GILLMAN HEIGHTS
High Court Decision Chang Mei
Wah Selena and Others v Wiener Robert Lorenz and Others and Other
Matters[2008] SGHC 97
Suit No: OS 86/2008, 88/2008, 95/2008, 192/2008
Decision Date: 25 Jun 2008
Court: High Court
Coram: Choo Han Teck J
Counsel: David Lim Hong Kan (Lim & Bangras) for the plaintiffs in
Originating Summons No 86 of 2008, Denis Tan (Toh Tan & Partners) for the
plaintiffs in Originating Summons No 88 of 2008, Michael Hwang SC, Yeo
Chuan Tat, Fong Lee Cheng (Michael Hwang) (instructed) and Richard Tan
Seng Chew, Diana Xie (Tan Chin Hoe & Co) for the plaintiffs in Originating
Summons No 95 of 2008, N Sreenivasan and Valerie Ang (Straits Law Practice
LLC) for the plaintiffs in Originating Summons No 192 of 2008, Andre Yeap
Poh Leong SC, Dawn Tan Ly-Ru, Danny Ong and Dominic Chan (Rajah & Tann LLP)
for the intervener, Quek Mong Hua and Julian Tay Wei Loong (Lee & Lee) for
the defendants
25 June 2008
Judgment reserved.
Choo Han Teck J:
1 On 21 December 2007, the Strata Titles Board (“the Board”) approved the
collective sale of Gillman Heights Condominium (“the Development”) to
Ankerite Pte Ltd (“the Purchaser”) at the price of $548m. The plaintiffs
(“the appellants”) were the minority subsidiary proprietors of the
Development who objected to the collective sale and filed the present
appeals (Originating Summons (“OS”) Nos 86, 88 and 95 of 2008) against the
decision of the Board (STB No 53 of 2007). The defendants named in OS Nos
86, 88 and 95 (“the respondents”) were members of the Sales Committee of
the Development who had filed the application to the Board (“the
Application”) for a collective sale order on behalf of the consenting
subsidiary proprietors (“CSPs”). A separate application (OS No 192 of
2008) was also taken up by four sets of CSPs, who had signed the
Collective Sale Agreement (“CSA”) but not the Supplemental Collective Sale
Agreement (“SCSA”) (which sought to extend the validity of the CSA), for,
inter alia, a declaration that the CSA was not validly extended and that
the Board had no jurisdiction to approve the collective sale, given that
there was no valid CSA at the time of the Application. The Purchaser was
granted leave to intervene in the four OS (“the appeals”).
2 At the hearing of the appeals, the appellants (represented by different
sets of counsel) as well as the applicants in OS No 192 took a collective
stance and adopted each other’s arguments. Their combined arguments and
grounds of appeal can be found in the written submissions of Mr Michael
Hwang SC, counsel for the appellants in OS No 95, and the grounds are as
follows:
(a) The Board erred in law in granting the collective sale order, as s
84A(1) of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“the LTSA”)
did not apply to the Development since it is an ex-HUDC Estate;
(b) Even if s 84A(1) of the LTSA applied to the Development, the Board
erred in law in allowing the collective sale order, as the respondents had
not obtained the agreement of subsidiary proprietors (“SPs”) having no
less than 90% of the share values required under s 84A(1)(a) of the LTSA;
(c) Even if the applicable section was s 84A(1)(b) of the LTSA and not s
84A(1)(a) of the LTSA, the Board erred in law in granting the collective
sale order as the respondents had not obtained the agreement of SPs having
no less than 80% of the share values;
(d) The Board erred in law in granting the collective sale order when
there was no valid CSA at the time of the application for collective sale
by the respondents;
(e) The Board erred in law in granting the collective sale order when the
application by the respondents did not comply with paras 1(b) and
4(b)(iii) of the Schedule of the LTSA;
(f) The Board erred in law in granting the collective sale order when the
transaction was not in good faith, having regard to the sale price,
contrary to s 84A(9)(a)(i) of the LTSA;
(g) Alternatively, new facts had arisen after the Board’s decision
concerning the relationship of the majority (National University of
Singapore (“NUS”)) with the Purchaser which the respondents had not
disclosed to the Board. The Board was thus unable to make a fully informed
judgment as to whether the transaction was in good faith in accordance
with s 84A(9)(a)(iii) of the LTSA; and
(h) The Board had committed a breach of natural justice by not removing Mr
Michael Ng (“Mr Ng”) from the Board, as Mr Ng had failed to declare that
his company, Savills (Singapore), was working with solicitors for the
respondents on various en-bloc sale projects.
There is considerable overlap in the grounds above.
3 The first issue before me concerned the question whether s 84A(1)
applied to privatised HUDC estates. The relevant version of s 84A(1) of
the LTSA was the version prior to the amendments to the LTSA in 2007 (“the
relevant s 84A(1)”), which states as follows:
84A. —(1) An application to a Board for an order for the sale of all the
lots and common property in a strata title plan may be made by —
(a) the subsidiary proprietors of the lots with not less than 90% of the
share values and where less than 10 years have passed since the date of
the issue of the latest Temporary Occupation Permit on completion of any
building comprised in the strata title plan or, if no Temporary Occupation
Permit was issued, the date of the issue of the latest Certificate of
Statutory Completion for any building comprised in the strata title plan,
whichever is the later; or
(b) the subsidiary proprietors of the lots with not less than 80% of the
share values where 10 years or more have passed since the date of the
issue of the latest Temporary Occupation Permit on completion of any
building comprised in the strata title plan or, if no Temporary Occupation
Permit was issued, the date of the issue of the latest Certificate of
Statutory Completion for any building comprised in the strata title plan,
whichever is the later,
who have agreed in writing to sell all the lots and common property in the
strata title plan to a purchaser under a sale and purchase agreement which
specifies the proposed method of distributing the sale proceeds to all the
subsidiary proprietors (whether in cash or kind or both), subject to an
order being made under subsection (6) or (7).
4 The appellants submitted that s 84A(1) uses the time from the date of
the latest Temporary Occupation Permit (“TOP”) or if no TOP was issued,
the date of the latest Certificate of Statutory Completion (“CSC”) for the
purposes of calculating majority consent in a collective sale. Privatised
HUDC estates (such as the Development), however, do not have TOPs or CSCs
as HUDC estates are exempted from the requirements of the Building Control
Act (Cap 29, 1999 Rev Ed). In the case of the Development, it was exempted
from the operation of s 5 of the Building Control Act 1973 and the
regulations under the Building Control (Order) 1984 and should have a
Certificate of Fitness instead, although it appears that the Development
does not have this certificate either. The appellants argued that
Parliament must be presumed to have known of the exemption of TOPs and
CSCs for HUDC estates when it enacted s 84A(1) in 1999 and it must have
been Parliament’s intention not to have en-bloc sale legislation apply to
privatised HUDC estates. The appellants argued further that the draftsman
of the LTSA has adopted an “inclusive approach” in drafting Part VA of the
LTSA (concerning collective sales) in that specific sections (ie, ss 84A
to 84G) were provided to apply to different and specific types of estates.
The appellants further submitted that this view was strengthened by the
2007 amendments to the LTSA. The new ss 126A(6A) and 126A(6B) now
specifically provide that in respect of privatised HUDC estates, any
reference to the date of the issue of the CSC in the application of ss
84A(1)(a) or 84A(1)(b) shall be read as a reference to the date of
completion of the construction of the last building (not being any common
property) in the strata title plan:
(6A) Subject to subsection (6B), in the application of section 84A(1)(a)
or (b) to any designated land, any reference therein to the date of the
issue of the latest Certificate of Statutory Completion for any building
(not being any common property) comprised in the strata title plan shall
be read as a reference to the date of completion of the construction of
the last building (not being any common property) comprised in the strata
title plan as certified by the relevant authority.
(6B) In the application of section 84A(1)(a) or (b) to any designated land
specified in the First Schedule to the HUDC Housing Estates Act (Cap.
131), any reference therein to the date of the issue of the latest
Certificate of Statutory Completion for any building (not being any common
property) comprised in the strata title plan shall be read as a reference
to the date of the issue of the Certificate of Fitness for any building
(not being any common property) comprised in the strata title plan.
5 According to the appellants, the enactment of ss 126A(6A) and 126A(6B)
showed that privatised HUDC estates were deliberately excluded when s
84A(1) was enacted in 1999, and the recent enactment of these two
sub-sections was to change the existing law. This change in law, counsel
submitted, was in line with the recent practice of the government to allow
the topping up of leases for leasehold estates (especially privatised HUDC
estates, given that such estates have only a maximum 99-year lease) and to
include privatised HUDC estates in the en-bloc pool due to increased
demand for land. The appellants further submitted that even if Parliament
had not intentionally excluded privatised HUDC estates from en-bloc sales
in 1999, but had done so due to an oversight, this was, nevertheless, not
an omission which could be corrected by the courts.
6 Counsel for the respondents and the Purchaser submitted that pursuant to
s 9A of the Interpretation Act (Cap 1, 2002 Rev Ed), a purposive
interpretation should be taken of s 84A(1) of the LTSA, and such a
purposive interpretation would serve the true purpose and spirit of the
legislation. Mr Andre Yeap SC (“Mr Yeap”), counsel for the Purchaser,
pointed out that the Board and the High Court had on a previous occasion
made orders for the collective sale of one privatised HUDC estate, namely
in the estate known as Waterfront View. In the case of Waterfront View, an
argument was made, briefly, by the appellants there that Parliament could
not have intended a privatised HUDC estate to be subjected to a collective
sale. That argument was dismissed by Belinda Ang Saw Ean J (Yeo Loo Keng
and Another v Tan Yew Lee Kevin and Others [2007] 3 SLR 455 (“Yeo Loo Keng”)
at [38]):
Mr Leong had contended that Parliament could not have intended for HUDC
properties to be involved in, and the corresponding CPF housing scheme
regulations (as set out below) to have any application to, a collective
sale of property. That assertion is factually incomplete as it disregarded
privatisation of the property in 2002. It had also sought to make a
distinction that was fanciful. This is because the CPF housing scheme
regulations applicable to privately-owned properties in relation to this
issue have a similar structure and framework as those that govern HUDC
properties. [emphasis added]
7 The issue of whether privatised HUDC estates are subjected to en-bloc
sale (prior to the 2007 amendments to the LTSA) was not one of the main
issues raised before the High Court in Yeo Loo Keng, and was only raised
as a side argument to one of the issues. It seems to me that Yeo Loo Keng
cannot reliably support the proposition that s 84A(1) does not apply to
privatised HUDC estates.
