Court of Appeal · Decided 2 April 2009

Ng Eng Ghee and Others v Mamata Kapildev Dave And Others (Horizon Partners Pte Ltd, intervener) and Another Appeal

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[2009] SGCA 14Case no. CA 119/2008, 120/2008, OS 10/2008

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Introduction
[1] En bloc sales have often aroused heated debate and controversy ever since enabling legislation was first introduced in 1999. The ground-breaking legislation was intended to and has facilitated the collective sale of qualifying estates even in the absence of unanimous consent by all the subsidiary proprietors. Parliament’s primary objective in enacting the collective sale scheme was to promote the rejuvenation of older estates as well as the optimal use of prime land to build more quality housing in land-scarce Singapore. To achieve this salutary objective, the scheme, inter alia, permits a majority of not less than 80% of consenting subsidiary proprietors to effect the collective sale of the entire qualifying estate inclusive of the units of objecting subsidiary proprietors.
[2] In the last decade, however, periodic price surges in the property market have prompted some housing estates to carry out collective sales even in the absence of an immediate or urgent need for rejuvenation or upgrading. The lure of “windfall profits” has been a siren song for many (especially absent landlords and speculators), to the detriment of those who do not want to lose their homes at any price. As a result, bitter acrimony and strained relationships have often arisen between owners who want to sell and those who do not want to sell their units. The unedifying drama and intrigue that an en bloc sale can precipitate has been captured in vivid and unflattering detail in the press and even in a recent television soap opera.
[3] Nevertheless, it cannot be gainsaid that, in establishing the statutory scheme, Parliament had carefully considered both the rights and financial interests of the objecting subsidiary proprietors. As a class, they have to be adequately protected from bullying and underhand tactics as well as any potentially collusive or improper conduct on the part of any of the majority owners. Thus, detailed modalities were put in place to ensure that the views of objecting owners are adequately ventilated and their objections independently appraised. In particular, a Strata Titles Board (“STB”) is expressly empowered to review the entire sale process and to ensure that it has been carried out in good faith (the provision currently governing the constitution of STBs is s 89 of the Building Maintenance and Strata Management Act (Cap 30C, 2008 Rev Ed)). In assessing whether a sale transaction has been carried out in good faith, the STB must take into account, inter alia, the sale price for the lots and the common property in the qualifying estate (see s 84A(9)(a)(i)(A) of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) (“LTSA”)).
[4] In the present appeals, a number of critical issues in relation to the collective sale process arise for scrutiny. One issue is the nature of the duties owed by a sale committee (“SC”) to the subsidiary proprietors. Are these duties analogous to those of an ordinary property agent, a mortgagee exercising its power of sale or a trustee selling trust property? What is the extent of these duties: for example, does the SC have to obtain the best price for the property and what steps must it take to do so? Another issue is the meaning of “good faith” in s 84A(9)(a)(i) of the LTSA and what that obligation entails in relation to the sale transaction. In determining whether a transaction is in good faith, is a breach of duties by the SC relevant?
[5] As this is a lengthy judgment, we set out the schematic layout of the judgment for ease of reference, which is as follows:
Introduction..................................................................................................
1
The background............................................................................................
4
The preliminary steps..........................................................................
6
The launch of the formal collective sale process and the terms of the collective sale agreement..............................................................
9
The efforts to sell the Property between May 2006 and December 2006.....................................................................................................
14
Changing market conditions and the SC meeting on 6 January 2007.....................................................................................................
16
The decision of the original SC to sell the Property to HPL............
27
The application to the Horizon Board.........................................................
35
The parties’ submissions....................................................................
36
The Horizon Board’s decision............................................................
38
The appeal to the High Court......................................................................
43
The appellants’ submissions..............................................................
44
The Judge’s decision...........................................................................
45
The present appeals.....................................................................................
46
The parties’ submissions....................................................................
46
The appellants’ submissions.......................................................
46
The respondents’ submissions....................................................
50
The intervener’s submissions....................................................
52
The nature of an appeal from an STB decision to the High Court..
52
The main legal issues...................................................................................
59
The relationship between an SC and subsidiary proprietors...........
59
The SC as a fiduciary.................................................................
62
A “trustee” of the power of sale................................................
66
“Good faith” in the transaction................................................
71
The duties of an SC.............................................................................
75
Duty of loyalty or fidelity............................................................
75
Duty of even-handedness...........................................................
76
Duty to avoid any potential conflict of interest.........................
76
Duty of full disclosure................................................................
81
Duty of conscientiousness..........................................................
84
(1) Duty to obtain the best price.........................................
85
(a) Increasing the prospects of obtaining the best price........................................................................
86
(b) Making the decision to sell...................................
87
(2) Duty to consult the subsidiary proprietors......................
90
Summary....................................................................................
91
Functions and duties of an STB........................................................
93
Breaches and omissions of the original SC.................................................
96
Failure to act with due diligence and transparency in the process leading to the appointment of the property agent.............................
97
Failure to proactively follow up on the Vineyard offer and other expressions of interest........................................................................
98
Failure to use Vineyard offer as leverage..........................................
99
Failure to obtain advice from an independent property expert prior to the sale...................................................................................
99
Acting with undue haste in proceeding with the sale to HPL.........
101
Decision to sell to HPL notwithstanding the conflicts of interest involving two key members of the SC and First Tree.......................
103
Failure to consult the consenting subsidiary proprietors................
106
Errors in the Horizon Board’s decision.......................................................
108
Errors in the decision of the Judge..............................................................
113
Summary of our findings...............................................................................
114
Conclusion.....................................................................................................
116
The background
[6] Two appeals have been brought before us (“the present appeals”). Civil Appeal No 119 of 2008 (“CA 119/2008”) was filed by the subsidiary proprietors of three units in the condominium development known as “Horizon Towers” (“the Property”) who had objected to the application to an STB (“the Horizon Board”) for the collective sale of the Property. Civil Appeal No 120 of 2008 (“CA 120/2008”) was filed by the subsidiary proprietors of another two units in the Property, who had also objected to the collective sale. The present appeals are brought against the decision of the High Court judge (“the Judge”) (see Lo Pui Sang v Mamata Kapildev Dave [2008] 4 SLR 754 (“the Judgment”)) upholding the decision of the Horizon Board on 7 December 2007 (see Mamata Kapildev Dave v Lo Pui Sang/Kuah Kim Choo [2008] SGSTB 7 (“the HB decision”)) to grant an order for the collective sale of the Property, which consists of two plots of land, 15 Leonie Hill Road Singapore 239194 and 29 Leonie Hill Singapore 239228.
