Liu Chee Ming and Others v Loo-Lim Shirley

[1] This was an appeal against the decision of the Strata Titles Board (“the Board”) approving the collective sale of a condominium known as Futura (“Futura”) under s 84A of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“LTSA”). On 25 October 2007, I dismissed the appeal. The appellants have appealed to the Court of Appeal.

[2] Futura is a freehold 26-storey residential development located at Leonie Hill Road. The condominium comprises 72 units having a total share value of 75. By 12 September 2006, subsidiary proprietors with 80% or more of the share value had signed a collective sale agreement (“CSA”) which, inter alia, appointed a sale committee to negotiate with any intending purchaser and finalise the terms of sale of all the estate, rights, title and interest of the intending vendors in Futura at a minimum price of $279,363,774.

[3] On 12 September 2006, a public tender for the sale of Futura was launched. DTZ Debenham Tie Leung (SEA) Pte Ltd (“DTZ”) was the marketing agent. Despite DTZ’s marketing efforts, the response when the tender closed on 19 October 2006 was muted. There was only one bid at $291 million by City Sunshine Holdings Ltd, a subsidiary of City Developments Pte Limited and an expression of interest by another party, Wincheer Investment Pte Ltd. I will refer to the bidder as “CDL”. Although CDL’s bid was $11 million more than the minimum price, the sale committee could not accept the bid unreservedly because of two conditions.

[4] The first of CDL’s two conditions is found in clause 4A.1 and 4A.3 of the appendix annexed to the form of tender. These provisions stated:

[5] The second of the two conditions is found in clause 10.1 and 10.2 which stated:

[6] As can be seen, the two conditions were very disadvantageous to the vendors. The first in respect of the development charge (“DC”) was that such a charge was to be determined by CDL’s architect which would be final, conclusive and binding. In other words, although the DC is determined by the relevant authority, the authority’s determination would be irrelevant as it would be CDL’s architect’s determination that would count. Ms Tang Wei Leng (“Ms Tang”), a director of DTZ elaborated on the concerns about this condition in [11] to [15] of her affidavit in support of the vendors’ application to the Board for an order of sale of all the units in Futura under s 84A of the LTSA. The paragraphs stated:

[7] The second condition relating to any encroachment onto the land was to be ascertained from a survey to be carried out by a registered surveyor appointed by CDL or persons authorised by CDL. If there was any encroachment, it would entitle CDL to rescind the contract of purchase or a reduction of the purchase price. Accordingly, if the property market turned for the worse, CDL could use the encroachment, if any, to back out from the purchase. Ms Tang said in [18] of her affidavit that she had advised the sale committee that there was a great possibility there could be encroachment issues in older developments like Futura.

[8] The views of the sale committee and negotiations with CDL came from the evidence of Ms Tang as well as Chan Wing Peng (“Mr Chan”), a member of the sale committee. They had both filed affidavits and given evidence before the Board.

[9] The sale committee decided to reject the two conditions but realised that there was no other bidder. The sale committee instructed DTZ to discuss and negotiate with CDL to remove the two conditions. According to Ms Tang, she met two representatives of CDL on 20 October 2006 to discuss the two conditions. The next meeting was on 23 October 2006 but no agreement could be reached then. Ms Tang met the sale committee at the office of their solicitors Lee & Lee the same day and briefed them on the situation. She was then instructed to negotiate with CDL to remove the two conditions for a reduction (in the price) not exceeding $5 million. The sale committee sat in a meeting room at Lee & Lee while Ms Tang made calls to CDL on her mobile phone outside of the room. She would revert to Mr Chan whenever CDL made a proposal on the price reduction and this went on until CDL agreed to a price reduction of $3.7 million. CDL insisted, however, that the deal had to be concluded that night itself. The sale committee agreed to the reduced price of $287.3 million as it was still higher than the minimum price and there was no other bid. CDL representatives then went over to Lee & Lee’s office the same night and submitted a revised bid at $287.3 million without either of the two conditions. At about 11pm, the sale agreement was concluded. The negotiations and the conclusion of the sale agreement took about three hours that night.

