Then Khek Koon and another v Arjun Permanand Samtani and another and other suits

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 18 October 2013
• Neutral Citation: [2013] SGHC 213
• Court: High Court (Singapore)
• Docket Number: Suit No 1084 of 2009 consolidated with Suit No 1085 of 2009 and Suit No 1086 of 2009
• Published date: 16 November 2017
• Year: 2013
• Hearing Date: 26 September 2012,25 September 2012,28 September 2012,01 October 2012,20 September 2012,17 September 2012,02 October 2012,30 November 2012,18 September 2012,23 October 2012,24 September 2012,03 October 2012,21 September 2012,27 September 2012,19 September 2012
• Plaintiff Counsel: Mr Kannan Ramesh SC, Mr Eddee Ng, Ms Cheryl Koh, Ms Ho Xin Ling, Ms Yang Sue Jen (Tan Kok Quan Partnership)
• Defendant Counsel: Mr N Sreenivasan SC, Mr Shankar s/o Angammah Sevasamy (Straits Law Practice LLC),Mr Subramanian Pillai, Ms Luo Ling Ling, Mr Leow Zi Xiang (Colin Ng & Partners LLP)
• Subject Matter: Equity,Remedies,Equitable Compensation,Damages,Recovery of Legal Costs
• Citation: [2013] SGHC 213

Vinodh Coomaraswamy J: Introduction Three consolidated actions

In these three consolidated actions, five plaintiffs seek equitable compensation against two defendants for breaches of fiduciary duties.¹ All seven parties – the five plaintiffs and both defendants – are subsidiary proprietors of flats in a condominium known as Horizon Towers. Both defendants were members of the sale committee in charge of the collective sale. The plaintiffs’ claims arise from the ill-fated collective sale of Horizon Towers.

All five plaintiffs resisted fiercely the proceedings which would have forced them to sell their homes against their will. They did so twice before the Strata Titles Board (“STB”) and twice before the High Court. There was much satellite litigation also. The plaintiffs incurred substantial legal costs as a result.

The STB and the High Court sanctioned the collective sale over the plaintiffs’ objections. Three of the five plaintiffs pursued their objections to the Court of Appeal. The appeal thoroughly vindicated the plaintiffs. The Court of Appeal upheld virtually the entirety of the plaintiffs’ suite of objections, both on the facts and on the law. The Court of Appeal set aside the collective sale. The plaintiffs kept their homes.

All five plaintiffs – including the two who did not appeal – asked the Court of Appeal for an award of costs. The Court of Appeal made certain costs orders in the plaintiffs’ favour, accepting some, but not all, of their submissions on costs. That left a margin between what the plaintiffs recovered under the costs orders and what they actually paid to their own solicitors.

The plaintiffs in these proceedings seek equitable compensation equivalent to their unrecovered costs.

Plaintiff’s case

The plaintiffs’ case is that the defendants are obliged to compensate them in equity for these unrecovered costs because the two defendants were members of the sale committee which initiated the collective sale of Horizon Towers and: (1) owed them fiduciary duties in their conduct of the collective sale; (2) breached those fiduciary duties; (3) caused the plaintiffs to resist the collective sale and to participate in the associated satellite litigation; and (4) thereby caused loss to the plaintiffs being their unrecovered costs.

To establish the fiduciary duties and to establish the breach of those duties, the plaintiffs rely on the Court of Appeal’s comprehensive judgment setting aside the collective sale in Ng Eng Ghee and Others v Mamata Kapildev Dave and Others (Horizon Partners Pte Ltd, intervener) and Another Appeal [2009] 3 SLR(R) 109 (“Ng Eng Ghee (CA)”). They do so in two senses. First, they rely on it as a matter of stare decisis: as precedent binding on me that members of a sale committee in a collective sale owe all subsidiary proprietors certain fiduciary duties. Second, the plaintiffs rely on Ng Eng Ghee (CA) under the extended doctrine of res judicata giving rise to an abuse of process: that Ng Eng Ghee (CA) – which considered precisely the same conduct by precisely the same defendants (amongst others) in precisely the same collective sale – precludes those defendants from denying that they owed fiduciary duties to the plaintiffs and from denying that they breached those fiduciary duties. Any attempt by the defendants to do so, the plaintiffs say, would amount to a collateral attack on the Court of Appeal’s decision in Ng Eng Ghee (CA) and is therefore illegitimate and impermissible.

The plaintiffs’ case, therefore, is that the only issue for me to determine in these proceedings is the quantum of the equitable compensation which the defendants should pay to the plaintiffs and not the liability of the defendants to pay that compensation.

Defendants’ case

The defendants accept, at this stage of these proceedings, that I am bound as a matter of stare decisis by Ng Eng Ghee (CA) to hold that, as members of a sale committee overseeing a collective sale, the defendants owed the plaintiffs certain fiduciary duties. They do, however, reserve the right to challenge the existence of these fiduciary duties if this matter goes further. But the defendants submit that Ng Eng Ghee (CA) does not preclude them from seeking to prove to me that the defendants did not in fact breach those fiduciary duties. The defendants therefore assert in this action that they did in fact act in good faith throughout the collective sale process. They assert also that they would have been able to prove this in the collective sale proceedings if only they had been afforded the opportunity to give evidence.