[7] The Property is a 99-year leasehold condominium with a total of 210 units. As will shortly become apparent, the history of the collective sale process for the Property is complex and convoluted. The main dramatis personae in the saga were: First Tree Properties Ltd (“First Tree”), the marketing agent for the sale of the Property; the SC which was appointed at an extraordinary general meeting (“EGM”) on 23 April 2006 (see [11] below) to carry out the collective sale (“the original SC”); the original SC’s solicitors advising on the process of the collective sale; and Hotel Properties Ltd (“HPL”), which made an informal offer to purchase the Property. This offer eventually led to the sale of the Property to Horizon Partners Pte Ltd (“HPPL”), the intervener in the present appeals. The names of a few key individuals recur in the various accounts of the collective sale process and we should perhaps state who they are, namely:
(a) Arjun Samtani, who was the chairman of the original SC;
(b) Wee Hian Siew, the secretary of the original SC;
(c) Tan Kah Gee, a member of the original SC;
(d) Henry Lim, a member of the original SC who claimed to have liaised with several potential buyers for the Property (see [27] and [205] below);
(e) Bharat Mandloi, the only member of the original SC who openly expressed serious reservations at an SC meeting (see [30]–[33] below) about the propriety of immediately entering into the sale of the Property to HPL; and
(f) Alvin Er, the managing director of First Tree.
[8] We should point out here that certain aspects of this labyrinthine narrative cannot be delineated clearly because the Horizon Board had ruled in the course of the proceedings before it that plainly relevant and admissible evidence (viz, pertaining to the legal advice the original SC had received from its solicitors) was privileged. As will be seen below, the ruling of the Horizon Board was wrong in law and contrary to its statutory functions and duties. Furthermore, Wee Hian Siew and Henry Lim were the only members of the original SC who testified on behalf of the respondents, the consenting subsidiary proprietors, during the proceedings before the Horizon Board. The objecting subsidiary proprietors’ application dated 25 October 2007 to subpoena Arjun Samtani as a witness of fact was rejected on the overly legalistic basis that insufficient particulars of the proposed testimony were provided. We shall return to these points below (at [199], [191] and [56] respectively).
The preliminary steps
[9] The chain of relevant events can be traced back to October 2005, when a collective sale of the Property was first mooted by Wee Hian Siew and Henry Lim. Arjun Samtani was the chairman of the management council (“MC”) of the Property at the time. It appears that Arjun Samtani was heavily involved in the informal preparatory work for the collective sale. Wee Hian Siew testified before the Horizon Board that it was Arjun Samtani and two other members of the MC of the Property – Tan Kah Gee and Wee Hian Siew himself – who started the ball rolling in October 2005.[note: 1] It was clear to him well before the formation of the original SC that Arjun Samtani would seek to participate in its work.[note: 2] Subsequently, First Tree was invited to make presentations on the feasibility of a potential collective sale, beginning in February 2006. First Tree is a housing agent with a paid-up capital of $50,000. It has two shareholders, Alvin Er and his wife. Neither of them is a licensed valuer. The registered address of First Tree at the time of the Horizon Board’s proceedings was Alvin Er’s house although the actual business address was at the CPF Building in Bishan. Wee Hian Siew acknowledged in his testimony at the hearing before the Horizon Board that, as secretary to the original SC, he did not personally check on First Tree’s track record.[note: 3] Neither was he aware of whether any of the other original SC members had done so.[note: 4] The first presentation was made on 4 February 2006 to Henry Lim and Wee Hian Siew; the second took place on 11 March 2006 to about 20 subsidiary proprietors of the Property; and the third on 25 March 2006 with some 40 to 50 subsidiary proprietors present. When the presentations were made, the only other successful en bloc sale that First Tree appeared to have had an involvement in was St Michael’s Lodge, a development of less than 12 units.[note: 5] It is worth noting that, at the first presentation, First Tree proposed a reserve price of $450m. Alvin Er testified that this was revised to $500m at the third presentation, because property prices were then rising. In the course of the third presentation, on 25 March 2006, First Tree informed the subsidiary proprietors that high-end collective sale prices had already shot up by 40% in the previous six months. Pertinently, First Tree justified the revision of the reserve price as follows:[note: 6]
[10] In March 2006, Arjun Samtani and Tan Kah Gee, unknown to the other original SC members and consenting subsidiary proprietors, took steps to purchase additional units in the Property. Tan Kah Gee moved first by signing an option dated 21 March 2006 for the purchase of an additional unit at the price of $1.2m. A loan was taken to purchase the unit. The sale and purchase was completed on 26 June 2006. As at 2 January 2009, the outstanding amount of the loan was $900,500.53. Shortly before First Tree’s third presentation on 25 March 2006 (see [9] above), Arjun Samtani entered into an option dated 24 March 2006 to purchase an additional unit at the price of $1.35m. The option was exercised on 7 April 2006. He and his daughter also took a substantial loan of $1m to finance the purchase. The current outstanding sum has not been disclosed.
The launch of the formal collective sale process and the terms of the collective sale agreement
[11] The formal collective sale process was launched at an EGM on 23 April 2006 (“the 23 April 2006 EGM”), when a resolution was passed appointing the SC for the purposes of the collective sale of the Property. The subsidiary proprietors of 133 units and 706 share values (65.67% of the total share values) in the Property were represented at the EGM. Alvin Er has testified that, after the third presentation on 25 March 2006 and prior to the 23 April 2006 EGM, Arjun Samtani had contacted him and told him to attend the EGM and make a presentation. At Arjun Samtani’s request, a copy of the proposed presentation was sent to him alone and he gave the go-ahead (Alvin Er did not explain why Arjun Samtani had asked for a copy of the proposed presentation).[note: 7] At the 23 April 2006 EGM, First Tree informed the subsidiary proprietors that, based on the latest transaction prices at that time, the sale of the Property at a reserve price of $500m was estimated to result in an average premium of about 80% for each unit.
