S Mohan JC:
Introduction
The Realty Centre (the “Development”) is a well-known commercial development situated in the Central Business District on Enggor Street. Built in the early 1970s, the Development was the subject of an attempt by a majority of its subsidiary proprietors to sell the Development by way of a collective sale.
The sale was objected to by, inter alia, Mr Tan Thiam Chye, who owned two office units in the Development. This case raised issues that touched on, inter alia, the relevance (and prevalence) of what has been termed as the “premium variance test” in collective sales and what constitutes “common property” as defined in various legislation relating to strata developments. There has been no appeal against my decision. However, given the potential relevance to the industry of some of the issues that arose to be decided in these proceedings, I provide the full grounds of my decision.
The parties and a summary of the procedural history
The plaintiffs are representatives of the collective sale committee (the “CSC”) of the Development and were authorised to make the application for a collective sale order. The Development is a 12-storey commercial building comprising 36 units in total. These are made up of three retail units on the ground floor, 32 office units of four different sizes located on the 4th to 11th floors, and one food and beverage unit on the 12th floor. The details of the units (as set out in the following table) are undisputed:
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| S/N | Type | Unit | Strata area per Unit (sm) | No of Units | Share value per unit |
| 1 | Retail | #01-01 | 249 | 1 | 1 |
| 2 | Retail | #01-02 | 199 | 1 | 1 |
| 3 | Retail | #01-03 | 179 | 1 | 1 |
| 4 | Office | #04 to #11-01 | 106 | 8 | 1 |
| 5 | Office | #04 to #11-02 | 95 | 8 | 1 |
| 6 | Office | #04 to #11-03 | 121 | 8 | 1 |
| 7 | Office | #04 to #11-04 | 112 | 8 | 1 |
| 8 | F&B Unit | #12-00 | 170 | 1 | 1 |
The 1st plaintiff, Ms Yeo Sok Hoon, represented the owners of Unit #12-00 (the “1st plaintiff”) and was the chairperson of the CSC; the 2nd plaintiff, Mr Seah Siang Mong, was the owner of Unit #01-02 (the “2nd plaintiff”) and a CSC member, while the 3rd plaintiff, Mr Paul Go Kian Lee, was the owner of Unit #08-04 (the “3rd plaintiff”) and the secretary of the CSC (collectively, the “plaintiffs”).
On 25 July 2019, the plaintiffs applied to the Strata Titles Board (the “STB”) for a sale order. As objections were taken towards the sale of the Development, and following a failed attempt at mediating the dispute, the STB issued a stop order, which in turn led to the present application in OS 1424/2019. Before the STB and when OS 1424/2019 was commenced, there were two objectors, namely Mr Tan and Sin-Tai Investments Pte Ltd (“Sin-Tai”), who were named as the 1st and 2nd defendants in OS 1424/2019 respectively. By the time the hearing commenced on 31 March 2020, Sin-Tai had reached a settlement with the plaintiffs and the proceedings against it were withdrawn. Thereafter, only Mr Tan (hereafter “the defendant”) remained opposed to the collective sale.
In these proceedings, the plaintiffs sought, inter alia, an order to allow the sale of all the lots and common property in the Development to New Vision Holding Pte Ltd (the “Purchaser”) pursuant to s 84A of the Land Titles (Strata) Act (Cap 158, 2009 Rev Ed) (the “LTSA”). The defendant objected to the sale solely on the basis of s 84A(9)(a)(i)(B) of the LTSA, ie, that the transaction was not in good faith taking into account the method of distributing the proceeds of sale.
I heard OS 1424/2019 from 31 March to 3 April 2020, and at the end of the hearing, reserved judgment. I was informed by counsel that the plaintiffs had to obtain an order in respect of the collective sale by 21 May 2020. Accordingly, I gave directions for written submissions to be tendered within fairly compressed timelines and delivered judgment orally on 14 May 2020. Based on the totality of the evidence adduced, I concluded that the application was properly made, that all the statutory requirements under the LTSA and the Rules of Court (Cap 322, R5, 2014 Rev Ed) (the “ROC”) were complied with and that the transaction was in good faith taking into account the method of distributing the proceeds of sale. I also found that there was no credible evidence to support the defendant’s assertion that there was an absence of good faith on the part of the CSC or its marketing agent in arriving at the method of apportioning the sale proceeds of the Development. I accordingly allowed the plaintiffs’ application and granted the order for sale.