8 Section 84A(1) was first enacted in 1999 pursuant to the Land (Titles)
Strata (Amendment) Act (Act 21 of 1999), and the original wording of the
proposed section in the Bill was as follows:
84A.—(1) An application to a Board for an order for the sale of all the
lots and common property in a strata title plan with more than 10 lots may
be made by —
(a) the subsidiary proprietors of the lots with not less than 90% of the
share values where less than 10 years have passed since the date of the
issue of the latest Temporary Occupation Permit on completion of the
development or, if no Temporary Occupation Permit was issued, the date of
the issue of the latest Certificate of Statutory Completion for any
building comprised in the strata title plan, whichever is the later; or
(b) the subsidiary proprietors of the lots with not less than 80% of the
share values where 10 years or more have passed since the date of the
issue of the latest Temporary Occupation Permit on completion of the
development or, if no Temporary Occupation Permit was issued, the date of
the issue of the latest Certificate of Statutory Completion for any
building comprised in the strata title plan, whichever is the later,
who have agreed in writing to sell all the lots and common property in the
strata title plan to a purchaser under a sale and purchase agreement which
specifies the proposed method of distributing the sale proceeds to all the
subsidiary proprietors, subject to an order being made under subsection
(6) or (7).
[emphasis added]
9 The Explanatory Statement to the Land (Titles) Strata (Amendment) Bill
(Bill No 28 of 1998) (“the 1998 Bill”) stated the purpose of the proposed
s 84A as follows:
New section 84A enables owners of 80% or 90% share values in a strata
development with more than 10 units registered under the Act to apply to a
Board after they have entered into a conditional sale and purchase
agreement. [emphasis added]
10 At the second reading of the 1998 Bill, the Minister of State for Law,
Associate Professor Ho Peng Kee, also explained that (Parliamentary
Debates, vol 69, cols 605-606 (31/07/98)):
… the new scheme [for en-bloc sales] will apply to three types of strata
developments: those registered under the Land Titles (Strata) Amendment
Act where the owners own their units and share in the common property,
which is the vast majority; those not registered under the Land Titles
(Strata) Act where the owners own their units and a share in the land but
do not have a management corporation framework under the Act; and those
not registered under the Land Titles (Strata) Act where the developer
still owns the land.
…
I should add that the new scheme will only apply to strata developments.
It will not apply to landed developments. Strata developments, unlike
landed developments, are founded on the concept of community living,
shared ownership of common property in designated values, and individual
ownership of strata title which is essentially air space. All these
distinguishing features of strata developments support the new approach
based on majority consent for en-bloc sales.
[emphasis added]
11 Pursuant to the recommendations of the Select Committee, the
prohibition against strata developments with 10 or fewer units was removed
and the relevant s 84A(1) was enacted (see Report of the Select Committee
on the Land Titles (Strata) (Amendment) Bill (Bill No 28/98) (“Select
Committee’s Report”) at p iii). From the Explanatory Statement of the 1998
Bill, the relevant parliamentary debates and the words of the relevant s
84A(1) (“sale of all the lots and common property in a strata title
plan”), it seems that Parliament had intended s 84A(1) to apply to strata
developments.
12 Prior to the enactment of s 84A(1) of the LTSA in 1999, the
privatisation of HUDC estates was introduced in 1995 with the enactment of
ss 126A and 126B of the LTSA pursuant to the Land (Titles) Strata
(Amendment) Act (Act 27 of 1995). Once a HUDC estate is privatised, the
HUDC Housing Estates Act (Cap 131, 1985 Rev Ed) no longer applies to the
HUDC estate and the body corporate of the HUDC estate constituted under
the HUDC Housing Estates Act will continue as a management corporation
constituted under the LTSA (s 126B(1) of the LTSA):
126B. —(1) Upon the registration of the strata title application in
respect of any housing estate built on land to which the HUDC Housing
Estates Act (Cap. 131) applies —
(a) the HUDC Housing Estates Act shall cease to apply to the housing
estate and to all the registered proprietors of flats within the housing
estate;
(b) any body corporate constituted under the provisions of the HUDC
Housing Estates Act in respect of that land shall continue as a management
corporation constituted under the provisions of this Act having as its
corporate name the corporate name as prescribed in this Act (referred to
in this section as the new management corporation);
(c) the management committee constituted under the HUDC Housing Estates
Act of such body corporate shall, subject to this Act, be the council of
the new management corporation, and any person who, immediately before
such registration, is a member of the management committee shall be deemed
to have been elected under the provisions of this Act as a member of the
council of the new management corporation;
(d) all by-laws relating to the land under the provisions of the HUDC
Housing Estates Act (Cap. 131) shall cease to have any force or effect in
relation to that land but without prejudice to any right or liability
accruing or legal proceedings instituted prior to the registration of the
strata title application;
(e) any contribution levied by such body corporate under the provisions of
the HUDC Housing Estates Act and unpaid on the registration of the strata
title application may be recovered by the new management corporation as if
it were a contribution levied by the new management corporation under this
Act;
(f) any charge constituted upon a flat in favour of such body corporate
under the provisions of the HUDC Housing Estates Act in connection with
any unpaid contributions shall be deemed to be a charge constituted upon
the lot corresponding to that flat in favour of the new management
corporation under this Act;
(g) every fund which was, immediately before the registration of the
strata title application, kept by such body corporate under the provisions
of the HUDC Housing Estates Act, shall be deemed to be a fund required
under the corresponding provisions of this Act to be established and
maintained by the new management corporation; and
(h) any policy of insurance effected by such body corporate in relation to
any building within the housing estate in accordance with the provisions
of the HUDC Housing Estates Act and in force on the registration of the
strata title application shall continue and deemed to have been effected
under this Act, and sections 69 and 70 of the Building Maintenance and
Strata Management Act 2004 shall not apply to or in respect of the new
management corporation for that housing estate until the expiry of that
policy.
[emphasis added]
13 Effectively, a privatised HUDC estate becomes no different from any
other private strata developments with a management corporation; as the
Minister for National Development, Mr Lim Hng Kiang, said at the second
reading of the Land (Titles) Strata (Amendment) Bill (Bill No 22 of 1995)
(“the 1995 Bill”) (and I quote at length below) (Parliamentary Debates,
vol 64, cols 1389-1391 (07/07/95)):
The primary objective of the Bill is to amend the Land Titles (Strata) Act
to provide the legal framework to enable the conversion of the leases of
flats in designated HUDC estates to strata titles.
This conversion will allow HUDC residents to enjoy the status and
advantages of private property owners. It is part of the Government's
asset enhancement programme. It will also serve to meet the rising
aspirations of Singaporeans for private housing.
Upon privatisation, the HUDC owners will have ownership of their
respective strata units and own, as tenants-in-common, the common property
such as car parks, open landscaped areas and common parts within the
buildings.
This will enable them collectively to upgrade their estates to a standard
comparable to private residential estates. The residents will be able to
enjoy the status and privileges of private residential owners without
having to uproot themselves and move elsewhere.
At the same time, the privatised estates will no longer come under HDB
rules and regulations. They will be like any other private property,
subject only to the Residential Property Act. Thus, for example, if the
building is at least six storeys high, the flats can be sold to
foreigners.
The passage of this Bill does not imply automatic privatisation. This Bill
is only an enabling legislation.
HDB, as the landlord, will progressively identify which estates are ready
for conversion. But it would then be up to the HUDC lessees themselves to
obtain at least 75% support for the conversion.
The Government has decided to set this 75% support requirement because the
conversion process will entail costs to the lessees. It would thus be fair
that a significant majority agree to bear these costs before the
conversion can proceed.
The process of legal transfer of title from HDB to HUDC lessees will take
up to one and a half years as time is needed for the preparation of strata
title survey plans and also the physical conversion works needed to bring
the blocks up to the latest standard for the award of strata titles.
Let me now turn to conversion costs. The lessees of HUDC Phase III or IV
HUDC estates will have to pay for the conversion costs of around $25,000
each. This sum includes $20,000 for a carpark lot. The lessees should note
that this upfront purchase of their car park lots, for which they can now
use their CPF funds, will save them from having to pay parking charges
over the rest of their lease. Other conversion costs include legal and
survey fees, and also construction costs to meet prevailing barrier-free
requirements of strata-titled properties. Lessees of HUDC Phases I and II
flats will not need to incur the car park cost as they already have a
share of the car parks and common areas.
After the conversion, the residents can form management corporations to
manage and maintain their estates. The management corporations can carry
out improvements without having to seek HDB's consent. They can also build
additional facilities, if they desire to do so.
The town councils will work out the portion of their sinking funds which
are attributable to the HUDC estates and transfer the amount to the
management corporations of the HUDC estates to be converted.
Sir, a pilot project is needed to test the full complexity of the scheme
and iron out any problems which may arise. We have thus chosen two Phase
III HUDC estates - Pine Grove and Gillman Heights - for the pilot project.
If successful, the Government will extend the conversion scheme to other
HUDC estates batch by batch.
[emphasis added]
14 Given that the privatisation of HUDC estates was introduced in 1995
(the Development was one of the first few HUDC estates that took part in
the pilot (conversion) project), that the privatised HUDC estate becomes
no different from any other private strata developments with a management
corporation constituted under the LTSA, and the subsequent enactment in
1999 of s 84A(1) applying to strata developments, I am of the view that
Parliament did not intend to exclude privatised HUDC estates from the
application of s 84A(1) and from en-bloc sales. It remains now to consider
the significance of the TOP and CSC in the context of s 84A(1).
15 The relevant parliamentary debates show that Parliament had intended to
peg the requisite majority consent needed for a collective sale (80% or
90%) with the age of the estate/development. At the second reading of the
1998 Bill (which introduced s 84A(1)), Associate Professor Ho Peng Kee
said at the start of the reading of the bill (Parliamentary Debates, vol
69, cols 601-602 (31/07/98)):
Firstly, Government will not decide which developments are ready or ripe
for en-bloc redevelopment. The owners will decide that for themselves.
There are too many factors at play, such as the age and state of repairs
of the development, market conditions, sentiments of the owners and the
relationship amongst them. As announced previously, what the Bill will do
is peg the required majority consent to the development's age - the
majority owners must account for at least 90% of the share values for
developments less than 10 years old, and 80% for developments 10 years or
more. This approach will facilitate the redevelopment of older buildings.
It is also in line with the approach in other countries - Nova Scotia, New
Brunswick and Ontario in Canada (80%); British Columbia, Canada (75%);
Hawaii (80%) and Hong Kong (90%, but where the law also provides that the
Chief Executive in Council may specify a lower percentage not less than
80% in certain circumstances). A higher percentage is not practical, a
lower percentage not appropriate given the importance of the matter.