[12] First Tree was formally appointed as the sole marketing agent for the Property by a letter of appointment dated 26 April 2006. The letter of appointment provided that First Tree’s marketing fee for the collective sale of the Property, which should not in any event exceed 1% of the sale price, would be payable solely by the eventual purchaser. The relevant clause reads:[note: 8]
We pause to observe that this was an unusual arrangement (see [192] below). The appointment was to be valid until six months after the date when the owners having an aggregate of at least 80% of the share values of the Property had signed a collective sale agreement, or 31 March 2007, whichever was earlier, subject to renewal at the discretion of the SC. A collective sale agreement dated 11 May 2006 (“the CSA”)[note: 9] was circulated for signing by the subsidiary proprietors. By 20 July 2006, the subsidiary proprietors representing 80.65% of the share values of the Property had signed the CSA and thus First Tree’s mandate was due to expire on 20 January 2007.
[13] Under cl 3.1 of the CSA, those subsidiary proprietors who signed the CSA (“the consenting subsidiary proprietors”) acknowledged and ratified the appointment of the following individuals to the original SC:
Name
Unit
Appointment
(a)
Mr Arjun Samtani
#12-03, West Tower
Chairman
(b)
Mr Wee Hian Siew
#14-03, West Tower
Secretary
(c)
Mr Claude Reghenzani
#15-02, West Tower
Member
(d)
Dr Chan Siew Chee
#07-04, East Tower
Member
(e)
Mr Tan Kah Gee
#16-03, East Tower
Member
(f)
Mr Bharat Mandloi
#12-04, East Tower
Member
(g)
Mr Shahrukh Marfatia
#14-05, East Tower
Member
(h)
Mr Henry Lim
#12-06, West Tower
Member
(i)
Mr George Eapen
#15-03, West Tower
Member
[14] The ambit of the original SC’s authority and discretionary powers under the CSA was conspicuously broad. Presumably, this was to facilitate the management of the collective sale process by the original SC and to avoid its having to convene an EGM for each and every decision that had to be made in the course of the process. Clauses 4.1 and 5 of the CSA, inter alia, provided that:
[15] Clause 4.2 of the CSA provided that “[t]he [SC] shall notify the Consenting Subsidiary Proprietors from time to time as regards the progress of the Collective Sale”. Interestingly, at the 23 April 2006 EGM, Arjun Samtani had informed the subsidiary proprietors that they would be given constant updates via notices or circulars, “preferably every 2 weeks”.[note: 10] But, as will be seen below (at [23]), the original SC failed to provide updates to the subsidiary proprietors on the collective sale during the period from October 2006 to January 2007 when the sale was actually entered into.
[16] Clause 6.1(c) of the CSA provided that, in the event that unanimous consent to the CSA was not obtained, the consenting subsidiary proprietors agreed as between themselves to:
[17] Clause 6.2 provided that:
[18] Significantly, Arjun Samtani and Tan Kah Gee did not disclose that they had purchased additional units in the Property (see [10] above) to the other subsidiary proprietors or the other members of the original SC, either during the 23 April 2006 EGM or next to their names in cl 3.1 of the CSA (see [13] above) or indeed at any other material point of time prior to the issue of the option to purchase the Property on 22 January 2007 (see [42] below). The other subsidiary proprietors found out about the additional units in May 2007 only after the application to the Horizon Board for the collective sale of the Property had been filed, and Arjun Samtani’s and Tan Kah Gee’s e-mails dated 30 April 2007 and 2 May 2007 respectively to the original SC’s solicitors disclosing their interests in additional units were unearthed in the course of the discovery process.
[19] Arjun Samtani’s involvement in the collective sale process continued with undiminished vigour. Indeed, it was he who chaired the 23 April 2006 EGM. At the same EGM, he also proposed (seconded by Tan Kah Gee) that the number of members of the original SC be fixed at nine. The other members of the original SC who testified before the Horizon Board agreed that, as their chairman, he acted in a leadership role for the collective sale process (see, eg, transcript of Wee Hian Siew’s testimony before the Horizon Board on 6 November 2007 at pp 59–60). It was Arjun Samtani who called for and set the agenda for the SC meetings, as evidenced by e-mail correspondence between the original SC members (see eg, [26] below). On many occasions, directions and instructions were solely given by him on the conduct of the sale. Communications to the consenting subsidiary proprietors were signed off by him (see eg, [23] below). All important communications were channelled through or to him qua chairman of the SC. It would not be overstating the position to say that he played a crucial, if not dominant, role in initiating, implementing and finalising the collective sale.
The efforts to sell the Property between May 2006 and December 2006
[20] The marketing efforts for the sale of the Property began in earnest in May 2006, when First Tree sent marketing information to some 44 local developers. A public tender for the Property was launched on 21 July 2006. It closed on 15 August 2006 with no bids. The original SC members and First Tree tried to follow up on expressions of interest from a handful of developers, but to no avail. Alvin Er informed the original SC at a meeting on 17 August 2006 that most of the developers had sought to quote below the reserve price. In particular, on that day itself, Wing Tai Holdings Limited had informed him that it was willing to meet but only if the original SC would allow negotiations for a price below $500m.
[21] Faced with this situation, First Tree indicated at the 17 August 2006 meeting that it would be willing to be a co-broker with other property agents in the hope of obtaining an acceptable offer. Thus, some members of the original SC also approached other marketing agents such as DTZ Debenham Tie Leung (“DTZ”) and Knight Frank to market the Property.
[22] On 13 and 14 September 2006, First Tree contacted 22 local developers to inform them that the Property was available through private treaty. Efforts at contacting potential buyers continued but no firm offers ensued. Between September 2006 and December 2006, Tang Wei Leng from DTZ approached and sounded out numerous potential buyers, including Far East Organization, Lippo Realty, Frasers Centrepoint Homes and Capitaland. A site visit was arranged for Capitaland but it subsequently informed DTZ that it was not prepared to pay $500m for the Property.