[10] Subsequently, an application was made to the Board under s 84A of the LTSA by Shirley Loo-Lim as the authorised representative of subsidiary proprietors who held at least 80% of the share values in Futura. The subsidiary proprietors of six units filed objections to the application. After mediation efforts failed, the Board conducted a hearing. On 23 May 2007, the Board decided to grant the application and issued an order for the sale and other related matters. Proprietors of five units decided to appeal against the Board’s decision and filed this originating summons. After hearing arguments, I dismissed their appeal.

[11] Section 84A (9) of the LTSA provides that the Board shall not approve an application –

[12] Section 98(1) of the Building Maintenance and Strata Management Act 2004 (Act 47 of 2004) provides that no appeal shall lie to the High Court against an order of the Board except on a point of law.

[13] The plaintiffs submitted that “a point of law” includes “errors of law”. They relied on Halsbury’s Laws of England, vol 1(1) (Butterworths, 4th Ed Reissue, 1989) para 70 which states:

[14] The above passage was cited with approval by Selvam JC in MC Strata Title No. 958 v Tay Soo Seng [1993] 1 SLR 870 (“Tay Soo Seng”). In Edwards (Inspector of Taxes) v Bairstow [1956] AC 14 (“Edwards v Bairstow”), Lord Radcliffe said at 35 and 36:

[15] The statements in Halsbury’s and in Edwards v Bairstow and Tay Soo Seng were cited to me in Koh Gek Hwa v Yang Hwai Ming [2003] 4 SLR 316 by the appellants there without objection by the respondents. Therefore, I did not decide whether the statements or a narrower meaning of a point of law should apply. However, such a contest was considered by Justice Andrew Ang in Ng Swee Lang v Sassoon Samuel Bernard [2007] SGHC 190 and in Dynamic Investments Pte Ltd v Lee Chee Kian [2007] SGHC 216 (“Dynamic”). After considering the wider and narrower meaning, Ang J decided that those statements, which have the wider meaning, were applicable to an appeal from a decision of the Board. It is not necessary for me to repeat what he said.

[16] In the present appeal before me, the statement in Halsbury’s was again cited by the appellants without contest by the respondents. Nevertheless, I take this opportunity to say that I agree with Ang J on the wider meaning for a point of law in an appeal from a decision of the Board but it must be remembered that the statement in Halsbury’s should not be taken to allow an appellant to raise issues of fact. That is why Ang J held in Dynamic at [14] that a decision on the facts of the case could not be challenged unless there was an error of law either ex facie or such as was described in Edwards v Bairstow. Thus, Ang J said in Dynamic at [16] that it is for an appellant, such as those before me, to show that the finding of the Board was such that “no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal”.

[17] As regards whether a transaction is “not in good faith”, Ang J was of the view in Dynamic at [12] that this was a question of mixed law and fact. He also said at [15] that as this was a matter which the Board had to be “satisfied” on, it suggested that there was an element of subjectivity in such a decision, intended to preclude challenge to the Board’s finding save where there was an error of law.

[18] After referring to the definition of “good faith” in Black’s Law Dictionary and some cases, Ang J concluded at [24] that it was for the appellant in Dynamic to show that the subsidiary proprietors who signed the CSA there were actuated by dishonesty or bad faith so that the Board’s holding that there had been no lack of good faith could not stand. This required a consideration of the facts.

[19] With respect, I adopt the views of Ang J. The appellants before me challenge the decision of the Board on two of the specified factors in s 84A(a) of the LTSA :

(a) the sale price and

(b) the relationship of the purchaser to any of the subsidiary proprietors.

(see Applicants/Appellants’ Skeletal Submissions (“ASS”) para 11).

However, the ASS had three sub-headings:

(i) arbitrary reduction of sale price by $3.7 million;

(ii) valuation report;

(iii) powers of the sale committee.

[20] In [3] of ASS, the appellants submitted that the Board erred in its interpretation of clauses 1.1, 2.4, 5.1-5.3 and 6.1.1 of the CSA. This appeared to cover the first and third sub-headings.