The current requirement of unanimous consent is untenable. The case of Kim
Lin Mansions which was recently highlighted in the press brings this out
clearly. Community living, which is the heart of living in a condominium,
all but disappears when owners have to drag out their disagreement in
court, incurring huge financial outlays in the process. There is
uncertainty; there is delay; there is acrimony. Also, as more developments
age and incur large upgrading and repair bills, opting for en-bloc sale
will increasingly become a viable option. But the existing law which
requires unanimous consent makes it extremely difficult, if not
impossible, to realise en-bloc sales.
[emphasis added]
16 In his reply to some of the points raised by Members of Parliament,
Associate Professor Ho Peng Kee said the following (Parliamentary Debates,
vol 69, cols 633-634 (31/07/98)):
One or two speakers had asked whether the 10-year rule, where the
buildings are relatively new, would lead to wastage at the national level.
From the records, only about 20% of en-bloc developments have been less
than 10 years. Nevertheless, we also know that there may be good reasons
why owners in a development which is less than 10 years would want to sell
en-bloc. It could be because the plot ratio has been enhanced
substantially. It could be because the development is next to a vacant
plot of land and there is reason to sell it so that development can be
built on a larger piece of land. Or it is next to another development
which is perhaps also less than 10 years old, but it makes economic sense
to sell it together. As the approach we take is to facilitate en-bloc
sale, we have adopted the 10-year rule.
Mr Lew says that this will mean that it goes against another objective
which is to rejuvenate estates. That is a secondary objective. In time to
come, when estates become older, I think this will come to the forefront.
But at the moment, the primary objective is to help realise enhanced plot
ratios so that many more homes can be created for Singaporeans.
The Select Committee, which considered the 1998 Bill and reviewed the 80%/
90% requisite majority consent, also wrote the following in its report
(Select Committee’s Report at pp iii-iv):
[10] A number of MPs and representors argued that it would be a waste of
resources to tear down a building of less than 10 years old which is
relatively new. One representor felt that en-bloc sales of buildings less
than 10 years old should be allowed only under exceptional circumstances.
Other representors proposed that the consent level be lowered for
buildings older than 20 years.
[11] There were other representors who felt that market forces will
determine whether an en-bloc sale is economically viable and, therefore,
whether unit owners will sell and developers will buy. Demolishing
buildings that are less than 10 years old will not be a waste of resources
because the land would be better utilised and its economic potential
maximised. Another representor proposed that if the relevant authority
decides that a particular area should be developed more intensively, a
notice should be served on the unit owners in these developments to compel
them to redevelop within a certain time frame.
[12] The Committee recognises that ultimately it will be market forces and
conditions which will determine if an en-bloc sale is economically viable.
The Committee recommends that the present approach of 90% / 80% majority
share value consent level for developments of less than 10 years and 10
years and more respectively should not be changed. The consent level
should be pegged to the age of the development as it is more likely that
older developments will be sub-optimally utilised, have higher repair
bills and have more unit owners in favour of en-bloc sales.
[emphasis added]
At the third reading of the 1998 Bill, the Minister for Law at the time,
Prof S Jayakumar, said (Parliamentary Debates, vol 70, cols 1326-1327
(04/05/99)):
What I propose to do is to highlight only some of the changes made by the
Select Committee as well as some of the issues considered by the
Committee.
Firstly, the issue as to whether to vary the 90% / 80% majority share
value consent level. The Committee heard diverse and sometimes
diametrically opposing views on this issue. Some felt that 90% / 80%
consent level should be made stricter. Others were in favour of a more
liberal, lower level consent requirement, especially for older buildings.
The Select Committee has decided to keep the present approach in the Bill,
ie, the 90% consent level for developments less than 10 years and 80% for
developments 10 years or older. Ultimately, it should be left to market
forces and conditions which will determine if an en-bloc sale is
economically viable. The 90% / 80% level linked to the 10 years age of the
development was considered a reasonable criterion. The consent level
should be pegged to the age of the development as it is more likely that
older developments will be sub-optimally utilised and have higher repair
bills.
[emphasis added]
In his reply to points raised by Members of Parliament, Prof Jayakumar
reiterated that the requisite majority consent was pegged to the age of
the building (Parliamentary Debates, vol 70, col 1341 (04/05/99)):
Then we have this key feature, ie, 90%/80% consent requirement pegged to
the age of the building, ie, 10 years or less and 10 years or more,
coupled with the institutional mechanism of the Strata Titles Board rather
than the Courts for the reasons which are spelt out in the Bill. And the
role of the Strata Titles Board is, again, that of facilitating the
process, as an avenue for mediating when there are objections and the
situation and the type of objections are imponderable. Some examples were
given but those are not the only ones. The Board will be taking a
non-interventionist approach but we do spell out a few of the categories
where the Board expresses its disapproval. But apart from that, the Board
will really take a mediating role. [emphasis added]
17 It is clear from the quoted passages above that what Parliament had in
mind was to peg the requisite majority consent to the age of the
development. The words “TOP” or “CSC” were not mentioned at all during the
second and third reading of the 1998 Bill by the Minister or any Member of
Parliament. I am of the opinion that the references to TOP or CSC in s
84A(1) by the draftsman were merely used as a method of calculating the
age of the development. I agree with counsel for the respondents, Mr Quek
Mong Hua (“Mr Quek”) that the reference to TOP and CSC had no substantive
effect, in view of Prof Jayakumar’s statement in the Select Committee’s
Report (at p E 5):
Amendment No. 2 makes it clear that the age of a development (which is
completed in phases), will be calculated from the date when the Temporary
Occupation Permit or Certificate of Statutory Completion is issued for the
last building in the development. That is a technical amendment. [emphasis
added]
18 For the above reasons, I am of the opinion that the parliamentary
intention in respect of s 84A(1) of the LTSA was to allow en-bloc sales
with 80% majority consent for strata developments that are more than 10
years old. It cannot be said that Parliament had intended to exclude
privatised HUDC estates from collective sale by making references to TOP
and CSC in s 84A(1). On the contrary, it appears that Parliament had
intended s 84A(1) to apply to strata developments (including privatised
HUDC estates). This was thus not a case of legislative oversight.
Therefore, the appellants’ arguments against legislative gap-filling were
irrelevant.
19 It is important to point out here that s 9A of the Interpretation Act
requires that a construction promoting legislative purpose be preferred
over one that does not promote such purpose or object; the effect of s 9A
has been usefully considered by VK Rajah JA in the recent case of PP v Low
Kok Heng [2007] 4 SLR 183 at [39]-[45]. Bearing in mind that the
interpretation of a criminal statute may have different emphasis, I agree,
generally, with what was said in Low Kok Heng, warning, however, that the
phrase “purposive interpretation” should not be used without the court
keeping an eye on what purposes are involved and whose purposes are being
served. “Purposive interpretation” is not a phrase to be used as a
password like “open sesame”. For the statute in question, for example,
making sure that the safeguards in favour of minority subsidiary
proprietors are properly observed is just as purposive as giving the
majority owners a right to sell en-bloc. The specific question in issue,
however, was not one concerning specific protection for the minority. It
concerned whether a privatised HUDC estate can participate in the benefits
of an en-bloc sale if the requisite conditions are met. In that regard, I
think that the court should incline more towards an affirmative answer
than a negative one.
20 For the reasons above, I do not hold the view submitted by the
appellants’ counsel that it would be a strained construction of the
statutory provision, but even so, there are circumstances in which a
strained construction may be valid. Francis Bennion, Bennion on Statutory
Interpretation (Lexis Nexis, 5th Ed, 2008) commented as follows (at 458):
There are broadly four reasons which may justify (and in some cases
positively require) the strained construction of an enactment:
(a) a repugnance between the words of the enactment and those of some
other enactment;
(b) consequences of a literal construction so undesirable that Parliament
cannot have intended them;
(c) an error in the text which plainly falsifies Parliament’s intention;
or
(d) the passage of time since the enactment was originally drafted.
COMMENT ON CODE S 158
This section states in very broad outline the main reasons why sometimes a
strained construction of an enactment is necessary. In many actual cases,
the reasons overlap. Each reason is related to the intention of Parliament
(the only ultimate criterion). As Blackstone pointed out, it is not always
enough for a lawyer to say ita lex scripta est (thus the law is written).
If a literal construction was adopted in the present case, the intention
of Parliament to allow the en-bloc sale of strata developments that are
more than 10 years old if they have the requisite majority consent of 80%
would thus be frustrated. The undesirable consequence of the literal
interpretation in the present case may have the result that a privatised
HUDC estate more than 20 years old cannot participate in a collective
sale. I do not think that Parliament intended this effect because one of
the reasons for privatising an HUDC estate is to let it enjoy the benefits
of a private estate, including a collective sale.
21 Counsel for the appellants submitted that the recent enactment of ss
126A(6A) and 126A(6B) in 2007 is evidence that when Parliament enacted s
84A(1) in 1999, it had deliberately excluded privatised HUDC estates from
participating in a collective sale, and the recent enactment of ss
126A(6A) and 126A(6B) was intended to change the existing law. The
relevant parliamentary debates do not seem to have discussed the purpose
of the enactment of ss 126A(6A) and 126A(6B). However, Mr Yeap pointed out
that the enactment appears to have been motivated by views received from
consultation with the public on the proposed amendments to the LTSA in
2007. The Ministry of Law in its “Response to Feedback Received from
Public Consultation on Proposed Changes to En Bloc Sale Legislation”
stated at paras 11.3 and 11.4 as follows:
Feedback
11.3 It was suggested that provisions be introduced to make clear the
milestone to use to determine the age of a privatised HUDC that is
applying for en bloc sale as some HUDC developments may not have TOP or
CSC.
Response
11.4 We agreed with the suggestion and had provided in the legislation
that in determining the age of a privatised HUDC estate that is applying
for an en bloc sale under the LT(S)A, reference can, in addition to the
date of issue of the latest Temporary Occupation Permit or the latest
Certificate of Statutory Completion, also be taken from the date of
completion of construction of the building as certified by the relevant
authority (eg. HDB).
In light of this as well as Parliament’s intention when it enacted s
84A(1), I am of the view that ss 126A(6A) and 126A(6B) were enacted to
clarify the position in regard to privatised HUDC estates and not to
change the existing law. I, therefore, hold that s 84A(1) of the LTSA
applies to privatised HUDC estates.