[23] The original SC initially provided regular updates to the subsidiary proprietors on the progress of the sale, eg, on 16 August 2006, 21 August 2006 and 21 September 2006.[note: 11] The last such communication signed by Arjun Samtani was dated 23 October 2006. Significantly, it acknowledged that the property market was rising and promised to keep the subsidiary proprietors updated:[note: 12]
Between November 2006 and early January 2007, the original SC did not meet as a committee. No updates were provided to the subsidiary proprietors. The next notification on 23 January 2007 announced that an option had been issued for the Property.
Changing market conditions and the SC meeting on 6 January 2007
[24] Beginning in late December 2006, however, interest in purchasing the Property at or above the reserve price had begun to mount visibly, attesting to a corresponding price surge in the property market (see [38] below). On 23 December 2006, Alvin Er met with the top management of HPL. He informed HPL that the reserve price could not be revised below $500m. He was then informed that HPL was considering purchasing the Property, possibly in a joint venture with other parties, and that he would be informed once a decision had been made. According to Alvin Er, he immediately informed Arjun Samtani of what had transpired during this meeting with HPL.[note: 13] He did not inform any of the other original SC members.
[25] On 3 January 2007, Henry Lim (an SC member, see [13] above) received through a contact, Keith Yeo, a letter of offer from a Malaysian law firm, M/s Shan & Su, which stated:[note: 14]
Henry Lim forwarded this letter to the other original SC members and the original SC’s solicitors for the collective sale process, on or around 4 January 2007.
[26] On 4 January 2007, Alvin Er received a call from HPL. Its management wanted to meet up with the original SC to discuss the collective sale. Alvin Er contacted Arjun Samtani, who arranged for the meeting to take place later that day at 6.00pm.[note: 15] Some of the SC members, including Arjun Samtani, met with HPL’s representatives at the SC’s solicitor’s office. HPL verbally indicated that it was willing to purchase the Property for $500m. No minutes of this meeting were taken.[note: 16] After this meeting, Arjun Samtani sent out an e-mail dated 5 January 2007 to the SC members, stating:[note: 17]
[27] On the same day, Henry Lim informed Keith Yeo about the HPL offer and informed him that if Vineyard was serious about its offer, it should immediately place a $50m deposit as proof of its intent. HPL was, on the other hand, not similarly requested to affirm its commitment. In the proceedings before the Horizon Board (see [46] and [48] below), Henry Lim testified that he contacted Keith Yeo a few more times up till 16 January 2007, but received no response from Keith Yeo or any other person on behalf of Vineyard.
[28] On 6 January 2007, a crucial SC meeting (“the 6 January 2007 SC meeting”) took place. The original SC discussed the issue of whether it should raise the sale price for the Property and reviewed HPL’s offer as well as other potential offers. We now set out the minutes of the 6 January 2007 SC meeting as recorded by a solicitor of the original SC in full:[note: 18]
[29] The brevity of the minutes is striking, given that the meeting itself took an hour and a half, and that several other important issues were apparently extensively discussed. It has now emerged that important concerns and reservations voiced by at least one of the original SC members, Bharat Mandloi, have been surprisingly papered over and not minuted. Bharat Mandloi testified on 2 August 2007 before the Horizon Board about what was discussed at the 6 January 2007 SC meeting. The crux of his evidence (which has largely been corroborated) has given us cause for real concern.
[30] It was recorded in the minutes of the 6 January 2007 SC meeting that Bharat Mandloi had abstained from voting on the sale to HPL. In truth, he had left the 6 January 2007 SC meeting before the voting took place.[note: 19] He explained that the circumstances prompting him to abruptly walk out of the meeting were as follows:[note: 20]
[31] The most troubling aspect of his testimony is as follows:[note: 21]
[32] He added on cross-examination:[note: 22]
[33] Subsequently, Bharat Mandloi reaffirmed his evidence:[note: 23]
[34] Wee Hian Siew, in his testimony, initially limply asserted that he could not recollect what Bharat Mandloi had asserted at the meeting but, when pressed, reluctantly conceded that he did not dispute Bharat Mandloi’s evidence:[note: 24]
Subsequently Wee Hian Siew reverted to his stance that he could not recall what Bharat Mandloi had said at the 6 January 2007 SC meeting, but acknowledged that he therefore was in no position to challenge Bharat Mandloi’s testimony that he had raised the issue of the eroded premium and the option of going back to the consenting subsidiary proprietors (see [30]–[33] above).[note: 25]
[35] Henry Lim also agreed during cross-examination that the option of going back to the consenting subsidiary proprietors had been raised at the 6 January 2007 SC meeting. He testified:[note: 26]
[36] Bharat Mandloi’s evidence certainly had the grudging support of both Wee Hian Siew and Henry Lim. Henry Lim’s tired refrain of “no comment”, when repeatedly pressed for a direct answer, speaks for itself. We find it puzzling that the Horizon Board chose not to deal with Bharat Mandloi’s account of the 6 January 2007 SC meeting in its decision at all, not even to dismiss it as irrelevant. In our view, Bharat Mandloi’s account of what transpired ought to be accepted as credible. Furthermore, it is certainly relevant and highly significant for it incontrovertibly shows that, by the time of the 6 January 2007 SC meeting, the original SC was fully apprised of the dramatic changes in the property market. Nevertheless, the original SC brusquely decided against going back to the consenting subsidiary proprietors for reaffirmation of their mandate to sell at $500m or to ascertain their wishes on how the SC ought to proceed.
