Liu Chee Ming and Others v Loo-Lim Shirley

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 08 January 2008
• Neutral Citation: [2008] SGHC 3
• Docket Number: Originating Summons No 927 of 2007
• Date: 08 January 2008
• Year: 2008
• Published date: 11 January 2008
• Plaintiff Counsel: Henry Heng and Joan Sim (Tan Peng Chin LLC)
• Citation: [2008] SGHC 3
• Defendant Counsel: Michael Kuah and Matthew Saw (Lee & Lee)
• Court: High Court (Singapore)
• Subject Matter: Section 98(1) Building Maintenance and Strata Management Act 2004 (Act 47 of 2004),Collective sales,Agent negotiating sale on behalf of sale committee,Whether transaction in good faith,Land,Strata titles,Dissenting owners appealing against approval of collective sale by Strata Titles Board,Sale committee agreeing to lower sale price upon removal of disadvantageous conditions in sale and purchase agreement,Whether good faith of transaction a point of law

8 January 2008

Woo Bih Li J

Introduction

1 This was an appeal against the decision of the Strata Titles Board (“the Board”) approving the collective sale of a condominium known as Futura (“Futura”) under s 84A of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“LTSA”). On 25 October 2007, I dismissed the appeal. The appellants have appealed to the Court of Appeal.

Background

2 Futura is a freehold 26-storey residential development located at Leonie Hill Road. The condominium comprises 72 units having a total share value of 75. By 12 September 2006, subsidiary proprietors with 80% or more of the share value had signed a collective sale agreement (“CSA”) which, inter alia, appointed a sale committee to negotiate with any intending purchaser and finalise the terms of sale of all the estate, rights, title and interest of the intending vendors in Futura at a minimum price of $279,363,774.

3 On 12 September 2006, a public tender for the sale of Futura was launched. DTZ Debenham Tie Leung (SEA) Pte Ltd (“DTZ”) was the marketing agent. Despite DTZ’s marketing efforts, the response when the tender closed on 19 October 2006 was muted. There was only one bid at $291 million by City Sunshine Holdings Ltd, a subsidiary of City Developments Pte Limited and an expression of interest by another party, Wincheer Investment Pte Ltd. I will refer to the bidder as “CDL”. Although CDL’s bid was $11 million more than the minimum price, the sale committee could not accept the bid unreservedly because of two conditions.

4 The first of CDL’s two conditions is found in clause 4A.1 and 4A.3 of the appendix annexed to the form of tender. These provisions stated:

4A.1 The Purchaser has offered to buy the Development at the Purchase Price on the basis that no development charge (“DC”) is payable for the re-development of the Land. Upon acceptance of the Purchaser’s tender, the Purchaser will apply to URA for the data on the approved plans of the Development, to enable the architect appointed by the Purchaser to ascertain the Development Baseline of the Development, and to determine, in accordance with the method and the rate prescribed under the Planning Act and the relevant rules, whether any DC will be payable for a new residential development on the Land with a plot ratio of 2.8 and a proposed gross floor area of 22,639.96 square metres.

4A.2 …

4A.3 If, in accordance with Clause 4A.1, any DC is determined by the Purchaser’s architect to be payable for the re-development of the Land, the Purchase Price shall be reduced by the amount of the DC determined in that manner. The determination of the Purchaser’s architect shall be final and conclusive, and shall be binding on the parties.

5 The second of the two conditions is found in clause 10.1 and 10.2 which stated:

10.1 The Owners shall allow the Purchaser and the registered surveyor appointed by the Purchaser or other persons authorised by the Purchaser access onto the Land during reasonable hours of the day to carry out a survey of the Land.

10.2 If it is ascertained from the survey that there is any encroachment onto the Land, the Purchaser shall have the following rights:

(a) the right to rescind the Contract, in which event the Deposit (without interest) shall be refunded to the Purchaser and neither party shall thereafter have any claim against the other for costs, compensation or otherwise; or

(b) the right to a reduction of the Purchase Price, the amount to be calculated in the following manner:

Purchase Price x Area of Encroachment

Area of the Land

6 As can be seen, the two conditions were very disadvantageous to the vendors. The first in respect of the development charge (“DC”) was that such a charge was to be determined by CDL’s architect which would be final, conclusive and binding. In other words, although the DC is determined by the relevant authority, the authority’s determination would be irrelevant as it would be CDL’s architect’s determination that would count. Ms Tang Wei Leng (“Ms Tang”), a director of DTZ elaborated on the concerns about this condition in [11] to [15] of her affidavit in support of the vendors’ application to the Board for an order of sale of all the units in Futura under s 84A of the LTSA. The paragraphs stated:

11. The DC amount is the difference between the development ceiling and the development baseline. The development ceiling is computed based on the proposed development intensity. The development baseline is computed based on the existing intensity which is the higher of the 1958/1980 Master Plan or the existing paid-up gross floor area.