22 The next major issue concerned the question whether it was s 84A(1)(a)
or s 84A(1)(b) that was applicable in this case. Counsel for the
appellants argued that even if s 84A(1) were applicable to privatised HUDC
estates, the requisite majority consent required for the collective sale
of the Development should be 90% as provided in s 84A(1)(a) and not 80% as
provided in s 84A(1)(b) because:
(a) A CSC was issued on 23 October 2002 for “4 Blocks of 20-Storey Flats
and 6 Blocks of 4-Storey Maisonettes on Lot(s) 01478C MK01 at Gillman
Heights” for works done for the privatisation of Gillman Heights; and
(b) A TOP was issued for the new single-storey clubhouse with swimming
pool on 27 November 2002.
Counsel submitted that s 84A(1)(b) should apply because it had only been
less than 10 years since the CSC or TOP in question here was issued.
23 As demonstrated above, the intention of Parliament seemed to be to peg
the requisite majority consent to the age of the estate. It was not
disputed that, with the exception of one block, the Development was
completed in December 1984. The exception was a block that was completed
in October 1984. Therefore, in my view, the Development was more than 20
years old when the application to the Board was filed.
24 Furthermore, it appears that the CSC and TOP in question would not
avail the appellants even if a strict literal reading of the relevant s
84A(1) was adopted. The relevant s 84A(1) states that the relevant date is
“the date of the issue of the latest Temporary Occupation Permit on
completion of any building comprised in the strata title plan or, if no
Temporary Occupation Permit was issued, the date of the issue of the
latest Certificate of Statutory Completion for any building comprised in
the strata title plan, whichever is the later.” [emphasis added] In
respect of the TOP issued on 27 November 2002, it was issued for the new
single-storey clubhouse and the swimming pool. The parties at the hearing
agreed that the strata title plan that was issued after the privatisation
of the Development did not reflect the clubhouse or the swimming pool. The
appellants did not tender a recent strata title plan that reflected the
clubhouse (the swimming pool was not considered a building) as a “building
comprised in the strata title plan”. The respondents’ and Purchaser’s
counsel contended that the clubhouse and the swimming pool, being common
property of the Development, would not, in any event, be reflected in the
strata title plan. As for the CSC, although it was stated to be issued in
respect of “4 Blocks of 20-Storey Flats and 6 Blocks of 4-Storey
Maisonettes on Lot(s) 01478C MK01 at Gillman Heights,” it is undisputed
that the CSC was, in fact, issued in respect of upgrading works on the
common property as part of the privatisation of the Development, and not
“any building comprised in the strata title plan”. Henceforth, the TOP and
CSC in question here are not relevant for the purposes of s 84A(1) (even
if the strict literal reading is adopted).
25 There was some merit in the respondents’ and the Purchaser’s submission
that the latest amendments to s 84A(1) of the LTSA in 2007 showed that the
phrase “building comprised in the strata title plan” was not intended to
include common property. The present s 84A(1) (after the 2007 amendments)
reads as follows:
84A. —(1) An application to a Board for an order for the sale of all the
lots and common property in a strata title plan may be made by —
(a) the subsidiary proprietors of the lots with not less than 90% of the
share values and not less than 90% of the total area of all the lots
(excluding the area of any accessory lot) as shown in the subsidiary
strata certificates of title where less than 10 years have passed since
the date of the issue of the latest Temporary Occupation Permit on
completion of any building (not being any common property) comprised in
the strata title plan or, if no Temporary Occupation Permit was issued,
the date of the issue of the latest Certificate of Statutory Completion
for any building (not being any common property) comprised in the strata
title plan, whichever is the later; or
(b) the subsidiary proprietors of the lots with not less than 80% of the
share values and not less than 80% of the total area of all the lots
(excluding the area of any accessory lot) as shown in the subsidiary
strata certificates of title where 10 years or more have passed since the
date of the issue of the latest Temporary Occupation Permit on completion
of any building (not being any common property) comprised in the strata
title plan or, if no Temporary Occupation Permit was issued, the date of
the issue of the latest Certificate of Statutory Completion for any
building (not being any common property) comprised in the strata title
plan, whichever is the later,
who have agreed in writing to sell all the lots and common property in the
strata title plan to a purchaser under a sale and purchase agreement which
specifies the proposed method of distributing the sale proceeds to all the
subsidiary proprietors (whether in cash or kind or both), subject to an
order being made under subsection (6) or (7).
[emphasis added]
The purpose of amending s 84A(1) to include the words “not being any
common property” was explained in the Explanatory Statement of the Land
Titles (Strata) (Amendment) Bill (Bill No 32 of 2007) as follows:
Clause 7 amends section 84A(1) to add a new requirement that subsidiary
proprietors with at least 90% of the total area of all the lots in the
strata title plan for developments that are less than 10 years old, or
subsidiary proprietors with at least 80% of the total area of all the lots
in the strata title plan for developments that are at least 10 years old,
must agree to a collective sale before an application for such sale may be
made to a Board. The clause also clarifies that the reference to
“building” in the section does not include any common property in a
development. [emphasis added]
I am thus of the opinion that the applicable provision was s 84A(1)(b) of
the LTSA and not s 84A(1)(a), that is to say, the requirement for a
majority was 80%.
26 Mr N Sreenivasan (“Mr Sreenivasan”), argued on behalf of the appellants
and applicants in OS No 192, that even if the applicable provision was s
84A(1)(b) of the LTSA, there was no valid CSA at the material time given
that it had expired pursuant to either cl 11(b) or cl 11(c) of the CSA,
which provided as follows:
PERIOD OF VALIDITY OF THIS AGREEMENT
As from the Date of this Agreement, all terms, convenants, conditions,
representations and undertakings herein shall remain in full force and
effect and be binding on the Vendors and this Agreement shall be
determined only on occurrence of any of the following events:
…
(b) The permitted time referred to in Clause 1A of the [First Schedule to
the LTSA] in relation to this Collective Sale Agreement has lapsed. …
(c) The STB’s Approval under Clause 10 shall not be issued within twelve
(12) months from the Date of this Agreement. …
27 Given that the first signatures of the CSA were collected on 18
February 2006, Mr Sreenivasan argued that the CSA had expired on 17
February 2007 by virtue of cl 11(b), and thus, at the time of the
Application to the Board, ie 3 May 2007, there was no valid CSA. That
argument, however, conflated the permitted time for a collective sale
agreement to be validly executed (as stipulated by para 1A of the First
Schedule to the LTSA) with the permitted time for an application to be
made to the Board (as stipulated by para 1(a) of the First Schedule to the
LTSA) and, thus, in my view, was of no assistance to Mr Sreenivasan’s
clients.
28 It is useful to set out the relevant provisions of the LTSA, namely,
paras 1(a) and 1A of the First Schedule:
1. Before making an application to a Board, the subsidiary proprietors
referred to in section 84A(1) or the proprietors of flats referred to in
section 84D(2) or 84E(3), as the case may be, shall –
(a) execute within the permitted time but in no case more than 12 months
before the date the application is made, a collective sale agreement in
writing among themselves (whether or not with other subsidiary proprietors
or proprietors) agreeing to agree to collectively sell - … (i) in the case
of an application under section 84A, all the lots and common property in a
strata title plan; …
…
1A. For the purposes of this Schedule - … (a) the permitted time in
relation to a collective sale agreement executed or to be executed by
subsidiary proprietors or proprietors referred to in section 84A(1),
84D(2) or 84E(3), means a period - …
(i) starting from the date the first subsidiary proprietor or proprietor,
or his duly appointed attorney, as the case may be, signs the collective
sale agreement; and
(ii) ending not more than 12 months after the date the first subsidiary
proprietor or proprietor, or his duly appointed attorney, as the case may
be, signs the collective sale agreement; and … (b) the collective sale
agreement shall be regarded as executed notwithstanding that it is
executed on separate copies thereof and at different times.
The 12-month periods in paras 1(a) and 1A may overlap but do not refer to
a single period. They operate independently so that the general scheme
allows the CSP 12 months from the first signature to the last signature to
obtain the requisite 80% majority. If they do so within this “permitted
time” the majority may then make an application to the Board for its
approval for sale provided that the CSA had not been executed more than 12
months earlier by the requisite number of owners from the date the
application was made. In the present case, the first signature was
appended on the CSA on 18 February 2006. The last (having passed the 80%
mark) was appended on 23 June 2006. The CSA in this regard has satisfied
the requirement of para 1A. The Application was made to the Board on 3 May
2007 and was within the 12 month requirement under para 1(a), that is to
say that the Application was made before 22 June 2007, 12 months after the
requisite majority has obtained. I am unable to agree with counsel’s
submission that the permitted time expired on 17 February 2007, namely, 12
months after 18 February 2006. The Act does not expressly relate the 12
months in para 1A to that in para 1(a). The references to 12 months and
“permitted time” in the two sections might have created an impression that
they relate to the same period, but as I explained above, they do not.
When a law requires interpretation the court has to be mindful that its
interpretation is within a sensible reading of the words under
interpretation and does the least harm to the parties in the proceedings
without laying a principle that might subsequently be misunderstood or
applied in such a way that the good presently done becomes tomorrow’s
burden to others. The law must be expressed in such terms that the layman
sitting in a quasi-judicial capacity will find it easy to understand. In
this case, and I can only speak of this case, the Board also understood
the operations of paras 1(a) and 1A in the same way as I do.
29 Mr Sreenivasan argued, alternatively, that the CSA expired on 22 June
2007 by virtue of cl 11(c) given that the Board’s approval had not been
obtained “twelve (12) months from the Date of [the CSA (ie, 23 June
2006)]”, since that approval was obtained only on 27 December 2007. The
validity of this argument depended on whether the CSA itself had been
validly extended by the SCSA, that is, the extension of the deadline for
obtaining the Board’s approval (“the deadline”) to 5 February 2008. The
appellants and applicants argued that there was no valid extension as 26
SPs had signed the CSA after the permitted time, ie after 17 February
2007, and thus these 26 SPs could not have validly extended the time by
signing the SCSA (excluding these 26 SPs would reduce the majority
percentage to 83.27%), and that 20 CSPs who had signed the CSA before 17
February 2008 did not sign the SCSA subsequently (excluding these 20 SPs
would reduce the majority percentage by a further 3.29%). Counsel seemed
to be submitting that there was no requisite 80% majority to extend the
deadline and the CSA. On the other hand, Mr Yeap submitted that there was
no need to delve into these figures as the Sales Committee had, for and on
behalf of and as agents of all the “Vendors” (defined in cl 1.1 of CSA as
“the Registered Proprietors who have executed [the CSA] and any
supplemental agreement”) agreed to extend the deadline for obtaining the
Board’s approval to 5 February 2008 under cl 6.2.1 of the Sale and
Purchase Agreement (“S&P”), by agreeing to obtain the Board’s approval
within 12 months of the date of the S&P, ie, 5 February 2007:
The Vendor shall apply to the STB for the said order. The said order shall
be obtained on or before twelve (12) months from the Date of this
Agreement. [emphasis added]
I am unable to accept this submission that cl 6.2.1 of the S&P had
extended the deadline. In fact, cl 1A.1 of the S&P would suggest that the
Sales Committee had to obtain the agreement of SPs with 80% of the share
values of the Development for the extension of the deadline:
The Sales Committee under the CSA (“the Sale Committee”) shall on behalf
of the Vendor use their best endeavours to procure the validity of the CSA
to 5 February 2008 (“the Extension”) by getting the agreement of the
Subsidiary Proprietors who own eighty per cent (80%) of the share values
of the Development.