The decision of the original SC to sell the Property to HPL
[37] As 6 January 2007 was a Saturday, Henry Lim effectively had one working day to follow up with the other potential offers. He was apparently unsuccessful as, on 8 January 2007, First Tree promptly sent a letter to HPL (“the 8 January 2007 letter”), stating:[note: 27]
[38] There can be little doubt that the move towards quickly wrapping up the deal with HPL took place against the background of a pronounced, widely-known and well-publicised price surge in the property market. Kalpana Rashlwala, “Developers revive interest in unsold collective sale sites”, The Business Times (11 January 2007) (“the 11 January 2007 BT article”) reported that a neighbouring condominium, Grangeford Apartments (“Grangeford”), was raising its reserve price by 25% to $350m. The report stated:[note: 28]
Alvin Er prevaricated as to whether he had drawn this article to the attention of the original SC but nevertheless unequivocally conceded that the original SC was aware of its contents.[note: 29] Wee Hian Siew acknowledged having come across the article when he read The Business Times.[note: 30] Henry Lim claimed that Alvin Er had not forwarded the article, at least, to him.[note: 31] The momentum of this surge in property prices is also dramatically attested to by a letter dated 2 March 2007 (barely two months later), in which the marketing agent of Grangeford, CB Richard Ellis, informed Grangeford’s subsidiary proprietors that it had decided to raise the reserve price to $470m (ie, by $120m) in response to an expression of keen interest by HPL to purchase Grangeford.[note: 32]
[39] As a court of law, we should not, however, rely in this matter on subsequent events to ascertain or divine the knowledge and beliefs of the original SC members at the material period of time in January 2007. It is therefore crucial for us to examine what was known to them and expressed by them on record. We have already concluded above that Bharat Mandloi’s evidence (which was not challenged by either Wee Hian Siew or Henry Lim) showed that the original SC was aware of the surge in prices in the property market at the latest by the time of the 6 January 2007 SC meeting (see [36] above). It is also highly pertinent that soon after the 6 January 2007 SC meeting, Tan Kah Gee e-mailed Arjun Samtani and the other SC members on 12 January 2007, stating:[note: 33]
This e-mail is significant for a number of reasons. First, the reference to the division of opinion among the original SC members and Tan Kah Gee’s own discomfort with the decision to sell to HPL at the 6 January 2007 SC meeting is further evidence that the original SC was apprised of the upswing in the property market at the latest by 6 January 2007. Secondly, the reference to expressions of interest from more developers suggested that, if the SC had waited a bit longer, it might have been able to obtain a better price (see also [179] below). Thirdly, why was Tan Kah Gee voicing concerns as to “whether we should handle all expression[s] of interest properly” [emphasis added]? A reasonable inference from this is that he did not believe that the original SC had, despite the “unanimity” of the decision taken earlier on 6 January 2007, acted “properly” as he was of the view that the Property “should fetch more than $500MM given the current market condition” [emphasis added]. Fourthly, it seems that, as far as Tan Kah Gee was concerned, he voted in favour of the sale to maintain “unanimity” and because of the “strong advice” received from the SC’s solicitors. It is not clear if the “division in opinion” he referred to is confined to Bharat Mandloi’s objection to the sale to HPL (see [30]–[33] above) as no individuals are identified. Regrettably, the minutes of the 6 January 2007 SC meeting are bereft of details. We have not seen any response to this e-mail but there is on record an e-mail from Arjun Samtani to Alvin Er sent soon after, on 13 January 2007, asking him to carefully maintain records (see [41] and [43] below).
[40] It bears emphasis that there was no concluded deal with HPL at this point of time when the original SC, or at least the active members of the SC, were fully aware of a fast rising property market. HPL’s response to the 8 January 2007 letter from First Tree only came on 15 January 2007 (“the 15 January 2007 offer”), in the form of an offer by a member of the HPL group (Alkaff Mansion Pte Ltd) to purchase the Property at $500m, the minimum reserve price that had been set some eight months ago at the 23 April 2006 EGM.
[41] On 16 January 2007, First Tree sent a letter to the original SC, stating that as at 5.30pm on that day, “there are no other offers and no firm indication of any other offer in the near future except from Alkaff Mansion Pte Ltd”, and recommending that the SC accept the 15 January 2007 offer.[note: 34] This the SC did on 16 January 2007 itself. It is also worth noting that, apart from the 4 January 2007 meeting between HPL and some of the original SC members (see [26] above), the original SC members apparently left it entirely up to Alvin Er to deal directly with the representatives from HPL and with Arjun Samtani. We should also point out that the SC members must have been aware that First Tree’s mandate was due to end on 20 January 2007. If no sale was concluded by then, no commission would be due to it. The mandate was eventually extended on 20 January 2007 until 28 February 2007 for the purpose of seeing through the HPL sale. We shall revisit this point again later, at [192] below.
[42] Subsequently, on 22 January 2007, the original SC issued an option to purchase to HPPL, exercisable by 4.00pm on 12 February 2007. HPPL exercised the option to purchase on 11 February 2007, thus converting the option to purchase into a sale and purchase agreement between HPPL and the subsidiary proprietors of the Property (“the S&P”). By cl 4 of the option to purchase, the sale of the Property was made conditional upon an order of the STB for the collective sale of the Property (under s 84A of the LTSA) in accordance with the provisions of the S&P.
[43] It should be noted that, before HPPL exercised the option to purchase on 11 February 2007, Henry Lim sent an e-mail dated 2 February 2007 to the original SC members and Alvin Er, entitled “Developers/contacts in touch with me on Horizon Towers”.[note: 35] The list contained some 26 names (including HPL) but not Vineyard, Shan & Su or Keith Yeo (see [39] above).
[44] It is also noteworthy that the original SC did not seek an independent valuation of the property prior to the sale even though it was expressly authorised by the CSA to do so (see cl 6.2(a) of the CSA, at [17] above). It is pertinent that the solicitors had advised the SC during the 6 January 2007 meeting that the “decision [to sell] must be supported by logic and proper advice from the property experts if the SC does not have the expertise” [emphasis added] (see [28] above). This caution was apparently forgotten by all concerned. Indeed, it was only much later that the original SC obtained a valuation dated 16 March 2007 from Chesterton International Property Consultants Ltd which purported to value the Property (as at 16 March 2007) at $485m. Subsequently, a valuation report dated 7 May 2007 was obtained from Jones Lang LaSalle, which valued the Property (as at 22 January 2007) at $496m. Finally, a third valuation report dated 1 November 2007 from CB Richard Ellis purported to value the Property at $485.5m (as at 22 January 2007) and $492.6m (as at 12 February 2007). For the sake of completeness, we should mention that the appellants had also obtained valuation reports for the Property: a report dated 18 July 2007 from SC Lim Pte Ltd which valued the Property (as at 22 January 2007) at $582m (relying on comparable sales) and $613m (considering a rising market); a report dated 18 July 2007 from HBA Group Property Consultants Pte Ltd which valued the Property (as at 22 January 2007) at $650m; and a report dated 20 July 2007 from Steven Loh Consulting Pte Ltd which valued the Property (as at 22 January 2007) at $645m. It can be readily seen that the parties appear to have had little difficulty in locating “independent” valuers, after the sale had taken place, to support their irreconcilable stances on the appropriateness of the sale price. We need say no more.
