Today, the Phoenix Court minority appeal against the High Court decision was dismissed with costs. You can find the full decision on the Supreme Court website - free to view for 3 months.
Ng Swee Lang and Another v Sassoon Samuel Bernard and Others[2008] SGCA 7.
This appeal concerns the collective sale of the freehold condominium development at 70 St Thomas Walk known as Phoenix Court which comprises three penthouses on the highest floor and 44 apartment units on the lower floors.
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High Court Media Summary here
29 February 2008
Media Summary
Ng Swee Lang and another v Sassoon Samuel Bernard and Others
CA 145 of 2007/W
Decision of the Court of Appeal (delivered by Chan Sek Keong CJ)
Background
1 The appellants are the joint subsidiary proprietors of a unit in Phoenix Court at 70 St Thomas Walk. It is a 13-storey freehold condominium development comprising 3 penthouses and 44 apartment units. On 16 April 2006, 46 out of 47 owners of units signed a collective sale agreement among themselves with a view to selling their units on the terms agreed therein. Sometime in mid-2006, the Sale Committee put out a public tender for the collective sale of Phoenix Court but failed to attract any bids. However, on 27 October 2006, the 46 owners (representing 97.92% of the total share value of the development and holding well in excess of 80% of the total area of all the lots in Phoenix Court) signed a sale and purchase agreement (S&PA) with Bukit Panjang Plaza Pte Ltd as the purchaser. The terms of the S&PA included a termination clause that if approval for the collective sale was not obtained from the Strata Titles Board within 6 months of the date of the S&PA (i.e., 25 April 2007), it would lapse.
2 On 17 January 2007, the respondents as representatives of the 46 owners applied to the Board for a collective sale order. When it became evident that the collective sale order could not be obtained by 25 April 2007, the Sale Committee entered into a Supplemental Agreement with the purchaser on 25 April 2007 to extend the time to 27 June 2007 in order to obtain a collective sale order from the Board.
3 On 21 and 22 June 2007, the Board heard the application. The appellants were represented by counsel and objected to the application on various legal grounds. The Board rejected all of them and approved the application for the collective sale of Phoenix Court.
4 The appellants appealed to the High Court to set aside the Board's decision. They argued that -
(a) the collective sale agreement had terminated by effluxion of time and therefore there was no valid agreement among the owners holding not less than 80% of the total share values of Phoenix Court;
(b) there was no valid sale and purchase agreement between the 46 owners and the purchaser as the S&PA was not validly extended and also did not specify the proposed method of distribution of the proceeds of sale to the unit owners;
(c) the respondents were not the authorised representatives of the majority owners;
(d) the transaction was not in good faith;
(e) notice of the application had not been accompanied by a valid valuation report; and
(f) the S&PA did not comply with s 84A(1) of the Land Titles (Strata) Act in failing to specify the proposed method of distribution of the sale proceeds among all the owners: such failure went towards establishing the jurisdiction and resulted in the respondents having no locus standi to apply to the Board for a collective sale order.
5 In a fully reasoned judgment, the High Court Judge dismissed the appeal and held:
(a) the collective sale agreement did not terminate on its proper construction in the events that happened;
(b) the failure to specify the distribution method in the S&PA did not invalidate the S&PA as the distribution method was set out in the collective sale agreement, a copy of which was in their possession; they were fully aware of the value of their units and the amount of the purchase consideration they would receive; the legislation on collective sales does not require minority dissenting members to sign the sale and purchase agreement; also the S&PA was validly extended;
(c) the respondents were the authorised representatives of the 46 owners, and in any case, the law required only one representative to act on their behalf; further, the appellants have never challenged the authority of the respondents;
(d) the transaction was not entered into in bad faith, nor had the appellants proved that the sale price was not the best price reasonably obtainable;
(e) the valuation report was not defective; and
(f) the failure to specify the distribution method in the S&PA did not affect the standing of the respondents to apply to the Board; s 84A(1) must be interpreted to give effect to the intention of Parliament. It could not be that a minor breach would invalidate the whole transaction.
