Ong Khim Heng Daniel v Leonie Court Pte Ltd

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 17 November 2000
• Neutral Citation: [2000] SGHC 237
• Docket Number: Originating Summons No 1135 of 2000 and Suit No 586 of 2000
• Date: 17 November 2000
• Year: 2000
• Published date: 19 September 2003
• Plaintiff Counsel: VK Rajah SC and Ajinderpal Singh (Rajah & Tann)
• Citation: [2000] SGHC 237
• Defendant Counsel: Michael Hwang SC and Edwin Tong (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Whether duty discharged,Whether contract terminated when approval not obtained in first application,Land Titles (Strata) Act (Cap 158),Duty to make best endeavours to obtain approval,Contractual terms,Whether party entitled to rely on own default to treat contract as terminated,Reasonable time for obtaining approval from Strata Titles Board,Contract,Whether confined to first application,Strata titles board,Land,Strata titles,Implied term for reasonable time to obtain requisite approval,Board approval for en-bloc sale of condominium

: Introduction

There is a condominium development at Mount Sinai Lane known as the Grenville Condominium. There are 68 units in the condominium. The owners of some of the units wanted to take advantage of the recent interest in en-bloc purchases of housing developments. They appointed property consultants to advise them and to market the property.

Eventually tenders were called for the property. Leonie Court Pte Ltd submitted the highest bid of $155m. That was below the reserve price of $170m, and subsequent negotiations led to an increased offer of $157m. The owners held an extraordinary general meeting on 30 November to consider the offer. Owners of 60 units (`the majority owners`) accepted it. This led to the formation of an agreement of sale and purchase of 5 January 2000 (`the agreement`) between those owners and the defendants.

As the owners of eight units (`the minority owners`) had not agreed to the sale it can only proceed with the approval of the Strata Titles Board (`the Board`). Under the amendments to the Land Titles (Strata) Act (Cap 158) (`the Act`) which came into force on 11 October 1999, such an order would bind the dissenting owners.

The provisions of the Act

The principal sections of the Act governing the applications for approvals are:

84A	(1)	An application to a Board for an order for the sale of all the lots and common property in a strata title plan may be made by -
		(a)	(not applicable)
		(b)	the subsidiary proprietors of the lots with not less than 80% of the share values where 10 years or more have passed since the date of the issue of the latest Temporary Occupation Permit on completion of any building comprised in the strata title plan or, if no Temporary Occupation Permit was issued, the date of the issue of the latest Certificate of Statutory Completion for any building comprised in the strata title plan, whichever is the later,
who have agreed in writing to sell all the lots and common property in the strata title plan to a purchaser under a sale and purchase agreement which specifies the proposed method of distributing the sale proceeds to all the subsidiary proprietors ...
84A	(4)	A subsidiary proprietor of any lot in the strata title plan who has not agreed in writing to the sale referred to in subsection (1) and any mortgagee, chargee or other person (other than a lessee) with an estate or interest in land and whose interest is notified on the land-register for that lot may each file an objection with a Board stating the grounds for the objection within 21 days of the date of the notice served pursuant to the Fourth Schedule or such further period as the Board may allow.
84A	(6)	Where an application has been made under subsection (1) and no objection has been filed under subsection (4), the Board shall, subject to subsection (9), approve the application and order that the lots and common property in the strata title plan be sold.
84A	(7)	Where one or more objections have been filed under subsection (4), the Board shall, subject to subsection (9), after mediation, if any, approve the application made under subsection (1) and order that the lots and common property in the strata title plan be sold unless, having regard to the objections, the Board is satisfied that -
		(a)	and objector, being a subsidiary proprietor, will incur a financial loss; or
		(b)	the proceeds of sale for any lot to be received by any objector, being a subsidiary proprietor, mortgagee or chargee, are insufficient to redeem any mortgage or charge in respect of the lot.
84A	(9)	The Board shall not approve an application made under subsection (1) if the Board is satisfied that -
		(a)	the transaction is not in good faith after taking into account only the following factors:
			(i)	the sale price for the lots and the common property in the strata title plan;
			(ii)	the method of distributing the proceeds of sale; and
			(iii)	the relationship of the purchase to any of the subsidiary proprietors; or
		(b)	the sale and purchase agreement would require any subsidiary proprietor who has not agreed in writing to the sale to be a part to any arrangement for the development of the lots and the common property in the strata title plan.
91	A Board shall carry out its work expeditiously and shall make a finding or determination within 6 months from the date it is constituted or within such extension of time as may be granted by the Minister.

