THOMSON VIEW

Ngui Gek Lian Philomene and others v Chan Kiat and others - (HSR International Realtors Pte Ltd, intervener)
5 September, 2013 12:00 AM

The  issues:

1. Did the CSC fail in its duties?
2. Do minority owners have the ability to raise objections that had not been previously submitted to the STB?
3. Do offers of secret payments made by the marketing agent to some SPs amount to bad faith?
4. ... not so important

Judgement

1. No

In my opinion, the judge was very lenient on the CSC.  They seemed to be harried and pushed along by the marketing agent and buyer. They didn't act like prudent sellers and agreed to new terms that were 'materially less favourable and not in line with market practice'. Their failure to extend the public tender 'was a breach of their duty to obtain the best price for the Development'. 

And still, the judge did not lay any blame at their feet.

2. YES

Ah, this is the most important issue moving forward. This clause just had to be challenged:-

LTSA 84A(4 ) Where a section 84A stop order is issued under subsection (6A)(b) in respect of an application to a Board under subsection (1) for an order for the sale of all the lots and common property in a strata title plan, and an application is then made to the High Court under subsection (1) for an order for the same sale of all the lots and common property in the same strata title plan, any person referred to in subsection (4)(a) or (b) who filed an objection to the Board (but no others) may re-file his objection to the sale, stating the same grounds of objection, to the High Court in the manner and within the time delimited by the Rules of Court.

'43 Nevertheless, my view is that the Section does not preclude the Defendants from raising the issue of the Incentive Payments. While I accept that the intent behind the Section is to avoid new grounds of objection from delaying the collective sale process, this intention does not extend to shutting out legitimate grounds of objection that could not have been known to the objectors at that point in time.

'45 Accordingly, I hold that the Section does not prevent dissenting subsidiary proprietors from raising a new ground of objection at the High Court if, through no fault of theirs, it became known to them only after they had filed objections to the STB. This interpretation of the Section ensures that dissenting subsidiary proprietors are not unfairly barred on a technicality from raising a new objection.'

So, that's a kick in the behind to those who crafted the Law! They thought they could tie the minority's hands by disallowing the fruits of  'discovery' at the High Court.   But this wise judge said No; the dirty deeds that are hidden at the STB level (and cannot be ferreted out) can indeed be uncovered and brought to light at the High Court.  Amen to that.

3. YES

52.    ...   'HSR  breached its duty of transparency by failing to disclose the Incentive Payments to the CSC or the other SPs.'

54 ........ 'HSR had the prospect of earning commission only if the 80% consent threshold was achieved. In order to achieve that 80% consent threshold, HSR promised the Incentive Payments to certain SPs who, but for the Incentive Payments, would not have signed the CSA. In so doing, HSR in effect promised to reduce its commission. The reduction of its commission would result in the net sale proceeds being increased pro tanto. However, the benefit of this reduction would not be shared by all SPs; the reduction would benefit only the few SPs who were promised the Incentive Payments. The ultimate outcome is that, without the consent of all the SPs who signed the CSA, the method of distributing the sale proceeds set out in the CSA would be surreptitiously departed from. Hence, there was bad faith in the transaction involving the method of distribution of the sale proceeds.'