12. The 1958 and 1980 Master Plan’s allowable intensity for Futura was based on an allowable plot ratio of 2.072 which translated to a GFA of 16,753.57 sq m. On this basis, the DC payable would be $23,545,558.

13. DTZ had advised the sale committee that there was unlikely to be any DC payable for the increase in intensity from the existing development to the 2003 Master Plan allowable plot ratio of 2.8 or a gross floor area (GFA) of 22,639.96 sq m. This was because the total strata floor area of Futura was 20,004 sq m and this represented about 88% of the allowable GFA. The building efficiency (ratio of net floor area to gross floor area) for most of the older residential developments in Singapore (including Futura) is usually about 85%, and therefore Futura’s existing gross floor area was likely to be at or above the new allowable GFA.

14. Notwithstanding that the URA was the proper authority to determine DC related issues, CDL wanted their architect to be the final determinant on the issue.

15. There was therefore a risk that CDL’s architect could take a conservative view that the development baseline was in accordance with the 1958/1980 Master Plan and accordingly, the DC as determined by him would be $23,545,558. The architect could also calculate the development baseline using the total strata floor area and the DC then would work out to $10,543,840. Either way, there was a potential risk that if the conditions were accepted, it would have exposed the owners to a risk of litigation on the 2 condition and its workings, something that the sale committee wanted to avoid.

7 The second condition relating to any encroachment onto the land was to be ascertained from a survey to be carried out by a registered surveyor appointed by CDL or persons authorised by CDL. If there was any encroachment, it would entitle CDL to rescind the contract of purchase or a reduction of the purchase price. Accordingly, if the property market turned for the worse, CDL could use the encroachment, if any, to back out from the purchase. Ms Tang said in [18] of her affidavit that she had advised the sale committee that there was a great possibility there could be encroachment issues in older developments like Futura.

8 The views of the sale committee and negotiations with CDL came from the evidence of Ms Tang as well as Chan Wing Peng (“Mr Chan”), a member of the sale committee. They had both filed affidavits and given evidence before the Board.

9 The sale committee decided to reject the two conditions but realised that there was no other bidder. The sale committee instructed DTZ to discuss and negotiate with CDL to remove the two conditions. According to Ms Tang, she met two representatives of CDL on 20 October 2006 to discuss the two conditions. The next meeting was on 23 October 2006 but no agreement could be reached then. Ms Tang met the sale committee at the office of their solicitors Lee & Lee the same day and briefed them on the situation. She was then instructed to negotiate with CDL to remove the two conditions for a reduction (in the price) not exceeding $5 million. The sale committee sat in a meeting room at Lee & Lee while Ms Tang made calls to CDL on her mobile phone outside of the room. She would revert to Mr Chan whenever CDL made a proposal on the price reduction and this went on until CDL agreed to a price reduction of $3.7 million. CDL insisted, however, that the deal had to be concluded that night itself. The sale committee agreed to the reduced price of $287.3 million as it was still higher than the minimum price and there was no other bid. CDL representatives then went over to Lee & Lee’s office the same night and submitted a revised bid at $287.3 million without either of the two conditions. At about 11pm, the sale agreement was concluded. The negotiations and the conclusion of the sale agreement took about three hours that night.

10 Subsequently, an application was made to the Board under s 84A of the LTSA by Shirley Loo-Lim as the authorised representative of subsidiary proprietors who held at least 80% of the share values in Futura. The subsidiary proprietors of six units filed objections to the application. After mediation efforts failed, the Board conducted a hearing. On 23 May 2007, the Board decided to grant the application and issued an order for the sale and other related matters. Proprietors of five units decided to appeal against the Board’s decision and filed this originating summons. After hearing arguments, I dismissed their appeal.

The court’s reasons

11 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 …

12 Section 98(1) of the Building Maintenance and Strata Management Act 2004 (Act 47 of 2004) provides that no appeal shall lie to the High Court against an order of the Board except on a point of law.

13 The plaintiffs submitted that “a point of law” includes “errors of law”. They relied on Halsbury’s Laws of England, vol 1(1) (Butterworths, 4th Ed Reissue, 1989) para 70 which states:

Errors...