30 However, I am of the view that the SCSA had extended the deadline (and
the validity of the CSA). Clause 1.9 of the CSA permitted SPs who have not
signed the CSA to sign a supplemental agreement after the date of the CSA
to join in the collective sale and the clause also specifically provided
that “Vendors” (which included the CSPs) need not execute such
supplemental agreement:
Nothing herein contained shall prevent the Registered Proprietors who have
not executed this Agreement from executing this Agreement or executing a
supplemental agreement (in the form set out in Schedule 6 or in such other
form as the Marketing Consultants and the Solicitors shall advise)
(“Supplemental Agreement”) agreeing to or joining in or consenting to the
Collective Sale on or after the Date of this Agreement. The Vendors shall
not be required to execute the Supplemental Agreement. [emphasis added]
Thus, I agree with the Board that “whatever the permutation” (Board’s
Grounds of Decision (“GD”) at [54]) the figures take, there was no
evidence that the requisite majority was not obtained when the CSA or SCSA
was signed, and it follows that the extension of the deadline by the SCSA
was valid.
31 I turn now to the appellants’ argument of non-compliance of the
notification requirements stipulated by ss 1(b) and 4(b)(iii) of the
Schedule to the LTSA. The appellant’s complaint here was not so much that
the required notices were not put up, but that the notices were not
affixed to “conspicuous parts of each building in the strata title plan”
(s 1(b) of the Schedule to the LTSA), and, consequently, s 4(b)(iii) was
also breached by virtue of a false statutory declaration that “the notices
referred to in paragraph 1(b) were affixed”. The appellants further drew
my attention to s 84A(3) of the LTSA, which states as follows:
Subject to subsection (7C), no application may be made under subsection
(1) by the subsidiary proprietors referred to in that subsection unless
they have complied with the requirements specified in the First, Second
and Third Schedules and have provided an undertaking to pay the costs of
the Board under subsection (5). [emphasis added]
In the present case, the respondents admitted that the relevant notices
were only put up on the Development’s 15 conspicuous notice boards located
throughout the Development (some at certain residential blocks, while
others were located next to certain residential blocks and the clubhouse),
and were not, strictly speaking, physically affixed on every building
itself in the Development (which a literal interpretation of s 1(b) of the
Schedule to the LTSA required). Nonetheless, the Board (its members having
paid a site visit to the Development) decided that there was substantial
compliance with ss 1(b) and 4(b)(iii) of the Schedule to the LTSA, after
finding that s 1(b) was quite incapable of extreme strict compliance in
the present case, given the design and physical layout of the buildings in
the Development (see GD at [35]-[36]). I am not minded to disturb the
Board’s finding. The importance of compliance with the requirements
specified in the First Schedule of the LTSA cannot be overstated and is
made plain by s 84A(3) of the LTSA. However, the opening words of that
section also make it clear that s 84A(3) is read subject to s 84(7C) (see
[32] above), which provides as follows:
A Board shall not invalidate an application to the Board for an order
under subsection (1) or section 84D(2), 84E(3) or 84FA(1) by reason only
of non-compliance with any requirement in the First, Second or Third
Schedule if the Board is satisfied that such non-compliance does not
prejudice the interest of any person, and the Board may make such order as
may be necessary to rectify the non-compliance and such order for costs.
[emphasis added]
It was therefore open to the Board in this case to find that placing the
notices on the various notice boards in the Development had served the
function of ensuring that all relevant parties had adequate notice and
information about the collective sale of the Development (which is the
purpose of the procedural requirements stipulated in the LTSA: seeNg Swee
Lang and Another v Sassoon Samuel Bernard and Others [2008] 1 SLR 522 at
[51]) and that no party had been prejudiced by this (GD at [39]). With the
general idea of the purposiveness of the rule in mind, and what I had said
in [19] above, I am of the opinion that the Board did not err in law in
this regard.
32 Lastly, the appellants raised the question of bad faith and breach of
natural justice. First, they say that the NUS was a member of the CSPs,
but evidence of its investment and commercial venture with the Purchaser
was not disclosed to the Board, and the Board was thereby unable to
properly consider whether the sale was tainted by bad faith. They also
contend that the Board erred in law in granting the collective sale order
when the transaction was not in good faith, having regard to the sale
price. Secondly, the appellants complain that Mr Ng, one of the members of
the Board, was a real estate valuation expert who had worked in projects
in which the solicitors for the respondents were also involved
professionally for the developer or purchaser, and therefore, it was
argued, that Mr Ng might not appear to be free from bias.
33 Section 84A(9) of the LTSA deals specifically with issues of bad faith
and provides as follows:
The Board shall not approve an application under subsection (1) –
(a) if the Board is satisfied that –
(i) the transaction is not in good faith after taking into account only
the following factors:
(A) the sale price for the lots and the common property in the strata
title plan;
(B) the method of distributing the proceeds of sale; and
(C) the relationship of the purchaser to any of the subsidiary
proprietors;
Mr Quek submitted that the NUS held 46.86 % of the total share values in
the Development. However, as at the date in which the required 8-week
notice was displayed (14 April 2006), there were already 32.41% of CSPs
excluding the NUS who had signed the CSA. That being the case, the NUS as
a CSP, was entitled to exercise its right as a CSP to vote for the
collective sale. I do not think that the exercise of its right is wrongful
in any way, or that it should be regarded as a mark of bad faith. The
minority CSPs were duly noted of the NUS vote and execution of the CSA
about six weeks before the application for approval was submitted to the
Board. The greater complaint was that the NUS appeared to have invested in
the shares of the Purchaser. This would be relevant under s 84A(9)(a)(i)(C)
above. Mr Yeap submitted that the NUS-Purchaser relationship was not
raised before the Board even though the information the minority now
relied upon was publicly available, and the witness from the NUS who
testified before the Board could have been questioned on it. I thus agreed
that the evidence that was sought to be adduced afresh before me should
not be admitted. A court deliberates only on the basis of the evidence
before it. While making sure that evidence of impropriety has not been
overlooked, the court must also take into account the potential procedural
impropriety by a party not adducing the relevant evidence diligently in
the hope of keeping such evidence in reserve for a second stage assault.
By its nature, such evidence and tactics are difficult to detect. The way
to prevent them is to adhere to the rules of evidence as strictly as
possible. Whether or not there was an act of bad faith by reason of the
relationship between the relevant parties is strictly a finding of fact
for the Board. I am not persuaded that the Board ought to hear the parties
again on the issue of the relationship between the NUS and the Purchaser.
As for the contention of bad faith in regard to the sale price (this would
be under s 84A(9)(a)(i)(A) above), I am in full agreement with the reasons
given by the Board (see GD at [55]-[63]) why there is no bad faith in the
present case, given the sale price of $548m, which is $20m above the
reserved price. The other en-bloc sale prices (of other estates) put
forward by the appellants are not viable comparables as they were not
privatised HUDC estates and/or were sold at a different time from the
Development. I note that the Development was sold before the property hike
in 2007, and it would not be appropriate for the Board or for this court
to assess good faith with regard to the sale price of the Development
through the lens of hindsight. The decision of when to sell the
Development was solely a decision of the majority SPs, and once that
decision had been made, it was not open to SPs to complain that a
collective sale lacked good faith pursuant to s 84A(9)(a)(i)(A) (and thus
they want out now) for the sole reason that (on hindsight) the Development
could have been sold at a higher price (for whatever reason) if they had
waited a while longer.
34 In respect of the complaint on breach of natural justice, namely that
Mr Ng was in a conflict of interest situation because he had worked on the
same projects with the CSPs’ solicitors in the past, I am of the view that
it is too tenuous an objection. Professionals cannot avoid working on the
same projects. It does not follow that they necessarily agree or have
reasons to be biased or prejudiced (since it is not necessary that they
would like each other just because they work together) against the other
professionals. Mr Quek also pointed out that there was no objection
against the appointment of Mr Ng within the statutory time limited for
such objections, that is, seven days from the notification of appointment.
More importantly, Mr Ng was one of five members of a Board. The Board had
considered the question of fair valuation and appeared to have given all
the evidence due consideration. Their decision as to fair value was a
finding of fact and one which an appellate court ought not reverse.
35 For the reasons above, I am satisfied that the applications by the
minority proprietors before me must fail. The applications are therefore
dismissed with costs to be taxed if not agreed.
STB DECISION
Wiener Robert Lorenz and Others v Chua It Poh/ Ng Lee Beng and
Others[2007] SGSTB 6
Case Number: STB 53/2007
Decision Date: 21 Dec 2007
Tribunal: Strata Titles Boards
Coram: Alfonso Ang, Chua Koon Hoe, Lee Coo, Michael Ng, Tan Ee Ping
Counsel Names: Quek Mong Hua, Ow Yong Thian Soo, Michael Kuah and Julian
Tay (Lee & Lee) for the applicants, Richard Tan (Tan Chin Hoe & Co) for
the 10th to 41st respondents, Kannan Ramesh and Eddee Ng (Tan Kok Quan
Partnership) for the 5th and 6th respondents, David Lim (Lim & Bangras)
for the 42nd, 45th, 47th to 50th and 52nd respondents
1. This is an application under section 84A(l)(b) of the Land Titles
(Strata) Act ("the Act") made by the Sales Committee representing 532
registered subsidiary proprietors holding 87.54% of the total share value
of Gillman Heights Condominium ("Gillman Heights") for an order approving
the sale of Gillman Heights to Ankerite Pte Ltd at the price of
S$548million.
Gillman Heights
2. Gillman Heights is an estate that was exempted from the operation of
section 5 of the Building Control Act 1973 and the regulations under the
Building Control (Order) 1984. Gillman Heights is situated in what was
commonly known then as district 4. It consists of 607 residential units
and 1 shop unit.