The Appeal
6 The appellants’ appeal to the Court of Appeal is based on the same grounds canvassed before the Judge. The Court of Appeal agrees with the decision of the Judge and also his reasoning on all his legal findings. The Court agrees with the Judge that the modern approach to statutory interpretation required the court to consider the legislative intention of the collective sale scheme and to give effect to it in interpreting the relevant provisions of the legislation.
7 In the present case, with respect to Phoenix Court (which is more than 10 years old), the appellants’ argument is based substantially on the meaning and effect of s 84A(1) which provides (as paraphrased):
In the case of a strata title development that is more than 10 years old, an application to a Board for an order for a collective sale of a strata title development by the unit owners with not less than 80% of the share values and not less than 80% of the total area of all the lots who have agreed in writing to sell all the lots and common property in the development to a purchaser under a sale and purchase agreement which specifies the proposed method of distributing the sale proceeds to all the subsidiary proprietors.
The argument of the appellants is as follows: S 84A(1) sets out two requirements of a collective sale: (a) the age of the development; and (b) the percentage value of the units and of the total area of the lots in the development. These two requirements are fundamental. If they are not complied with, the Board has no jurisdiction to hear the application. Correspondingly, the majority owners are not eligible to make a collective sale application to the Board. These two requirements go towards establishing the jurisdiction. Therefore s 84A(1) is a jurisdictional provision.
8 The next stage of the argument is this: s 84A(1) also refers to a sale and purchase agreement which specifies the proposed method of distributing the sale proceeds to all the subsidiary proprietors. It therefore follows that the appellants contend that the specification itself is a fundamental requirement of a collective sale, just like the other two requirements. Accordingly, since the S&PA in the present case did not specify the distribution method, no application for a collective sale could be made to the Board.
9 The Court of Appeal agrees with the reasoning of the Judge in dismissing this argument as nothing more than a technical argument, and that the omission was an irregularity which the Court could waive in the circumstances of this case. The Court of Appeal also takes the view that the appellants have also by their own conduct waived the irregularity. They failed to raise this objection within the time limit as required by the Act and before the Board.
10 The appeal is dismissed with costs.
29 February 2008
Media Summary
Ng Swee Lang and another v Sassoon Samuel Bernard and Others
CA 145 of 2007/W
Decision of the Court of Appeal (delivered by Chan Sek Keong CJ)
Background
1 The appellants are the joint subsidiary proprietors of a unit in Phoenix Court at 70 St Thomas Walk. It is a 13-storey freehold condominium development comprising 3 penthouses and 44 apartment units. On 16 April 2006, 46 out of 47 owners of units signed a collective sale agreement among themselves with a view to selling their units on the terms agreed therein. Sometime in mid-2006, the Sale Committee put out a public tender for the collective sale of Phoenix Court but failed to attract any bids. However, on 27 October 2006, the 46 owners (representing 97.92% of the total share value of the development and holding well in excess of 80% of the total area of all the lots in Phoenix Court) signed a sale and purchase agreement (S&PA) with Bukit Panjang Plaza Pte Ltd as the purchaser. The terms of the S&PA included a termination clause that if approval for the collective sale was not obtained from the Strata Titles Board within 6 months of the date of the S&PA (i.e., 25 April 2007), it would lapse.
2 On 17 January 2007, the respondents as representatives of the 46 owners applied to the Board for a collective sale order. When it became evident that the collective sale order could not be obtained by 25 April 2007, the Sale Committee entered into a Supplemental Agreement with the purchaser on 25 April 2007 to extend the time to 27 June 2007 in order to obtain a collective sale order from the Board.
3 On 21 and 22 June 2007, the Board heard the application. The appellants were represented by counsel and objected to the application on various legal grounds. The Board rejected all of them and approved the application for the collective sale of Phoenix Court.