[21] In [12] and [23] of ASS, the appellants submitted that the Board applied the wrong principles of law and/or erred in law by asking itself and answering the wrong question, giving reasons which disclose faulty reasoning, taking irrelevant considerations into account and failing to take into account relevant and admissible evidence and considerations.

[22] The appellants submitted that the original offer price had been arbitrarily reduced by $3.7 million. There was no justifiable basis to do so because both Ms Tang and Mr Chan were of the opinion that no DC would be payable and no land survey had been conducted to ascertain if there was any real encroachment issues.

[23] Secondly, the appellants submitted that there was no urgency as CDL’s offer was irrevocably open for acceptance until 4pm of 18 November 2006. This would have given time for a land survey to be conducted.

[24] Thirdly, the appellants submitted that the sale committee acted in bad faith in failing to convene a meeting of the vendors as stipulated in clause 6.1.1 of the CSA.

[25] Fourthly, the appellants submitted that the sale committee did not directly or indirectly participate in the negotiation on 23 October 2006 as none of the committee’s witnesses could provide an accurate or consistent account of the alleged negotiations and were unable to produce any minutes of the meeting that night. In addition, the sale committee had abdicated their duties to Ms Tang.

[26] Fifthly, the appellants submitted that Ms Tang did not act professionally and/or acted in bad faith and/or was in a position of conflict of interest when she negotiated with CDL alone on 23 October 2006.

[27] As I mentioned, under the terms of CDL’s bid, the question as to whether any DC was chargeable and if so, the amount of the DC, was to be determined by CDL’s architect alone. The fact that Ms Tang and Mr Chan did not think that any DC was chargeable was immaterial. They could not be certain that CDL’s architect would reach a similar conclusion. The Board concluded at [23] and [24] of its grounds of decision (“GD”) as follows:

[28] I would add that [23] of Ms Tang’s affidavit before the Board elaborated that at the earlier 20 October 2006 meeting, CDL had expressed the view that a DC was payable based on their architect’s estimation.

[29] Furthermore, in my view, litigation would not be likely to have assisted the vendors to displace the determination of CDL’s architect in view of the contractual provisions.

[30] The appellants’ submission that the sale committee had not obtained a land survey to deal with the second condition was tied to their submission that there was no urgency as CDL’s offer was irrevocably open for acceptance until 4pm of 18 November 2006. However, the offer that was open for acceptance until then was the offer with the two conditions which were clearly disadvantageous to the vendors. CDL was prepared to withdraw the conditions provided the deal was concluded on the very night of 23 October 2006. Therefore, contrary to the appellants’ submission, there was urgency. The sale committee could not be certain whether CDL was engaged in a bluff to secure a reduction in price and the hand they were holding was not particularly strong as there was no other bidder. Also, Ms Tang herself believed that it was likely that there would be encroachment.

[31] In [37] of its GD, the Board said:

[32] I would mention two other points.

[33] First, according to the submission for the respondent, a land survey was eventually carried out by a surveyor appointed by CDL and this revealed an encroachment of 53.4 sq metres which would have entitled CDL to withdraw its bid or reduce the price offered by $1,151,633. Of course, the sale committee did not know of this at the material date of 23 October 2006.

[34] Secondly, a land survey would not have resolved all the problems. Even if there was time and money to get one done and it revealed no encroachment, CDL was entitled to say it wanted a survey done by its own surveyor. Also, the condition about the DC would remain. The approach of the sale committee was to get rid of both conditions at one go in exchange for a sum not exceeding $5 million which would still result in a price more than the minimum price.

[36] I will deal with the third submission of the appellants regarding clause 6.1.1 of the CSA later as it is appropriate to deal with their fourth submission about the alleged negotiations before dealing with clause 6.1.1. There were multiple complaints about the alleged negotiations.

[37] First, it was stressed that there were no minutes of what transpired in the evening of 23 October 2006 and Ms Tang and Mr Chan could not give a step-by-step account as to how the price was revised downwards. The suggestion was that the evidence about the negotiations having taken place at the time and place in the manner described was false.