3. In or around 1996 Gillman Heights was privatised and in November 1996
Gillman Heights was issued with Strata Title Plan. As part of the
privatisation process, works were done which involved the building of
ramps, railings, boundary fencing, fire engine hard standing areas, fire
engine access and installation of fire-rated doors. Sometime in February
2001, each of the registered subsidiary proprietor contributed monies to
construct a clubhouse, a swimming pool and a children's playground. The
total cost for the construction of the clubhouse, swimming pool and
children's playground was about S$3million.
4. On 23 October 2002, a Certificate of Statutory Completion ("CSC") was
issued in respect of works carried out pursuant to the privatisation
process. On 27 November 2002, a Temporary Occupation Permit ("TOP") was
issued in respect of the clubhouse/swimming pool at Gillman Heights.
5. There are 4 point blocks marking the four corners of Gillman Heights.
In between the point blocks are 6 low-rise terraced apartment blocks. Each
of these blocks is made up of 5 to 8 pairs of double-storey maisonettes,
one maisonette stacked on top of the other. Each pair of 2 stacked
maisonette units (i.e. 4 units) share a common staircase and covered
parking lots. Thus the number of pairs also represents the number of
staircases, each staircase shared by 4 units.
6. Of the total of 607 residential units in Gillman Heights, the National
University of Singapore ("NUS") owns 303 apartments, making them the
majority owner whose total share value amounts to 49.84%.
Grounds of objection
7. The main objections filed by all the Respondents may be broadly
summarised as follows:-
(i) the Respondents contended that the Applicants' reliance on section
84A(l)(b) of the Act which requires subsidiary proprietors having at least
80% of the total share value, is wrong in law. They argued that Gillman
Heights is less than 10 years old as the last CSC and TOP were issued on
23 October 2002 and 27 November 2002 respectively. Hence section 84A(l)(a)
of the Act should apply and this would require subsidiary proprietors
having at least 90% of the total share value agreeing to the collective
sale;
(ii) there was non-compliance with section 84A(3) of the Act when the
Applicants failed to comply with Paragraph l(b) of the Schedule of the Act
in that they failed to affix on a conspicuous part of each building
comprising the strata title plan, the notices once every 8 weeks ("the 8
weeks notices") specifying the number of subsidiary proprietors who had
signed the Collective Sale Agreement ("CSA") and the proportion (in
percentage). As an appendage to this issue, the Respondents claimed that
the statutory declaration made by one of the Applicants that the 8 weeks
notices were affixed on the buildings was false when in fact some of the 8
weeks notices were not affixed to the buildings but onto notice boards;
(iii) the Application for the collective sale of Gillman Heights could not
proceed as the CSA had expired on 17 February 2007 or alternatively on 22
June 2007. Additionally, the Supplemental Collective Sale Agreement (SCSA)
executed on 10 March 2007 extending the validity of the CSA to 5 February
2008 was invalid as some of the original signatories to the CSA did not
sign the SCSA. Subsidiary proprietors who did not sign the CSA also signed
the SCSA; and
(iv) the valuation and the method of distribution of the proceeds of sale
of Gillman Heights was not done in good faith.
8. There are 2 issues raised by the Respondents which involved
interpretation of the Act and they will be dealt together. They are issues
(i) and (ii) enumerated above.
Section 84A(l)(a) or section 84A(l)(b) - 90% or 80% requirement for
collective sale
9. The Respondents raised the issue as to whether the Applicants can rely
on section 84A(l)(b) of the Act which has a requirement of 80% of the
total share value agreeing to sell. The Respondents' position is that the
correct provision must be an application under section 84A(l)(a) of the
Act which has a requirement of the subsidiary proprietors having no less
than 90% of the total share value. In addition, some of the Respondents'
submission went further and questioned whether Parliament ever intended
that the Act should apply to ex-Housing and Urban Development Corporation
("HUDC") estates.
10. The Respondents submitted that it was only in the last amendment to
the Act that ex- HUDC estates were for the first time being included under
section 84A of the Act. Even if Parliament had not intended that the last
amendment include ex-HUDC estates for the first time, it cannot be certain
that the old section 84A applied to ex-HUDC estates. They argued that if
Parliament had intended in 1999 that section 84A was to apply to ex-HUDC
estates, it would have done so expressly. This lacuna was only filled in
by Parliament in the last amendment to the Act when it enacted the new
subsections 126A (6A) and (6B). The Respondents also pointed out that the
Board should not second guess what Parliament had intended and further as
the Board is a creature of statute, it has no jurisdiction or power to
fill in any lacuna or second guess policy consideration.
11. The Respondents submitted that on a proper construction of the Act,
the Applicants required a total of 90% of the total share value before an
application can be made to the Board. In summary their objection is that
in a sale of all the lots and common property not less than 90% of the
share value is required where less than 10 years have passed since the
date of the issuance of the latest TOP on completion of any building
comprised in the strata title plan or if no TOP was issued, the date of
the latest CSC for any building comprised in the strata title plan,
whichever is the later. It was argued that the Board should look at all
the TOP and CSC issued for any building comprised in the strata title plan
in respect of the development and takes that last TOP or CSC to calculate
the start date for eligibility for collective sale from that date.
12. When Gillman Heights was completed, and the owners moved in to occupy
the premises in October 1984, the issuance of the CSC on 23 October 2002
and the TOP on 27 November 2002 were not in dispute. It was also not
disputed that no TOP or CSC was issued when owners moved in to occupy
their units in 198411985. The Respondents stressed in their submissions
that when the CSC of 23 October 2002 was issued, it was for "4 blocks of
20-Storey Flats and 6 blocks of 4-Storey Maisonettes on Lot(s) 01478C MKOl
at Gillman Heights" that was to say, the whole condominium. Since both the
latest TOP and CSC for Gillman Heights were issued less than 10 years at
the time of the Application, the said Application falls within section
84A(l)(a) of the Act.
13. The Applicants' response to this issue can be summarised as follows.
The key element for the required threshold support for collective sale is
the age of the development i.e. whether it is more or less than 10 years
since the completion of the development. Any reference to TOP or CSC in
section 84A(1) of the Act is but formal means by which the age of an
estate can be determined. They contended that "building comprised in the
strata title plan" must refer to those buildings that carried strata lot
or value since the scheme of the Act required subsidiary proprietors' vote
based on strata values. The issuance of the TOP for the clubhouse and
swimming pool was irrelevant for the purpose of section 84(A) of the Act
as it did not relate to any building comprised in the strata title plan
which pertained to the age of the development. In respect of the CSC
issued on 23 October 2002, it was for works carried out as part of the
privatisation process. The Applicants further submitted that it had been
the legislative intent not to include the TOP or CSC of the buildings
which are common property and this issue has been settled in the latest
amendment to the Act. The Applicants whilst not relying on the last
amendment which came into effect, nevertheless sought to rely on the
Amendment Bill as evidence of the legislative intent which was to clarify
that building did not include common property in a development.
14. The Applicants sought to rely on a letter issued by the Building and
Construction Authority ("BCA") dated 23 April 2007 which was in reply to a
letter by the Applicants' lawyers dated 23 April 2007.
15. In the letter to the BCA, the Applicants sought confirmation that "the
date of completion of Gillman Heights by the Housing Development Board ("HDB)
in 1984 can be taken as equivalent to the TOP issued by the BCA". The BCA
confirmed that "the date of completion of the building can be taken an
equivalent to the TOP issued by the BCA."
Failure to comply with the "8 weeks notices"
16. It was argued that there was a procedural defect which was incurable
in that the Applicants failed to affix to a conspicuous part of each
building comprised in the strata title plan once every 8 weeks, a notice
as required under Part l(b) of the Schedule of the Act. This notice in the
4 official languages shall specify the number of subsidiary proprietors or
proprietor who, immediately before the date of the notice, had signed the
CSA and the proportion (in percentage) of the total share value of all
lots comprised in that strata title plan.
17. It was not in dispute that there are 10 blocks of flats in Gillman
Heights and that the Applicants conceded that notices were not affixed on
the buildings at 5 of the maisonette blocks namely blocks ID, lG, lH, 1J
and 1K. It was also not in dispute that the notices for these 5 blocks
were affixed on the notice boards that were near the buildings. The
Respondents further argued that since the notices were not affixed on all
the buildings, the statutory declaration made by one of the Applicants
that the notices were affixed on all the buildings was false.
18. Citing authorities of previous decisions of other boards in the
Mandalay Court [STB 2 of 20001 ("the Mandalay") and Grenville Condominium
[STB 12 of 20001 ("the Grenville"), the Respondents argued that the
mandatory nature of the Act required this Board to recognise the strict
interpretation of the Act so as to protect the minority in the event of
non-compliance with the relevant provision of the Act. They also referred
to the judgment of Justice Choo Han Teck in [2007] SGHC 174 Siow Doreen
and Others vLo Pui Sang and others (Horizon Partners Pte Ltd, first
interveners and Reghenzani Claude Augustus and others, second
interveners)("the Horizon Towers") case and argued that the powers of the
Board to allow minor amendments are limited under the Act.
19. The Applicants whilst conceding that notices were not affixed on the 5
buildings nevertheless argued that they had complied with the substance
and spirit of the procedural requirements. In the alternative, even if
there was no full compliance, there was still substantial compliance.
Lastly, even if there was non-compliance this was an irregularity which
had no adverse consequence and should not invalidate the Application.
20. In respect of the 5 blocks in issue, the Applicants argued that, had
the notices been affixed on any part of the building, there was even a
greater likelihood that the notices would be missed and not brought to the
attention of the owners of the blocks. They therefore argued that the
affixing on a building must include a designated locked notice board.
Although such notices were not physically affixed to the buildings, they
were nevertheless designated as part of that particular building which
they served.
21. Like the Respondents, the Applicants cited various authorities as to
how the Board should deal with the issue of interpretation of the Act and
non-compliance with procedural requirements including the recent decision
of [2007] SGHC 190 Ng Swee Lung and Another v Sassoon Samuel Bernard and
Others("the Phoenix Court") by Justice Andrew Ang.
Decision Of The Board
22. At the onset, this Board will state the position that it should adopt
regarding how it should deal with the interpretation of the Act. This
Board need not look beyond the 2 recent cases that were decided in the
High Court of Singapore namely the Horizon Towers and the Phoenix Court.
23. In the Horizon Towers and the Phoenix Court decisions, Choo J and Ang
J respectively in very considered judgments spelled out the role of the
Board in dealing with non-compliance of the Act.