[45] On 25 March 2007, an EGM (“the 25 March 2007 EGM”) was held to consider the collective sale of the Property under the CSA, the option to purchase and the S&P. At this EGM, several subsidiary proprietors who had signed the CSA voiced their deep unhappiness about the sale to HPPL at the reserve price of $500m. In particular, vociferous complaints were made and vigorous objections raised about the lack of communication and updates from the original SC on the progress of the sale process ever since the 23 October 2006 notification (see [23] above), the absence of a proper valuation report prior to the sale and the failure to seek a fresh mandate given that the property market had risen sharply and that the earlier anticipated premium had all but evaporated.
The application to the Horizon Board
[46] On 20 April 2007, the three authorised SC members (Arjun Samtani, Wee Hian Siew and Chan Siew Chee) filed an application to the Horizon Board for the collective sale of the Property. The application to the Horizon Board was dismissed on 3 August 2007 (“the Horizon Board’s 3 August 2007 decision”) on the technical ground that it did not contain documents required under a Schedule to the LTSA. On 11 August 2007, the S&P expired without any extension being granted by the consenting subsidiary proprietors. It appears, at this stage, given the changes in market conditions, many of the consenting subsidiary proprietors were not at all keen in proceeding with the sale. HPPL, on the other hand, insisted that they exercise their best endeavours to complete the sale.
[47] By the first week of September 2007, the composition of the original SC had been entirely transformed with the resignation of all its members (see [13] above) between 27 June 2007 and 7 September 2007. On 23 August 2007, HPPL commenced legal proceedings by way of Originating Summons No 1238 of 2007 against the then members of the SC in their own capacity as well as on behalf of and as representing all the other consenting subsidiary proprietors, as well as the original SC members. It sought a declaration that these defendants were in breach of the option to purchase, inter alia, by failing to do everything in their power to obtain a collective sale order from the STB. HPPL sought an order that the defendants do everything in their power to obtain that order and, further or alternatively, for substantial damages for breach of contract. (That action is still pending.) In response to this unexpected development, subsequently, three consenting subsidiary proprietors filed an appeal to the High Court by way of Originating Summons No 1269 of 2007 against the Horizon Board’s 3 August 2007 decision not to order the collective sale. At an EGM on 20 September 2007, a wholly new SC was appointed and the S&P was extended for the purpose of obtaining a collective sale order. The new SC revealed that it agreed to this extension out of “goodwill”, in the hope that HPPL would reciprocate by dropping Originating Summons No 1238 of 2007 so long as the new SC acted in good faith to try and obtain a collective sale order.[note: 36] HPPL, however, was not agreeable to this but instead requested the Registry to adjourn those proceedings sine die to await the outcome of the present appeal.
[48] On 11 October 2007, after hearing the appeal in Originating Summons No 1269 of 2007, the High Court set aside the Horizon Board’s 3 August 2007 decision and remitted the matter to the Horizon Board. The second tranche of hearings before the Horizon Board commenced on 16 October 2007.
The parties’ submissions
[49] Essentially, the application for collective sale was challenged by objecting subsidiary proprietors on the basis that the transaction was not in good faith after taking into account the sale price (s 84A(9)(a)(i)(A) of the LTSA). Counsel for a number of the objectors submitted that the original SC, when exercising the power under the CSA of selling all the units in the Property, was acting as agent for all the subsidiary proprietors and that it was in the position of a mortgagee exercising its power of sale. One of the objectors said that, unlike a mortgagee, the original SC had no interest in the other subsidiary proprietors’ property and, thus, he would place the duty of the SC as higher than that of a mortgagee.
[50] The objectors criticised the original SC’s handling of the offer from Vineyard (see [25] and [27] above). They argued that the original SC had acted with undue haste in selling the Property to HPPL in the circumstances that it did.
[51] It was also submitted that the ownership of additional units by two original SC members (see [10] above) placed them in a position of conflict. A third person who bought an additional unit during the collective sale process was William Kwok. He was not a member of the original SC and only became an SC member on 25 February 2007. It was alleged that the conflicting personal interests of these three SC members had brought about the hurried sale of the Property.
[52] The objectors also tendered expert valuation reports to show that the Property had been sold at too low a price (see [44] above).
[53] The other objections (viz, on constitutional and jurisdictional points, ss 84A(1) and 84A(3) of the LTSA, as well as bad faith after taking into account the method of distribution of the sale proceeds) are not relevant for the purposes of the present appeals.
[54] The objectors applied on 25 October 2007 for Arjun Samtani to be subpoenaed as a witness of fact. As we have mentioned earlier (at [8]), the Horizon Board did not accede to this request.
[55] The applicants for collective sale essentially submitted that the original SC had acted in good faith in accepting HPL’s offer, given the history of the unsuccessful marketing of the Property up until December 2006. They said that the original SC had relied on its solicitors’ advice in deciding not to pursue the Vineyard offer and to sell the Property to HPL instead. However, the applicants insisted that the details of the original SC’s solicitors’ advice should not be disclosed as they were protected by legal privilege. It was also argued that Henry Lim had asked Vineyard through Keith Yeo for further information and to give a deposit of $50m if it was serious about purchasing the Property. Since this was not forthcoming, the original SC decided to give HPPL the option to purchase instead.