The agreement for sale and purchase

As the sale could only proceed with the Board`s approval, the agreement was a conditional contract.

The clauses in the agreement which refer to the need for and the vendors` obligation to obtain the approval are

7A If not all the subsidiary proprietors of all the 68 units have agreed to join in the sale, the Vendors shall make their best endeavours and with all due expedition to apply to and obtain from the Strata Title Board an order for this sale under Part VA of Land Titles Strata Act.

8(c) In the event that the Strata Titles Board does not approve of the sale of the Property, all moneys paid by the Purchaser shall be refunded to the Purchaser but without any interest compensation deduction whatsoever. Each party hereto shall bear their or his own solicitors` costs in the matter and neither party hereto shall have any claims or demands against the other party for damages, costs or otherwise whatsoever in the matter.

9(f) Notwithstanding anything herein provided, if not all the subsidiary proprietors of all the 68 units have agreed to join in this sale, the sale and purchase of the Property is conditional and subject to the approval of the Strata Titles Board to the sale herein and in the event that the Strata Titles Board does not approve the sale, all moneys paid by the Purchaser shall be refunded to the purchaser but without any interest compensation deduction whatsoever and the Purchaser shall have no claim whatsoever against the owners but without prejudice to any other rights or remedies available to the owners at law or in equity against the Purchaser. Each party shall bear their or his own solicitors` costs in the matter.

10(a) Without prejudice to the terms of this Tender, the sale and purchase price of the Property shall be completed and the balance of the ninety (90%) of the Purchase Price shall be paid at the office of the Solicitors three (3) months from the Date of Acceptance or three (3) months after an order has been made by the Strata Titles Board for the sale under the Land Titles (Strata) Act (if required), whichever is later (the "Completion Date").

The application

The majority owners made their application on 15 February 2000. The application was opposed by the minority owners.

The application failed to yield the approval. The Board did not decide on the application on the merits under ss 84A(7) and (9). The Board upheld an objection that s 84A(1) of the Act and para 1(a) of the Fourth Schedule thereto were not complied with as no extraordinary general meeting was convened after the agreement was made. It explained in its Written Decision dated 2 June 2000:

48 In the Board`s opinion, the proper construction of para 1(a) in the Fourth Schedule is that the subsidiary proprietors who own not less than 80% or 90%, as the case may be, of the share values and who have agreed in writing to sell their development to a specific purchaser must call an EGM to consider the collective sale, before making an application to the Board. Such an EGM can therefore be held only after those owners have agreed in writing to that sale. The literal interpretation of the provision is borne out by the materials extraneous to the Act. Such an interpretation is consistent with the legislative object of insisting upon an EGM prior to making an application to the Board.

49 In the present case, the majority have through their counsel conceded that when the EGM was held on 30 November 1999, the percentage of subsidiary proprietors who agreed in writing to the sale of Grenville Condominium to Leonie Court Pte. Ltd at the reduced price of $157m owned less than 80% of the share values. The Board therefore agrees with the sixth respondent that para 1(a) in the Fourth Schedule was not complied with prior to the application to the Board, contrary to the mandatory requirement of s 84A(3). The majority`s application is thus an invalid one. The majority`s application is dismissed.

50 As to costs, the Board is of the view that costs should not be awarded to the sixth respondent. The law is still new and the issue before this Board is novel. There will also seem to have been no intention by the majority to ride roughshod over the minority when they relied on the EGM of 30 November 1999.

The aftermath of the Board`s decision

The defendants reacted swiftly and decisively on learning the Board`s ruling. On 8 June their solicitors Allen & Gledhill informed the majority owners` solicitors, Rodyk & Davidson that

1 We note that the Strata Titles Board did not approve the majority owners` application to the Strata Titles Board for an order of sale of the above development.

2 Clause 8(c) and 9(f) of the tender conditions provide that `In the event the Strata Titles Board does not approve the sale of the Property, all moneys paid by the Purchaser shall be refunded to the Purchaser but without any interest compensation or deduction whatsoever. Each party hereto shall bear their or his own solicitors` costs in the matter and neither party hereto shall have any claims or demand against the other party for damages, costs or otherwise whatsoever in the matter.`

3 In the premises, as instructed by our clients, we...