90% Or 80%
24. In the Horizon Towers' case, Choo J said that the purpose of an
application under section 84A of the Act is to "ensure that all legal
requirements necessary for an en-bloc sale are fulfilled." In his judgment
he also said that "if the application was incomplete or contained errors
or omissions of facts, the effect of those errors would be precisely the
matter that the Board has to hear and determine. If an error or omission
has caused prejudice to the minority, the Board may, in my opinion, in the
exercise of its discretion dismiss the application. If it does not, the
Board is, in my opinion, empowered to allow the amendment or correction so
that the record is clear."
25. Choo J went on to say that "it is the duty of the Board to consider
whether there was any error that was sufficiently material or substantive
to affect its decision whether to grant or refuse the application."
26. It is clear from the judgment of Ang J in Phoenix Court that the modem
approach in Singapore when it interprets the Act is to look at the "whole
scheme and purpose of the Act and by weighing the importance of the
particular requirement in the context of that purpose and by asking
whether the legislature would have intended the consequence of a strict
interpretation, having regard to the prejudice to private rights and the
claims of the public interest (if any)." Ang J further elaborated that the
"procedures were not built in as absolute obstacles to be surmounted on
pain of the Board being precluded from exercising jurisdiction if any of
the procedural requirements were not met, regardless of whether and to
what extent the interests of the minority were affected." Like any case,
each objection must be examined on its own fact and the particular
requirement breached set against the "overall purpose of the legislation."
The instances where the Board may strike down an application is limited to
the provisions spelt out in section 84A(7) to (9) of the Act. The
instances where the Board may disallow an application may be few, hearing
in mind the overall objective and scheme of the legislation. However, it
must follow common sense that the application must have as a start the
requisite percentage before the Board can approve the sale.
27. Does the Application have the requisite percentage? It is clear to the
Board, and parties do not disagree, that Gillman Heights was once a HUDC
estate. Gillman Heights was exempted from the statutory requirements of
the issuance of a TOP or CSC under section 5 of the Building Control Act
1973 and the regulations made thereunder before purchasers can move in.
28. The age of Gillman Heights must commence from the date that purchasers
were allowed to move in and occupy their premises in 1984. Since moving
in, owners of Gillman Heights are free to sell their units (subject to
restrictions that may be imposed on some owners who purchased it under
certain approved government schemes). Gillman Heights being a 99 year
leasehold property had used up some of its lease period when it was
privatised in 1996. It was in the process of the privatisation of Gillman
Heights that certain works had to be carried out to comply with safety and
fire requirements for which a CSC was issued. After the privatisation, the
owners on their own accord chose to build a clubhouse and a swimming pool
for which a TOP was issued.
29. The Board is of the view that the issuance of the TOP and the CSC did
not affect the age of the estate. The CSC was issued on privatisation as
the owners were now required to comply with the requirements such as fire
safety. A TOP was specifically issued when the clubhouse and swimming pool
were built. With or without the last amendment to the Act, the Board is of
the view that the age of the development cannot be re-set back to year
zero merely because parties had built a structure which required a TOP or
a CSC to be issued. The "birth date" of the development cannot be
rejuvenated merely because some structure is built which required a TOP or
a CSC. Not every single shed or toilet built for the common good of all
would restart the time line. Gillman Heights which was initially exempted
from complying with the requirements of the Building Control Act or the
regulations, the date in which owners were permitted to occupy the
premises must be the start time from which the Board will calculate the
years whether the estate falls within section 84A(l)(a) or (b). The Board
must disregard the TOP for the construction of the clubhouse and swimming
pool and CSC for the privatisation for the estate issued to Gillman
Heights as being the time reference to calculate whether it was above or
below 10 years.
30. The Board has to give effect to Parliament's intention and that is to
redevelop estates above 10 years old if they have 80% support and if they
are below 10 years old, 90% support. At the second reading of the Land
Titles (Strata) (Amendment) Bill on 3 1 July 1998 (Parliament No. 9,
Session 1, Vol. 69, Col602 [TAB 4]), Associate Professor Ho said:-
"Let me now highlight the key features of the proposed scheme. Firstly,
Government will not decide which developments are ready or ripe for
en-bloc redevelopment. The owners will decide that for themselves. There
are too many factors at play, such as the age and state of repairs of the
development, market conditions, sentiments of the owners and the
relationship amongst them. As announced previously, what the Bill will do
is peg the required majority consent to the development's age -the
majority owners must account for at least 90% of the share values for
developments less than 10 years old, and 80% for developments 10 years or
more. This approach will facilitate the redevelopment of older buildings…”
31. In arriving at this decision, the Board disregarded the letter issued
by the BCA to the Applicants' solicitors confirming the BCA's view that
they considered the date of completion of the building as equivalent to
the TOP. It is for the Board to make this decision and it cannot accept
the BCA's decision without itself looking into the issue. Likewise, the
Board also did not rely on the Explanatory Statements to the latest
amendment of the Act for the purpose of interpreting an earlier Act.
32. The Board will also deal with the argument made during the closing
submission that it can be inferred that Parliament never intended the Act
to apply to ex-HUDC estates and that this lacuna was only resolved when
Parliament passed the new section 84A(l)(a) or (b) to apply to ex-HUDC
estates. We dismiss this objection as totally invalid. Section 84A applies
to all developments so long as they are registered under the Act and there
is no exclusion, express or implied.
Affixing of the 8 weeks notices
33. In coming to a decision, the Board is again mindful and guided by the
decisions in Horizon Towers and Phoenix Court cases. The sole issue before
this Board is whether the failure to affix the 8 weeks notices on the
physical buildings of the 5 maisonette blocks, were irregularities that
warranted the Application being dismissed.
34. If a strict literal interpretation is adopted as suggested by the
Respondents, it must follow that the Application must fail. The notices
were not affixed on "the building" and the issue whether it was a
conspicuous part of the building did not arise. The Applicants in the
course of the hearing attempted to justify that one of the reasons for not
affixing on the building was because there was no notice board affixed to
the 5 blocks and that the MCST had refused permission for them to affix on
the building. The other blocks that were not in issue had notice boards
affixed onto the blocks.
35. In our opinion, there was a failure to comply with the strict wordings
of the Act. However, we find as a fact that this provision was quite
incapable of extreme strict compliance. The Board visited the site and
examined the buildings in question. We have described the configuration of
the blocks in paragraph 5 of our decision. It was clear to us and we find
that it was not possible to have a conspicuous place to bring the notices
to the attention of all the owners residing in these blocks as each
staircase serves 4 units. Affixing on any one of the staircases would only
mean that the notices would be conspicuous and brought to the attention of
the 4 owners using that staircase. To affix the notice on any part of the
block other than the staircase would probably result in all the owners not
even knowing that such a notice was affixed. The 5 blocks are elongated
with no focal point that could be considered conspicuous for everyone.
36. We find that the Applicants had complied with the spirit of the Act by
affixing the notices on the notice boards which is the usual place for all
residents to read notices, if they choose to do SO.
37. We heard evidence by some Respondents that they do not read such
notices as they only usually drive past the notice boards. It must also
follow that they would not have read the notice if they had not walked to
a particular part of the building even if the notice had been affixed.
38. Other than the vehement protests that there was no strict compliance,
no evidence was adduced that anyone had suffered as a result of the
non-compliance.
39. The Board is of the opinion that it has to interpret the Act in a
purposive manner and that is the notice ought to be affixed in a manner
that would bring it to the attention of the subsidiary proprietors. Where
a suitable place on the physical building is not available or is not
conspicuous for all, then so long as the Applicants had affixed the notice
which substantially complied with the Act and there was no detriment
suffered, the Board will disregard the non-compliance. Parliament cannot
possibly legislate provisions in the Act to cater for every configuration
of buildings that had been built and may be built so that the 8 weeks
notices can be complied with to the letter.
40. The Board view this ground of objection as one which is clearly
without merit and accordingly dismiss this objection.
The validity of the Collective Sale Agreement
41. The Respondents challenged that the Application must fail because
there was not a valid CSA.
42. The chronology of the main events concerning the CSA and the SCSA was
summarised by the Applicants as follow:
(i)
18 February 2006
-
First signature of the CSA
(ii)
23 June 2006
-
Date of the CSA (82.43% achieved)
(iii)
5 February 2007
-
Date of Sale and Purchase Agreement ("SPA") signed
(iii)
10 March 2007
-
Date of SCSA signed. (86.71% signed)
(v)
3 May 2007
-
Application to the Board for approval of the sale
43. The CSA which was dated 23 June 2006 and the SCSA dated 10 March 2007
substituted Clause 1 l(c) by extending the Strata Titles Board's ("STB")
approval under Clause 10 to 5 February 2008. Clause l l reads:
1 1. PERIOD OF VALIDITY OF THIS AGREEMENT
As from the Date of this Agreement, all terms, covenants, conditions,
representations and undertakings herein shall remain in full force and
effect and be binding on the Vendors and this Agreement shall be
determined only on occurrence of any of the following events:-
(a) The conclusion and the performance of all obligations by 'all parties
in this Agreement and the Contract for Sale.
(b) The permitted time referred to in Clause 1A of the Act (Amendment of
Fourth Schedule) Order 2004 in relation to this CSA has lapsed.
(c) The STB's Approval under Clause 10 shall not be issued within twelve
(12) months from the Date of this Agreement.
(d) No binding agreement for sale and purchase (whether conditional or
otherwise) is made between all the Vendors and any purchaser for the sale
and purchase of the Strata Units within twelve (12) months from the Date
of this Agreement.
(e) The Contract for Sale is rescinded by either the Vendors or the
Purchaser and either:
(i) remedies of both the Vendors and the Purchaser as against each other
have been resolved fully and finally; or
(ii) all rights and remedies of both the Vendors and the Purchaser as
against each other are exhausted or no avenue for appeal to any court
having jurisdiction remain.
44. Paragraph 1 (a) of the Act (Amendment of Fourth Schedule) Order 2004
reads:
"1. Before making an application to a Board, the subsidiary properties
referred to in section 84A(1) or the proprietors of flats referred to in
section 84D(2) or 84E(3), as the case may be, shall -
a. execute within the permitted time but in no case more than 12 months
before the date the application is made, a collective sale agreement in
writing among themselves (whether or not with other subsidiary proprietors
or proprietors) agreeing to agree to collectively sell -
(i) in the case of an application under section 84A, all the lots and
common property in a strata title plan; or
(ii) in the case of an application under section 84D or 84E, all the flats
and the land in a development to which section 84D or 84E, as the case may
be, applies;"
45. The Respondents' case was that the CSA expired on the 17 February 2007
upon the expiry of the one year after the date of the lS' signature of the
CSA on 18 February 2006 or in the alternative on 22 June 2007 (lSt
anniversary of achieving 80% or more of the subsidiary proprietors'
consent). They contended that the SCSA was ineffective in extending the
dateline of 5 February 2008. Further the SCSA cannot operate as an
agreement for variation of the CSA because not all the original
signatories of the CSA signed the SCSA and there were signatories to the
SCSA who did not sign the CSA.