The Horizon Board’s decision
[56] As mentioned (at [6] above), the Horizon Board’s order directing the collective sale of the Property was granted on 7 December 2007. We have already pointed out that the Horizon Board rejected the objectors’ application to subpoena Arjun Samtani on the technical basis that they had failed to provide sufficient particulars of the proposed testimony that the applicants for the collective sale were entitled to (see [8] above). Having regard to our views on the duties and functions of an STB (see [170]–[175] below), we pause to observe at this juncture that it is regrettable that the Horizon Board took an overly legalistic approach to the issue of subpoenaing Arjun Samtani to testify. An STB is not a court of law. Its key duty is to ensure that there is good faith in a given collective sale. Its findings of fact are critical. Yet, by refusing to subpoena Arjun Samtani, the Horizon Board effectively deprived itself of key information, for example, pertaining to Arjun Samtani’s involvement in the preliminary steps prior to the commencement of the collective sale, his reasons for the purchase of the additional unit at a significant point immediately preceding the sale process and, vitally, his precise role as well as influence on the other SC members in the sale decision. Instead, as an unhappy compromise, the Horizon Board irresolutely indicated that the objectors could file another application with the necessary details. No such application was eventually filed given the constraints of time.
[57] In the HB decision ([6] supra), the Horizon Board classified the issues which it had to address under five headings as follows (at [7] of the HB decision):
Of these issues, only the last issue (the s 84A(9) point) is relevant for the purpose of the present appeals.
[58] On the last issue, the Horizon Board began by stating that, while it was possible that the original SC was an agent owing certain fiduciary duties to the rest of the consenting subsidiary proprietors, the Horizon Board was concerned only with the issue of good faith vis-à-vis the sale transaction and any breach of fiduciary duties had to be assessed in the light of this requirement (see the HB decision at [54]). The Horizon Board did not even begin to address the issue of whether the original SC owed fiduciary duties to the objecting subsidiary owners.
[59] The Horizon Board noted the comparison of an SC’s duties to those of a mortgagee exercising its power of sale, viz, to act in good faith and to take reasonable steps to obtain the best price available at the time of the sale (or, per Salmon LJ in Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 (“Cuckmere”) at 966, “the true market value”). However, it rejected this comparison, stating that “there is no express statutory duty on the SC other than this: they need only ensure that the sale transaction is in good faith”, since the SC members’ “interest as owners would mean that they would be inclined to try to obtain the best price available” (at [58] of the HB decision). The logic of this reasoning of the Horizon Board is debatable. To “incline to try” is not the same as actually trying. In fact, as will be seen later (at [188] below), the evidence shows that far from trying to obtain the best price, certain members of the original SC were not even inclined to try. Furthermore, it should be emphasised that, since s 84A(9)(a)(i)(A) requires the STB to take into account the sale price for the lots and the common property in the development as a factor in determining good faith, it is difficult to understand why a duty to obtain the best price is not part of the duties of an SC.
[60] The Horizon Board viewed “good faith” as involving “notions of honesty, fairness and absence of unconscionable and perhaps even reckless behaviour” (at [60] of the HB decision). The Horizon Board then considered two areas in determining whether the transaction was in good faith – first, the steps taken in relation to the sale; and second, the comparison between the sale price and the true value of the property (at [61] of the HB decision).
[61] In relation to the first area, the Horizon Board noted that Vineyard had not responded to Henry Lim’s request, through Keith Yeo, for further information and the deposit of $50m (see [27] above) as proof of Vineyard’s seriousness about purchasing the Property (see the HB decision at [64]). Furthermore, the original SC had taken the advice of its solicitors as to the appropriateness of accepting HPL’s offer to pay $500m for the Property. Thus, the Horizon Board concluded (at [65] of the HB decision):
[62] The Horizon Board added that, at the time of HPL’s offer in early January 2007, the sale price of $500m was a fair price. The property market was then relatively less bullish than it became later. By selling at $500m, the original SC had fulfilled its mandate to sell at a price not below the reserve price (see cl 5 of the CSA, at [14] above and the HB decision at [68]).
[63] The Horizon Board was aware that altogether three members of the SC had at different times purchased units in the Property after the collective sale process had commenced (see [10] and [51] above). However, it was of the view that no conflict of interest had been proved, relying once again on the reasoning that, as owners of units in the Property, the original SC members would be interested in getting the best price available. The Horizon Board said (at [73] of the HB decision):
[64] Finally, given the history of attempts to advertise and promote the sale, the Horizon Board found that the sale to HPPL was not hurried (see the HB decision at [69] and [74]).
[65] In respect of the second area of inquiry (viz, the comparison between the sale price and the true value of the Property), the Horizon Board considered the expert valuation reports tendered by the objectors to the collective sale, which gave market values of the Property as at 22 January 2007 which were higher than $500m (see [44] above). The Horizon Board rejected these valuation reports on the basis that they referred to sale transactions after 22 January 2007 in establishing the open market value of the Property as at 22 January 2007, and that they did not give due consideration to the exceptionally large land area of the Property that had made the Property out of the reach of most developers in Singapore in January 2007 (see the HB decision at [81]–[101]).
[66] The Horizon Board pointed out that the fact that there were no offers for the Property despite the efforts to market it showed that, up till November 2006, the reserve price was above the market value of the Property (see the HB decision at [102]). Although it accepted that the market had begun to move when interest was shown at the price of $500m, it found that the sale price to HPPL was “not too low” in the light of the likely price range of the Property in December 2006 as indicated by the only other expression of interest of $510m from Vineyard (at [103] of the HB decision).
[67] The Horizon Board also considered the question of whether the transaction was not in good faith having regard to the adopted method of distribution of the sale proceeds which was to divide 50% of the sale proceeds based on the strata area of the respective units and the other 50% in proportion to their respective share value (see s 84A(9)(a)(i)(B) of the LTSA which requires an STB to take into account the method of distributing the proceeds of sale). It noted that this method of distribution was an acceptable compromise which helped to even out the difference in strata areas and share values where there were big discrepancies in both among the various units. Therefore, it found that the transaction was in good faith in so far as the method of distribution of the sale proceeds was concerned (see the HB decision at [110]–[112]). This point is no longer relevant.
