marketing agents were appointed for that purpose. At an Extraordinary General Meeting (“EOGM”) of the SPs on 7 April 2012, the contribution rate under cl 7.1 of the CSA was reduced to $1,000 (from the $2,000 stated in the CSA) and the closing date for signing the CSA was extended (from a date falling six months from the CSA) to 8 July 2012. Progress in obtaining more signatures, however, remained slow.

During this period, Khoo made attempts at persuading the SPs who had yet to sign to add their signatures to the CSA that (as we have already noted) he had drafted. In a personal note dated 28 June 2012 to one such SP, Khoo referred to certain “sanctions” which had been placed in the CSA:

We had anticipated this problem of people pushing the responsibility to others while waiting to collect the rewards. We have inserted sanctions in the CSA against such selfish behaviour. The sanctions will apply if you do not sign before the closing date even if you do not lodge any objection to the sale afterwards. The sanctions include paying or sharing the costs of the proceedings before the [STB], as well as costs in the High Court if we have to take the matter up there. The [CSC] has no choice in the matter. [emphasis added in italics]

By 8 July 2012 (approximately a year after the final version of the CSA was released, and the first signature obtained, on 9 July 2011), the SPs of 43 units had signed the CSA. This represented 89.58% of the total share value and 89.41% of the total area of Gilstead Court. The statutory majority of at least 80% of the SPs by share value and total area as required under s 84A(1)(b) of the LTSA necessary for a collective sale had thus been obtained within the permitted time of 12 months as provided for in para 1(a) of the First Schedule of the LTSA.

Eight SPs of five units in Gilstead Court did not sign the CSA. We shall refer to them collectively as the “non-signatory SPs”. They also did not pay any initial contribution to the costs and expenses of the collective sale under cl 7.1 of the CSA. The non-signatory SPs were as follows: Edric Pan (“Pan”) and Quek Chia-Min Valeria – Unit 50A; Chua Seet Mui (“Chua”) – Unit 50P; Loke Ah Meng (“Loke”) and Soh Lay Bee (“Soh”) – Unit 52A; Lim Li Meng Dominic and Lim Sui May Petrina (“the Lims”) – Unit 52C; and Koh Nai Hock (“Koh”) – Unit 54K.

The Lims and Koh were the appellants in the present appeal.

After fruitless efforts by Khoo to get the non-signatory SPs to consent to the CSA, the Exco wrote to all the SPs on 17 October 2012 saying that the non-signatory SPs were unwilling to sign up and that the Exco would move on.

Eventually, pursuant to a tender launched by the Exco themselves, a bid by Dillenia Land Pte Ltd (“DLPL”) was accepted on 17 June 2013. DLPL was therefore the designated purchaser of Gilstead Court. The agreement with DLPL was contained in a document known as the Final Terms and Conditions of Tender dated 29 May 2013 (“the Terms of Tender”), which also annexed the terms and conditions of the Final Draft Sale and Purchase Agreement (“the Draft SPA”). DLPL’s tender and the CSC’s letter of acceptance constituted the conditional contract of sale with DLPL under cl 26 of the Terms of Tender. DLPL’s bid was for the sum of $150,168,000, which was slightly over the reserve price of $150m.

On 22 June 2013, Chan (a member of the CSC) wrote to the Exco informing them that he had received word that the non-signatory SPs would sign the CSA if cll 7.5, 11.2 and 11.3 of the CSA were waived. Chan took the view that “this letter of comfort and assurance that these minority Owners seek is no skin off our noses” and that it was never the CSC’s intention to “make money off any Owner, let alone a minority Owner”. He recommended that the CSC issue the comfort letter.

This was followed by a letter from Pan (a non-signatory SP and a trained lawyer) to the Exco on 25 June 2013. He informed the Exco that he had managed to convince the other non-signatory SPs to sign the CSA if the CSC gave written confirmation that it would not seek to enforce cll 7.5, 11.1, 11.2 and 11.3 of the CSA.

Three days later, Khoo rebuffed Pan’s overture, stating that those clauses were “nothing more...