46. The Applicants' responded to these challenges in the following manner.
Firstly, the Respondents were not parties to the CSA and had no locus
standi to enforce the terms of the CSA which specifically excluded the
rights of third parties under Clause 17.2 of the CSA. They drew a
distinction between the contractual rights under the CSA and the statutory
rights to object only in respect of the statutory rights under the Act.
47. Secondly the Applicants contended that "permitted time" referred to in
Clause 1A of the Act (Amendment of Fourth Schedule) Order 2004 must be
read in conjunction with Clause 1. In summary they argued that the
permitted time must be read in the context of the purpose of the execution
of a collective sale for an application when the requisite level of
support needed for a collective sale had been achieved.
48. Thirdly the Applicants submitted that the extension by way of the SCSA
was valid in that Clause 1.8 of the CSA allowed the "amendment, supplement
or modification" of the CSA. Further Clause 13 of the CSA allowed "any
resolution decision or matter herein, shall be effective only if approved
by Vendors holding not less than eighty percent (80%) of the Share Value".
Hence by virtue of Clause 13, Vendors representing 84.24% had effectively
approved the extension by agreeing to substitute Clause 1 l(c) of the CSA
which extended the time for obtaining the Board's approval to 5 February
2008. The Applicants went further and argued that the 19 owners who did
not sign the SCSA had already given the mandate to sign the SPA as well as
to file the Application with the STB.
Decision of the Board
49. If there is no valid CSA, there is no basis for any application before
the Board. The Respondents thrust is that as the CSA must be interpreted
strictly and that on strict construction the CSA must expire either on 18
February 2007 or 22 June 2007.
50. The Board does not agree with the Respondents' interpretation of
Clause I l(b) of the CSA which refers to Clause 1A of the Act (Amendment
of Fourth Schedule) Order 2004. The Schedule's scheme of arrangement was
that the relevant majority owners referred in section 84A(1), 84D(2) or
84E(3) must be achieved not later than 12 months from the first execution
of the CSA by a flat owner. Thereafter the relevant majority must find a
purchaser and obtain the STB's approval within 12 months of successfully
getting the CSA executed by the minimum required number of owners to make
up the relevant majority. In our view, time had not lapsed. In any event,
there was a specific agreement to extend the specific time frame to obtain
the Board's approval under Clause 1 1 (c) of the CSA.
51. It is the Board's view that the CSA and the SCSA were contractual
agreements that must be viewed from a contractual viewpoint. These were
not statutory instruments. Such agreements may be amended or varied under
Common Law and specifically by agreement.
52. Was the CSA determined by operation of Clause 1 l(c)? In Clause 1 l(c)
of the CSA, the STB's approval shall be obtained within 12 months from the
date of the CSA dated 23 June 2006, the expiry date for such approval was
22 June 2007. On 5 February 2007, the subsidiary proprietors entered into
a SPA with Ankerite Pte Ltd. Under Clause 6.2.1 of the SPA, "the Vendors
shall apply to the STB for an order approving the sale. The said Order
shall be obtained on or before 12 months from the date of this agreement,
which is 5 February 2008". To comply with the provisions of the SPA, the
SCSA was signed on 10 March 2007 whereby Clause 1 l(c) of the CSA was
deleted and substituted with the following "the STB's Approval under
Clause 10 shall not be issued by 5 February 2008." The Board is of the
opinion that the Applicants are entitled to amend the CSA to extend the
date for seeking the Board's approval.
53. The connected issue is whether all the original signatories must sign
on the SCSA for it to be valid. The answer to this question must surely be
inferred from the CSA. We accept the Applicants' argument on the issue of
rights of third party i.e. the Respondents were not entitled to enforce
the terms of the CSA when they were not parties to the CSA. Even if this
is not so, it must follow that the Clause 1.9 of the CSA permitted
Registered Proprietors who had not signed the CSA to sign the CSA or a
supplemental agreement on or after the Date of the CSA. The Clause went so
far as to state that Vendors (those who had executed the CSA and any SCSA)
shall not be required to execute the SCSA. Clause 1.9 is reproduced.
Clause 1.9 of the CSA
"1.9 Nothing herein contained shall prevent the Registered Proprietors who
have not executed this Agreement from executing this Agreement or
executing a supplemental agreement (in the form set out in Schedule 6 or
in such other form as the Marketing Consultants and the Solicitors shall
advise) ("Supplemental Agreement") agreeing to or joining in or consenting
to the Collective Sale on or after the Date of this Agreement. The Vendors
shall not be required to execute the Supplemental Agreement."
54. Whatever the permutation, there was no evidence that the requisite
majority was not obtained when the CSA and SCSA were signed. We do not
agree with the submission that there was no mechanism or power in the CSA
which allowed for any variation other than its original signatories. The
CSA and the SCSA are not 2 separate agreements but one.
Lack of good faith - Valuation
55. The Respondents submitted that the sale price was well below the
market value as at 5 February 2007. Both the Applicants and the
Respondents solicitors examined extensively all the 4 valuation reports
that were submitted to the Board.
56. The Applicants relied on two valuation reports prepared by Tay Gek
Hoon ("Tay"), a Licenced Appraiser from Lock Property Consultant dated 16
March 2007 and Tan Keng Chiam ("Tan") from Jones Lang LaSalle dated
September 2007. Both used February 2007 as the reference date for
valuation, where Tay valued Gillman Heights at $530 million and Tan's
valuation was $545 million.
57. The Respondent relied on 2 valuation reports prepared by Yick Keng
Hang ("Yick") who was previously the chief valuer for Overseas Union Bank
("OUB"). Yick prepared a valuation report on Gillman Heights on 18 May
2007 and valued the property at $580 as at 5 February 2007. In his second
report undated in September 2007 he revised the valuation of Gillman
Heights at 5 February 2007 to $660 million dollars.
58. The Board had the benefit of having seen and heard all 3 witnesses who
were subjected to rigorous cross-examinations by opposing counsel. We
examined the basis and the methodology adopted in arriving at the
valuations. We heard arguments on methods of valuation both direct and
residual. We also heard opposing evidence as to the estate that Gillman
Heights should be compared with as a basis of valuation. Opposing evidence
was also adduced as to whether Gillman Heights is better located compared
with other HUDC estates such as Pine Grove and Farrer Court and private
estates such as Leedon Heights and the Metropolitan. Both parties also
raised the issue of whether the rising property prices in 2007 were
anticipated. Every conceivable reason as to why Gillman Heights should
command a higher value as expounded by Yick was raised just as every
reason why the valuation by the Applicants was correct was also brought
up.
59. The Board recognises that valuation of property is not an exact
science. Certain fundamental principles are used, and factors such as the
tenure of the land, the location, the prospect for redevelopments are
considered.
Decision of the Board
60. Having heard all the witnesses we conclude that the valuation of
Gillman Heights is more likely to be in the region stated by Tay, Tan and
the first report of Yick. All 3 reports are valid in their own right. This
was despite inconsistencies in all the evidence of the 3 witnesses.
However the Board finds that Yick's evidence is more unreliable especially
his 2'ld valuation report. We do not find him an unblemished witness as
argued by some of the Respondents.
61. Yick had shown himself to be given to hyperbole. In his evidence he
claimed that he could predict property prices without difficulty. Yet
there was such a vast difference in the 2 valuation reports that he
prepared. His explanation as to why there was such a big difference defies
belief. He explained that he had little time to prepare the 1st valuation
as it was done on an urgent basis and that with the benefit of more time
being given to him he could properly assess the estate and thereby
revising the valuation from $580 million to $660 million, a substantial
difference of $80 million.
62. The Board having seen and heard him does not believe his explanation.
A review of his evidence would show that he was shifty and self-serving
whenever it suited him. His contradictions were so material and we cannot
accept his evidence on his second report. We also find that the valuation
of Gillman Heights was more likely to be in the range given in the 3
valuation reports (including Yick's 1'' valuation report) and there is no
evidence before us to conclude that the valuation adopted by the
Applicants was not in good faith.
63. The sale price was $20 million above the reserve price and within the
range of the three valuations presented to the Board. The Board cannot
find that this was not done in good faith.
Method of Distribution
64. The method of distribution adopted was based on 50% strata area and
50% share value. The Respondents were aggrieved that based on this method
of distribution, the owners of maisonette units were disadvantaged as it
favoured the owners of apartments because the maisonette owners had paid a
high price based on area per square foot and yet will receive a lower
price based on area at the collective sale. It was also brought to the
Board's attention that the NUS which owned 49.84% of all units in Gillman
Heights would be the main beneficiary of this method of distribution as
they owned the apartments.
Decision of the Board
65. The Board is not satisfied that the method of distribution was not in
good faith. We find that this method was an acceptable method of
distribution which took into consideration 2 common factors - strata area
and share value. This is not an unreasonable method of distribution.
66. The Board is very mindful that the NUS was the majority owner and
carefully examined whether NUS had been favoured in any way. No evidence
was adduced to the Board that the NUS was favoured or the method of
distribution was chosen so that NUS as the majority owner would be induced
to vote in favour of the sale. In fact, NUS did not take part in any of
the proceedings other than agreeing to abide by the decision of the
majority of the other owners of Gillman Heights whether to sell or not to
sell. The Applicants had acted properly in dealing with the NUS and the
NUS had acted properly when they agreed to abide by the majority decision
and not playing any part in the collective sale process. No favour was
sought by NUS and no favour was given to NUS. This objection is without
merit and must be dismissed.
Financial loss
67. The Board will deal with the complaint of financial loss by the 21S'
Respondent and others.
68. The 21stRespondent's late wife purchased the unit under a Civil
Service Scheme in 1985. When she resigned in 1992, she was required to pay
a penalty of $15,091. This amount was paid in 1997.
Decision of the Board
69. This amount should not be considered as a deductible for the purpose
of computing financial loss. The payment of the penalty is a contractual
issue between his late wife and the Civil Service. There were other
Respondents who alleged financial loss in that they had incurred
renovation costs. The Board does not find any evidence of financial loss
and hence dismiss such objections.
70. The permissible objections are clearly spelt out in the Act and the
Board cannot take into account emotional reasons and the replacement costs
into consideration. The Board therefore dismissed all such objections.
Conclusion
The Board is satisfied that the Application complied with the Act and
accordingly approved the collective sale of Gillman Heights. The Board
will hear the issue of costs.
|