Ng Eng Ghee and Others v Mamata Kapildev Dave And Others (Horizon Partners Pte Ltd, intervener) and Another Appeal

• Judge: Chan Sek Keong CJ
• Judgment Date: 02 April 2009
• Neutral Citation: [2009] SGCA 14
• Subject Matter: Section 84A(1A) Land Titles (Strata) Act (Cap 158, 1999 Rev Ed),Fiduciary duties of collective sale committee to subsidiary proprietors of strata development,Fiduciary relationship arising from underlying agency relationship,Duties akin to trustee with power of sale,Whether Board made ex facie errors of law,Meaning of determination by "mediation-arbitration",Civil Procedure,Words and Phrases,Duty of even-handedness,Duty of loyalty or fidelity,Administrative Law,Sale committee selling property on marketing agent's advice without prior independent valuation,Market conditions changing,Land,Duty to obtain best sale price,Sale committee members purchasing additional units in property prior to appointment to sales committee,Nature of appeal from Strata Titles Board,Normal rules of evidence not applicable,Relevant considerations in assessing whether sales committee had acted in good faith,Meaning of s 98(1) Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed),Whether "good faith" after taking into account sale price meant only considering whether fair price,Equity,Collective sale committee agent of all subsidiary proprietors,Sale committee selling property at reserve price in compliance with mandate,Agency,Strata Titles Board finding collective sale in good faith,Objecting subsidiary proprietors purporting to appeal on question of law,Section 98(1) Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed),Duty of conscientiousness,Objecting subsidiary proprietors claiming lack of good faith under s 84A(9)(a)(i) Land Titles (Strata) Act (Cap 158, 1999 Rev Ed),Duty to avoid any potential conflict of interest,Whether collective sale tainted by undisclosed potential conflict of interests,Duty of full disclosure,Meaning of "good faith",Strata titles,Whether sale committee breached duty to act even-handedly between consenting and objecting subsidiary proprietors,Fiduciary relationships,Whether sale committee breached duty of loyalty and fidelity,Test for questions of law,Functions and duties of Strata Titles Board,Section 84A(9)(a)(i) Land Titles (Strata) Act (Cap 158, 1999 Rev Ed),Appeals,Whether exonerated from breach by reliance on legal advice,To be construed in its contextual setting,Inquisitorial role of Strata Titles Board,Failing to disclose purchases prior to or after appointment,"Good faith",Determination of "good faith" under s 84A(9)(a)(i) Land Titles (Strata) Act (Cap 158, 1999 Rev Ed),Collective sales,A protean concept,Marketing agent's fee payable by eventual purchaser,"Point of law",Whether sale committee breached duty to obtain best sale price
• Published date: 06 April 2009
• Year: 2009
• Citation: [2009] SGCA 14
• Court: Court of Three Judges (Singapore)
• Defendant Counsel: C R Rajah SC, Karthigesu Anand Thiyagarajah, Burton Chen, Lalitha Rajah (Tan Rajah & Cheah),Ang Cheng Hock SC, Corina Song, William Ong, Loong Tse Chuan (Allen & Gledhill LLP)
• Plaintiff Counsel: Rudy Darmawan (in person),Harry Elias SC, Philip Fong, Justin Chia, Kylie Peh (Harry Elias Partnership)

2 April 2009 Judgment reserved.

V K Rajah JA (delivering the judgment of the court):

Introduction

1 En bloc sales have often aroused heated debate and controversy ever since enabling legislation was first introduced in 1999. The ground-breaking legislation was intended to and has facilitated the collective sale of qualifying estates even in the absence of unanimous consent by all the subsidiary proprietors. Parliament’s primary objective in enacting the collective sale scheme was to promote the rejuvenation of older estates as well as the optimal use of prime land to build more quality housing in land-scarce Singapore. To achieve this salutary objective, the scheme, inter alia, permits a majority of not less than 80% of consenting subsidiary proprietors to effect the collective sale of the entire qualifying estate inclusive of the units of objecting subsidiary proprietors.

2 In the last decade, however, periodic price surges in the property market have prompted some housing estates to carry out collective sales even in the absence of an immediate or urgent need for rejuvenation or upgrading. The lure of “windfall profits” has been a siren song for many (especially absent landlords and speculators), to the detriment of those who do not want to lose their homes at any price. As a result, bitter acrimony and strained relationships have often arisen between owners who want to sell and those who do not want to sell their units. The unedifying drama and intrigue that an en bloc sale can precipitate has been captured in vivid and unflattering detail in the press and even in a recent television soap opera.