[38] Aside from the evidence of Ms Tang and Mr Chan, Mr Ow Yong Thian Soo, the partner in Lee & Lee who was in charge of the collective sale for the vendors confirmed that Ms Tang had met with the sale committee at Lee & Lee’s office that evening and that CDL officers had eventually gone over to Lee & Lee’s office to sign the sale agreement. However, Mr Ow did not participate in the negotiations.

[39] The Board found Ms Tang and Mr Chan to be honest witnesses. I conclude that the Board was entitled to take that view.

[40] However, the second point raised by the appellants was that by allowing Ms Tang to speak to CDL, the sale committee were not themselves participating in the negotiations and had thus abdicated their responsibilities and were in breach of the CSA. This point was coupled with other points like how Ms Tang was allowed to leave the meeting room to speak to CDL privately (over the telephone) and how the negotiations only took over three hours to conclude from 8pm to 11pm and the fifth submission which centred on how DTZ was in a position of conflict. On this submission, Ms Tang had said that DTZ did have prior dealings with CDL before and had dealt with CDL on an en bloc basis in the past. The appellants also went further and stressed that DTZ would not earn a commission if there was no sale. I will address all these points together.

[41] The fact that DTZ would only earn a commission if there was a sale is neither here nor there. There was no suggestion that such an approach was inconsistent with the terms of engagement of other marketing agents. Indeed, I think I can take judicial notice that it is common for housing agents who are marketing properties for sale, whether on an en bloc basis or not, to earn a commission only in the event of a successful sale. It was irresponsible of the appellants to raise this as an indicia of bad faith.

[42] As for DTZ having had prior dealings with CDL, this is not surprising. CDL is one of the largest and one of the most well-known developers in Singapore. DTZ is also a well-known name. Again, such dealings cannot be an indicia of bad faith on the part of DTZ when negotiating with CDL. Any suggestions that DTZ was beholden to CDL would again be irresponsible without concrete evidence.

[43] That the negotiations were concluded over three hours (or less) is again neither here nor there. Likewise, the fact that Ms Tang went out of the meeting room to speak to CDL over the telephone.

[44] As for the responsibility of the sale committee, the appellants relied on clause 2.4.4 of the CSA which stated that the sale committee have the authority “to negotiate with any intending purchaser and to finalise the terms and conditions of the Contract of Sale”. I would add that clause 2.4.2 stated that the sale committee have the authority “to instruct, confirm and/or ratify all instructions given to the Marketing Consultants by the Sale Committee relating to the Collective Sale”.

[45] The submissions of the appellants meant that the sale committee must be in direct contact with CDL and not through DTZ. I did not think clause 2.4.4 dictated that procedure. In my view, the sale committee were entitled to negotiate directly with CDL or through DTZ. Ms Tang was taking instructions from the sale committee who had set the limit of a $5 million reduction. Furthermore, she continued to revert to the sale committee that evening on the process of the negotiations.

[46] It was also suggested by the appellants that only Mr Chan was giving instructions and not a majority of the sale committee, as required under clause 2.3.1 of the CSA, but counsel for the appellants before me accepted that this point was not even put to Mr Chan when he was cross-examined.

[47] Thus, the crux of the appellant’s multiple points was that DTZ had been left to negotiate as they wished and DTZ was too quick to agree to a reduction of $3.7 million in exchange for the withdrawal of the two conditions because of its prior dealings with CDL and because DTZ wanted to ensure a sale to earn its commission.

[48] However, Ms Tang had a limit of up to $5 million. She managed to obtain the withdrawal of the two conditions in exchange for $3.7 million. Furthermore, the appellants themselves did not say what quantum of reduction, if any, would be reasonable. It must be remembered that the test is one of absence of good faith and not whether one could find any fault. In my view, the Board was entitled to conclude that there was no absence of good faith in respect of the price reduction.

[49] I come back to the third submission regarding clause 6.1.1 of the CSA which is set out in the Board’s GD.

[50] The appellants were not parties to the CSA even though eventually, by virtue of the decision of the Board, they were bound by its terms. Accordingly, their complaint about a breach of clause 6.1.1 was from the angle that such a breach established an absence of good faith. The vendors who had signed the CSA were not opposing the application to the Board.