4 The appellants appealed to the High Court to set aside the Board's decision. They argued that -
(a) the collective sale agreement had terminated by effluxion of time and therefore there was no valid agreement among the owners holding not less than 80% of the total share values of Phoenix Court;
(b) there was no valid sale and purchase agreement between the 46 owners and the purchaser as the S&PA was not validly extended and also did not specify the proposed method of distribution of the proceeds of sale to the unit owners;
(c) the respondents were not the authorised representatives of the majority owners;
(d) the transaction was not in good faith;
(e) notice of the application had not been accompanied by a valid valuation report; and
(f) the S&PA did not comply with s 84A(1) of the Land Titles (Strata) Act in failing to specify the proposed method of distribution of the sale proceeds among all the owners: such failure went towards establishing the jurisdiction and resulted in the respondents having no locus standi to apply to the Board for a collective sale order.
5 In a fully reasoned judgment, the High Court Judge dismissed the appeal and held:
(a) the collective sale agreement did not terminate on its proper construction in the events that happened;
(b) the failure to specify the distribution method in the S&PA did not invalidate the S&PA as the distribution method was set out in the collective sale agreement, a copy of which was in their possession; they were fully aware of the value of their units and the amount of the purchase consideration they would receive; the legislation on collective sales does not require minority dissenting members to sign the sale and purchase agreement; also the S&PA was validly extended;
(c) the respondents were the authorised representatives of the 46 owners, and in any case, the law required only one representative to act on their behalf; further, the appellants have never challenged the authority of the respondents;
(d) the transaction was not entered into in bad faith, nor had the appellants proved that the sale price was not the best price reasonably obtainable;
(e) the valuation report was not defective; and
(f) the failure to specify the distribution method in the S&PA did not affect the standing of the respondents to apply to the Board; s 84A(1) must be interpreted to give effect to the intention of Parliament. It could not be that a minor breach would invalidate the whole transaction.
The Appeal
6 The appellants’ appeal to the Court of Appeal is based on the same grounds canvassed before the Judge. The Court of Appeal agrees with the decision of the Judge and also his reasoning on all his legal findings. The Court agrees with the Judge that the modern approach to statutory interpretation required the court to consider the legislative intention of the collective sale scheme and to give effect to it in interpreting the relevant provisions of the legislation.
7 In the present case, with respect to Phoenix Court (which is more than 10 years old), the appellants’ argument is based substantially on the meaning and effect of s 84A(1) which provides (as paraphrased):
In the case of a strata title development that is more than 10 years old, an application to a Board for an order for a collective sale of a strata title development by the unit owners with not less than 80% of the share values and not less than 80% of the total area of all the lots who have agreed in writing to sell all the lots and common property in the development to a purchaser under a sale and purchase agreement which specifies the proposed method of distributing the sale proceeds to all the subsidiary proprietors.
The argument of the appellants is as follows: S 84A(1) sets out two requirements of a collective sale: (a) the age of the development; and (b) the percentage value of the units and of the total area of the lots in the development. These two requirements are fundamental. If they are not complied with, the Board has no jurisdiction to hear the application. Correspondingly, the majority owners are not eligible to make a collective sale application to the Board. These two requirements go towards establishing the jurisdiction. Therefore s 84A(1) is a jurisdictional provision.
8 The next stage of the argument is this: s 84A(1) also refers to a sale and purchase agreement which specifies the proposed method of distributing the sale proceeds to all the subsidiary proprietors. It therefore follows that the appellants contend that the specification itself is a fundamental requirement of a collective sale, just like the other two requirements. Accordingly, since the S&PA in the present case did not specify the distribution method, no application for a collective sale could be made to the Board.
9 The Court of Appeal agrees with the reasoning of the Judge in dismissing this argument as nothing more than a technical argument, and that the omission was an irregularity which the Court could waive in the circumstances of this case. The Court of Appeal also takes the view that the appellants have also by their own conduct waived the irregularity. They failed to raise this objection within the time limit as required by the Act and before the Board.
10 The appeal is dismissed with costs.
