Supplemental Agreement

A Supplemental Agreement (SA) is a legal document amending one or more terms in the original Agreement. If 80% of owner signatures are required for the Agreement to be valid then so must it be for the Supplemental Agreement.

Only, they don't have to be the same 80%. The owners who do not agree to the new term(s) are deemed to have withdrawn from the Agreement and are no longer treated as a Signatory to the Agreement. New owners can sign up for the Supplemental Agreement and they become part of the new 80%.

I smell a RAT here; why would owners who refused to sign for a higher RP choose to sign for a lower RP? Are there side agreements going on? Top ups from the developer, maybe?

SIGNING makes it look like the owners have the POWER TO CHOOSE ... but my question is; do they really?

In the CSA terms, there may be a clause or clauses dotted about that restrict the owner from exercising his freedom of choice. For example, it might state that the owner must render his full co-operation and efforts to assist the sale committee in the discharge of its duties and obligations.  The owner might also have to sign any document to effect any of the purposes in the Agreement, and not to do anything by way of act or omission that might jeopardize the sale or be detrimental to the fulfillment of any of the terms of the Agreement.

If they do not sign, then they may be in breach of their obligations and the SC can sue them.  Deep trouble of the owners' own making.

So does signing any document also cover the Supplemental CSA?  I don't know, but it's a question.

I have come across two types of Supplemental Agreements:

• A Supplemental Agreement  to lower the Reserve Price (Koon Seng House), (Marine Point)
• A Supplemental Agreement to extend the validity of the Agreement (Gillman Heights)

Koon Seng was the one that put the cat among the pigeons by declaring that the SA is a fresh agreement and another 12 months added. Sheesh! 

I am not sure if a contractual promise that it won't is stronger than a High Court judgement that it will - I'd need a lawyer to answer that! In the meantime, caution dictates that you go with the High Court interpretation and not a contractual wish.

Marine Point was another condominium which signed a Supplemental Agreement to lower the reserve price. This was because the Proposed Sale Price from a buyer was lower than the RP.  The valuation at close of tender was high - too high for the Proposed Sale Price.  So, instead of sticking to their guns they did another tender and another valuation from a different valuer (since the first guy said his valuation was correct and stuck by it) - and it turned out to be magically lower ..... so they could go ahead with the sale. Another sheesh!

Now Gillman Heights had a Supplemental Agreement to extend the validity of the Agreement since they were running out of time. It caused a lot of problems as many owners refused to sign and 4 of them brought it to the High Court. In that instance, 20 owners who had signed the CSA refused to sign the SA - but 26 fresh owners did sign. The CSA and S&P had opposite clauses; the CSA stated that "the Vendors shall  not be required to execute the Supplemental Agreement"  and in the S&P, it stated that agreement from the 80% was necessary. The judge went with the CSA.

A supplemental Agreement is a FRESH Agreement

KOON SENG HOUSE

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Goh Teh Lee v Lim Li Pheng Maria and Others [2009] SGHC 242
27 Oct 2009

Whether the application to the Board for a collective sale order was out of time
35 The plaintiff contended that the application to the Board, which was made on 16 April 2008 for a collective sale order, was out of time. In his view, the application had to be made within 12 months after the first owner appended his signature to the first CSA, that is, by 28 December 2007. This view was erroneous for two reasons.

36 First, where an earlier CSA had failed to achieve its intended purpose, ie, to sell the land to a purchaser, the proprietors of the land could not be precluded from making a new agreement with a lower reserve price. Hence, the supplemental agreement constituted a fresh agreement. Therefore, time for the purpose of para 1A(a) of the Schedule should be reckoned from the date the first signature was appended to the supplemental agreement.

37 Second, s 84E(3)(b) provides that proprietors holding not less than 80% of the aggregate share value may apply to the Board for a collective sale order. At the earliest, the 12-month period within which application may be made to the Board starts when 80% majority has been reached or first crossed (as the case may be). The plaintiff was therefore wrong to say that time for this purpose started running from the date of the first signature. There are two distinct 12-month periods. As I said, application may be made to the Board as soon as 80% majority has been reached or first crossed. However, this does not mean that the 12-month period within which application must be made to the Board necessarily starts then (see para 1(a) of the Schedule). For example, it could start at a later date when a greater percentage majority is reached so long as the time elapsed from the first signature to the time when such desired majority is reached is also not greater than 12 months (see para 1A of the Schedule).

38 The first signature to the supplemental agreement was appended on 24 March 2007 and the last was on 6 September 2007 (well within the 12-month period within which a majority of not less than 80% had to be reached). The other 12-month period (ie, that within which application to the Board had to be made) commenced on 6 September 2007. Therefore, the application made on 16 April 2008 was well within time.

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It seems this ruling has opened up an avenue for the sale committee and the 80% majority to extend the 12 month validity period for the CSA set in the LTSA Schedule indefinitely. They can piggyback a supplemental agreement to start a new 12 months afresh just before the old one runs out. This could theoretically become an instrument of abuse if, say, a SC and a jittery majority can't find a buyer and don't want to process to end after all their 'hard work' - all they would need do is trot out a new CSA with a minor adjustment (for justification's sake should it be challenged) and Bob's your uncle. There is no mention of by how much the Sale Price can be lowered so , theoretically, it could be a nominal $1.00 

It beggars the question why set time limits at all?

• Once a sale committee is elected; they can twiddle their thumbs for a full 12 months. What on earth is the MinLaw thinking about here. All the time in the world given to these people at the beginning and NO TIME given to owners to decide on the bids at the end. 
• It can be argued in court that if the CSA can be extended with a fresh 12 months through a supplemental CSA, then so too the SC's tenure - that's only logical, you can't have one without the other.
• An estate can be kept in limbo with successive SCSAs until an eventual sale; that is the only finality possible.
• Once you sign a CSA; you cannot rescind (except during the initial 5 day cooling off period).