[51] The appellants contended that when CDL’s bid was opened, the sale committee should have complied with clause 6.1.1, that is, to convene a meeting of the vendors to discuss the bid but the sale committee did not. The Board disagreed. Its reasons are set out in [45] to [49] of its GD:

[52] In my view, clause 6.1.1 would kick in if the offer with conditions was the best offer which the sale committee managed to secure. The convening of the meeting of the vendors would then be to obtain the consent of the vendors to that offer. Were the sale committee supposed to convene a meeting immediately after CDL’s bid was opened without even trying to secure a better offer? The appellants did not address this point. Since the sale committee were able to obtain CDL’s agreement to withdraw the two conditions in exchange for a reduction of $3.7 million, at a price about $7.9 million higher than the minimum price, was CDL’s original bid still the best offer? As mentioned, the two conditions were very disadvantageous to the vendors. The reduction of $3.7 million was about 1.27% of the original bid of $291 million. In my view, the reduced price without the two conditions was the better offer and clause 6.1.1 did not kick in.

[53] In any event, it appeared to me that the sale committee and its solicitors genuinely held the view that clause 6.1.1 did not apply in the circumstances. Accordingly, there was no basis for the Board to conclude that a failure to comply with clause 6.1.1 amounted to an absence of good faith.

[54] A valuation report was eventually obtained from Knight Frank Pte Ltd (“Knight Frank”) dated 4 January 2007 signed by Lydia Sng. The report stated that as at 23 October 2006, the open market value of Futura was $287 million.

[55] The appellants submitted that the Board had erred in finding that the “valuation gave support to the decision of the Sale Committee at $287.1 million” as the valuation was, inter alia, only issued by Knight Frank on 4 January 2007 and backdated to 23 October 2006.

[56] The appellants submitted that, first, the Board had erred because the sale price was $287.3 million and not $287.1 million. In my view, the latter figure was obviously a typographical mistake as other parts of the GD referred to the sale price of $287.3 million. In any event, the Board’s point was that the valuation of $287 million supported the sale price.

[57] The appellants’ second submission on this point was that the Board seemed to imply that the sale committee knew, at the material time of 23 October 2006, that the sale price was higher than the valuation and that this could not be correct since the valuation was done later. I see no such implication in the Board’s decision and need say no more on this submission.

[58] There was also a suggestion before the Board that because the valuation was done after 23 October 2006, the valuation by Knight Frank was obtained with the knowledge of the actual sale price and thus obtained after the event just to support the sale price. However, as the Board rightly observed at [41] and [42] of the GD, there was nothing wrong with obtaining the valuation report after the sale in the light of the legislative requirements then, although I accept that if a valuation report had been obtained before the sale, that would have avoided this particular argument. Furthermore, the appellants did not ask to cross-examine Lydia Sng. Neither did they obtain their own valuation report. It seemed to me that such conduct of the appellants in the face of their criticism of Knight Frank’s valuation report reflected the appellants’ own lack of good faith.

[59] The appellants’ written submission (at [27] and [28]) was that although clause 2.3.1 (not 2.4.4) of the CSA required the sale committee to act at a meeting by a simple majority, Mr Chan had acted unilaterally when instructions were given to Ms Tang to negotiate for the removal of the two conditions subject to a maximum reduction of $5 million and not to give away too much during the negotiations. Yet, as mentioned in [46], there was no suggestion to Mr Chan when he was cross-examined, that he was acting on his own. In the light of that, this point was not pursued in oral arguments.

[60] The appellants submitted at [32] of their written submission that the Board had erred in concluding that the sale committee were entitled not to open meetings at DTZ’s office and at Lee & Lee’s office to subsidiary proprietors outside of the sale committee. This submission was not meaningful. There was no evidence that the appellants, who did not sign the CSA, had asked to attend such meetings and there was no other objecting party before me claiming to have been refused attendance rights or that such refusal amounted to an absence of good faith.

[61] The other arguments of the appellants under this sub-heading repeated the arguments about the absence of minutes and clause 6.1.1 which I have dealt with.