The defendants’ alternative case is that the plaintiffs’ action is itself barred by the doctrine of res judicata, by the doctrine of issue estoppel or as an abuse of process because the court which determined each stage of the collective sale proceedings, including the satellite litigation, heard from the plaintiffs as to the appropriate order for the costs of that stage and awarded or withheld costs as each court thought appropriate. This culminated in the Court of Appeal’s reasoned decision on costs in Ng Eng Ghee and Others v Mamata Kapildev Dave and Others (Horizon Partners Pte Ltd, intervener) [2009] 4 SLR(R) 155 (“Ng Eng Ghee (Costs)”).

Parties

The plaintiffs in Suit No 1084 of 2009 (“S1084”) are Mr Then Khek Koon and his wife Ms Jasmine Tan Kim Lian. They are the joint owners of a flat in Horizon Towers. Ms Tan gave evidence before me. Mr Then did not. Together, they incurred costs of $291,850.92 in the course of the collective sale proceedings from 2007 to 2009. They recovered $118,341.30 under the costs orders made in those proceedings. Their claim against the defendants in these proceedings is therefore for the difference: $173,509.62.²

The plaintiffs in Suit No 1085 of 2009 (“S1085”) are Mr Rudy Darmawan and his wife, Ms Widia Seteono. They are the joint owners of a flat in Horizon Towers. Mr Darmawan gave evidence before me. Ms Seteono did not. Together, they incurred costs of $414,403.31 in the course of the collective sale proceedings. They also incurred interest of $109,699.94 on an overdraft facility used to finance their costs.³ The two sums together total $524,103.25. They recovered $186,028.84 under the costs orders made in the collective sale proceedings. Their claim against the defendants in these proceedings is therefore for the difference: $338,074.41.⁴

The plaintiff in Suit No 1086 of 2009 (“S1086”) is Ms Maryani Sadeli. She is the sole owner of a flat in Horizon Towers. She is Mr Darmawan’s aunt. She associated herself entirely with Mr Darmawan’s position during the collective sale proceedings and in the action before me. She did not give evidence before me. She relies on Mr Darmawan’s affidavit of evidence in chief and his cross-examination to support her claim. By an oral agreement in October 2007, Mr Darmawan agreed to pay Ms Sadeli’s past and future costs of the collective sale proceedings.⁵ She was billed costs of $123,785.98 in the course of the collective sale proceedings. She recovered $50,000 under the costs orders made in those proceedings. Her claim against the defendants in these proceedings is therefore for the difference: $73,785.98.⁶

The collective sale proceedings First SC is constituted

The detailed background to the collective sale of Horizon Towers is set out in full in Ng Eng Ghee (CA) at [6] to [74]. I will endeavour to summarise it here to the extent that it is relevant for my decision on the matters before me.

In October 2005, the first defendant was the chairman of the Management Committee of Horizon Towers. It was at that time that the idea of a collective sale of Horizon Towers was first mooted, though not by either defendant. The first defendant was attracted by the idea and was involved in the informal preparatory work for a potential collective sale. Starting in February 2006, First Tree Properties Ltd (“First Tree”), a property broker, made a series of presentations to increasingly-large groups of subsidiary proprietors on the feasibility of a potential collective sale. First Tree ultimately proposed a reserve price of $500m. At that price, each subsidiary proprietor stood to gain 80% more for his flat by a collective sale than by an individual sale. This margin is known as the collective sale premium.

On 21 March 2006, the second defendant took an option to purchase an additional flat in Horizon Towers at $1.2m. He exercised the option on 3 April 2006.⁷ He and his wife completed the purchase and became co-owners of the flat on 26 June 2006. Separately, on 24 March 2006, the first defendant took an option to purchase an additional flat in Horizon Towers at $1.35m. He exercised the option on 7 April 2006. He and his daughter completed the purchase and became co-owners of the flat on 16 June 2006. Each defendant financed his purchase with bank borrowings.

On 23 April 2006, the subsidiary proprietors of Horizon Towers held an Extraordinary General Meeting (“EGM”) to launch the collective sale process. The first defendant chaired the EGM. The second defendant was present at the EGM and played an active role in it. Neither defendant disclosed to all the subsidiary proprietors that he had purchased an additional flat in Horizon Towers. First Tree and Drew & Napier LLC (“D&N”) made presentations to the subsidiary proprietors. Following the EGM, nine subsidiary proprietors formed a sale committee (“the First SC”) to carry out a collective sale of Horizon Towers. The first defendant and the second defendant were among these nine. The first defendant was elected the Chairman of the First SC. On 26 April 2006, the First SC formally appointed First Tree as the sole marketing agent for the collective sale. The First SC also formally appointed D&N as its legal adviser for the collective sale.

In due course, a Collective Sale Agreement (“CSA”) dated 11 May 2006 was presented to the subsidiary...