3 Nevertheless, it cannot be gainsaid that, in establishing the statutory scheme, Parliament had carefully considered both the rights and financial interests of the objecting subsidiary proprietors. As a class, they have to be adequately protected from bullying and underhand tactics as well as any potentially collusive or improper conduct on the part of any of the majority owners. Thus, detailed modalities were put in place to ensure that the views of objecting owners are adequately ventilated and their objections independently appraised. In particular, a Strata Titles Board (“STB”) is expressly empowered to review the entire sale process and to ensure that it has been carried out in good faith (the provision currently governing the constitution of STBs is s 89 of the Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed)). In assessing whether a sale transaction has been carried out in good faith, the STB must take into account, inter alia, the sale price for the lots and the common property in the qualifying estate (see s 84A(9)(a)(i)(A) of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“LTSA”)).

4 In the present appeals, a number of critical issues in relation to the collective sale process arise for scrutiny. One issue is the nature of the duties owed by a sale committee (“SC”) to the subsidiary proprietors. Are these duties analogous to those of an ordinary property agent, a mortgagee exercising its power of sale or a trustee selling trust property? What is the extent of these duties: for example, does the SC have to obtain the best price for the property and what steps must it take to do so? Another issue is the meaning of “good faith” in s 84A(9)(a)(i) of the LTSA and what that obligation entails in relation to the sale transaction. In determining whether a transaction is in good faith, is a breach of duties by the SC relevant?

5 As this is a lengthy judgment, we set out the schematic layout of the judgment for ease of reference, which is as follows:

Introduction..................................................................................................	1
The background............................................................................................	4
The preliminary steps..........................................................................	6
The launch of the formal collective sale process and the terms of; the collective sale agreement..............................................................	9
The efforts to sell the Property between May 2006 and December; 2006.....................................................................................................	14
Changing market conditions and the SC meeting on 6 January; 2007.....................................................................................................	16
The decision of the original SC to sell the Property to HPL............	27
The application to the Horizon Board.........................................................	35
The parties’ submissions....................................................................	36
The Horizon Board’s decision............................................................	38
The appeal to the High Court......................................................................	43
The appellants’ submissions..............................................................	44
The Judge’s decision...........................................................................	45
The present appeals.....................................................................................	46
The parties’ submissions....................................................................	46
The appellants’ submissions.......................................................	46
The respondents’ submissions....................................................	50
The intervener’s submissions....................................................	52
The nature of an appeal from an STB decision to the High Court..	52
The main legal issues...................................................................................	59
The relationship between an SC and subsidiary proprietors...........	59
The SC as a fiduciary.................................................................	62
A “trustee” of the power of sale................................................	66
“Good faith” in the transaction................................................	71
The duties of an SC.............................................................................	75
Duty of loyalty or fidelity............................................................	75
Duty of even-handedness...........................................................	76
Duty to avoid any potential conflict of interest.........................	76
Duty of full disclosure................................................................	81
Duty of conscientiousness..........................................................	84
(1) Duty to obtain the best price.........................................	85
(a) Increasing the prospects of obtaining the best; price........................................................................	86
(b) Making the decision to sell...................................	87
(2) Duty to consult the subsidiary proprietors......................	90
Summary....................................................................................	91
Functions and duties of an STB........................................................	93
Breaches and omissions of the original SC.................................................	96
Failure to act with due diligence and transparency in the process; leading to the appointment of the property agent.............................	97
Failure to proactively follow up on the Vineyard offer and other; expressions of interest........................................................................	98
Failure to use Vineyard offer as leverage..........................................	99
Failure to obtain advice from an independent property expert; prior to the sale...................................................................................	99
Acting with undue haste in proceeding with the sale to HPL.........	101
Decision to sell to HPL notwithstanding the conflicts of interest; involving two key members of the SC and First Tree.......................	103
Failure to consult the consenting subsidiary proprietors................	106
Errors in the Horizon Board’s decision.......................................................	108
Errors in the decision of the Judge..............................................................	113
Summary of our findings...............................................................................	114
Conclusion.....................................................................................................	116

The background

6 Two appeals have been brought before us (“the present appeals”). Civil Appeal No 119 of 2008 (“CA 119/2008”) was filed by the subsidiary proprietors of three units in the condominium development known as “Horizon Towers” (“the Property”) who had objected to the application to an STB (“the Horizon Board”) for the collective sale of the Property. Civil Appeal No 120 of 2008 (“CA 120/2008”) was filed by the subsidiary proprietors of another two units in the Property, who had also objected to the collective sale. The present appeals are brought against the decision of the High Court judge (“the Judge”) (see Lo Pui Sang v Mamata Kapildev Dave [2008] 4 SLR 754 (“the Judgment”)) upholding the decision of the Horizon Board on 7 December 2007 (see Mamata Kapildev Dave v Lo Pui Sang/Kuah Kim Choo [2008] SGSTB 7 (“the HB decision”)) to grant an order for the collective sale of the Property, which consists of two plots of land, 15 Leonie Hill Road Singapore 239194 and 29 Leonie Hill Singapore 239228.

7 The Property is a 99-year leasehold condominium with a total of 210 units. As will shortly become apparent, the history of the collective sale process for the Property is complex and convoluted. The main dramatis personae in the saga...