Background
The collective sale process which culminated in OS 1424/2019 began in July 2017. On 28 July 2017, the 3rd plaintiff sent an email to the then-members of the management council and representatives of various subsidiary proprietors, stating that he was of the opinion that there was a high probability of a successful enbloc sale. He therefore put up a requisition for a General Meeting, and attached requisition forms to the email for the other subsidiary proprietors to sign. On 14 August 2017, the 3rd plaintiff sent an email to Mr Richard Boey from HBA Group Property Consultants, which was the Managing Agent, stating that he had received requisition forms from the owners of 15 units, and that the General Meeting could accordingly be arranged. The collective sale was thus included as an agenda item at an Annual General Meeting held on 12 December 2017 (“AGM”).
AGM and 1st CSC Meeting
During the AGM, the members of the CSC were elected to act on behalf of the subsidiary proprietors in the collective sale. The plaintiffs and the defendant were among the 11 persons in total who were elected as members of the CSC. At the 1st CSC meeting held on 12 December 2017 after the AGM, the 1st plaintiff was unanimously appointed as chairperson of the CSC, Mr Phee Thian Chye (“Mr Phee”) the co-chairperson and the 3rd plaintiff the secretary.
2nd CSC Meeting
At the 2nd CSC meeting held on 19 January 2018, the CSC agreed to appoint Cushman & Wakefield (S) Pte Ltd (“C&W”) as the marketing agent and Donaldson & Burkinshaw LLP (“D&B”) as the solicitors for the collective sale. It is relevant and would be helpful at this point to set out the different methods of apportionment that were raised and discussed by the CSC, how the present method of apportionment came to be adopted by the CSC, and the involvement of the plaintiffs and C&W in the process.
At the 2nd CSC Meeting, a two-tier method of apportionment (hereafter referred to as “MOA1”) was discussed in general terms as part of a general discussion on what would be an acceptable method of apportionment. Under MOA1, the sale proceeds would be paid out (a) first, based on the market value of the 36 individual strata lots and (b) for the net balance of the sale proceeds to be distributed to each subsidiary proprietor in equal shares. This was on the basis of an assumption that the common property was owned jointly or severally by all the subsidiary proprietors as tenants-in-common and therefore divisible equally based on their individual share value holdings. It is relevant to point out at this juncture that the share value structure of the Development was unusual in that all subsidiary proprietors were assigned one share value, irrespective of the size of their units (see table at [3] above). As will become apparent later in these grounds, this factor was one of the main reasons contributing to the defendant’s objections to the sale.
Reverting to the facts, it was recorded in the meeting minutes of the 2nd CSC meeting that the co-chairperson Mr Phee acknowledged that the apportionment formula would be the most challenging issue to resolve. The minutes then recorded various comments and suggestions by various CSC members. For example, one unnamed CSC member commented, inter alia, that ultimately the premium received by each unit must be fair and equitable. The minutes also recorded, by way of a comment by another CSC member as a preliminary suggestion on an apportionment formula, that most of the CSC members were familiar with MOA1 as it had been discussed in a previous unsuccessful collective sale exercise, and that it was “quite a good formula”. If the formula could generally be agreed on, this CSC member felt that they would have “some solid ground to start working on”. Another CSC member commented that first “…we agree on an apportionment method then we shall all abide by the method and respect the professional valuation reports…”. After further discussion by the CSC members, the minutes recorded the 1st Plaintiff, in her capacity as the chairperson, concluding that there was a “need to consult the professionals to see whether the apportion [sic] method mentioned by the CSC members is workable”, to “ensure that it stands [sic] the scrutiny of the Strata Title Board”. Lastly, the minutes recorded that Mr Albert Ching, representing The Singapore Cancer Society (the “Society”) informed the rest of the CSC that the Society would not be supporting the collective sale. As an aside, the Society occupied a total of six office units on the 4th and 6th floors of the Development.
3rd CSC Meeting
The 3rd CSC meeting held on 7 February 2018 was the first meeting with the appointed marketing agent and solicitors, C&W and D&B respectively. It was noted in the meeting minutes that “one major reason why the previous enbloc exercise failed was because the initial proposed Apportionment Formula was tweaked several times in trying to suit subsequent changes in valuation of some property units”.
4th CSC Meeting
At the 4th CSC meeting held on 13 April 2018, Ms Christina Sim from C&W (“Ms Sim”) explained to the CSC that MOA1 was “inequitable” and would “not stand up under...