[68] Finally, the Horizon Board considered whether the transaction was not in good faith having regard to the relationship between the purchaser and any subsidiary proprietor (see s 84A(9)(a)(i)(C) of the LTSA). This issue is irrelevant for the purpose of the present appeals.
The appeal to the High Court
[69] Several of the objecting subsidiary proprietors filed appeals to the High Court against the Horizon Board’s decision. There were three appeals, by way of Originating Summonses Nos 5, 10 and 11 of 2008 (respectively “OS 5/2008”, “OS 10/2008” and “OS 11/2008”).
The appellants’ submissions
[70] In OS 10/2008 Mr KS Rajah SC, on behalf of the objectors, made submissions pertaining to constitutional and jurisdictional issues which are no longer live in the present appeals. Accordingly, we shall not consider them. The main issue in the High Court which concerns us today is that of good faith in relation to the transaction. Mr Harry Elias SC (“Mr Elias”), counsel for the same objectors, submitted that the sale of the Property to HPPL was not in good faith, firstly because the SC had deliberately concealed from the consenting subsidiary proprietors the higher offer of $510m from Vineyard, and secondly in the light of the method of distribution of the sale proceeds. Mr Rudy Darmawan, a minority owner who acted in person in OS 11/2008 and is one of the appellants in the present appeals (“Mr Darmawan”), submitted that First Tree had acted in conflict of interest. According to him, First Tree was not motivated to find the highest bidder or follow up on the offer from Vineyard because its preoccupation was with fixing its own commission (which was to be paid by the purchaser) rather than securing the highest bid for the Property. Miss Jasmine Tan (another minority owner who acted in person in OS 11/2008) made similar submissions to Mr Darmawan’s on First Tree’s conflict of interest. She also argued that the Horizon Board had erred in treating the SC’s solicitors’ legal advice as privileged and that it had attempted to avoid the airing and inclusion of relevant facts through a technicality in refusing to subpoena Arjun Samtani (see [8] and [56] above).
The Judge’s decision
[71] On Mr Elias’s first submission, the Judge was of the view that the appellants had not discharged the burden of proving bad faith. He pointed out that the Horizon Board had made a finding of fact that the original SC had acted on its own initiative in deciding to pursue HPL’s proposal after receiving and relying on legal advice. He also pointed out that the appellants’ case in respect of the Vineyard offer was essentially concerned with the question of whether the purchase price was fair, upon which the Horizon Board had also made a finding of fact. The Judge concluded that the High Court would not interfere with these findings on questions of fact on which there was no right of appeal under the Building Maintenance and Strata Management Act 2004 (Act 47 of 2004) (“BMSMA”) (see the Judgment ([6] supra) at [14]).
[72] On the method of distribution of the sale proceeds, the Judge stated that it could not be said that there was a lack of good faith in the selection of the method of distribution or that the method was wrong just because it was the only method considered or the method resulted in some subsidiary proprietors getting more sale proceeds than others. He emphasised that, even if the Horizon Board was wrong in concluding that the chosen method was appropriate, that was an error of fact and not an error of law that could be taken on appeal (see the Judgment at [15]).
[73] Significantly, the Judge was of the view that the legitimate scope of an STB’s inquiry into whether a transaction was in good faith, after taking into account the sale price under s 84A(9)(a)(i)(A) of the LTSA (see [3] above), was a narrow one. He stated (at [16] of the Judgment):
[74] The Judge acknowledged that “it appears that there may have been intrigue in the course of the en bloc sale from the day the SC was created to the proceedings before the [Horizon Board]” (ibid). However, he was of the view that the Horizon Board was not the appropriate forum for considering the conduct of the original SC. He stated that if the original SC had deliberately or negligently ignored the Vineyard offer, thereby causing financial loss to the appellants, their recourse was through litigation in the courts (at [17] of the Judgment). For all these reasons, the Judge dismissed the appeals in OS 5/2008, OS 10/2008 and OS 11/2008.
The present appeals
The parties’ submissions
[75] Having set out the background to the case, we now turn to the parties’ submissions in the present appeals.
The appellants’ submissions
[76] Counsel for the appellants in CA 119/2008, Mr Elias, submitted at the outset that the present appeals were on a point of law (in accordance with s 98(1) of the BMSMA), viz, whether the Horizon Board had erred in law by finding that the sale to HPPL was in good faith, as no person acting judicially and properly instructed as to the relevant law would have come to such a determination (citing Edwards v Bairstow [1956] AC 14).
[77] Mr Elias next argued that the Horizon Board was not limited to considering the sale price in determining whether a given transaction was in good faith, relying on the use of the word “transaction” in s 84A(9) of the LTSA and the parliamentary debates on the enactment legislation which state that an STB must consider all the circumstances of the case (see [127] below). He tendered a list of conduct which purportedly amounted to a lack of good faith on the part of the original SC. We set out the list as follows:
[78] The 28 December 2006 letter referred to was allegedly the first letter from Vineyard expressing interest in purchasing the Property, but as no such letter was discovered throughout the entire proceedings before the Horizon Board and the Judge, we shall assume that it does not exist.
[79] As for the “Drew & Napier letter” dated 16 January 2008, this was a letter sent by the original SC’s solicitors, Drew & Napier LLC (“D&N”), to M/s Phang & Co, who represented some of the objecting subsidiary proprietors in the Horizon Board proceedings, in response to allegations made against D&N in a draft affidavit for OS 5/2008 (“the 16 January 2008 D&N letter”).[note: 37] In this letter, D&N clarified the content of their legal advice to the original SC, stating, inter alia, that, contrary to the assertions in the draft affidavit, they had, firstly, never been instructed to do any due diligence on Vineyard or contact Shan & Su; and, secondly, they had never advised the original SC that it could be sued if it did not sell the Property to HPL, whereas it would be difficult to challenge the sale if the original SC sold to HPL at a price which met the reserve price.
[80] Mr Darmawan, appearing in person for the appellants in CA 120/2008, emphasised Bharat Mandloi’s evidence that the original SC had refused to seek affirmation of the sale to HPL from the consenting subsidiary proprietors because that would mean that the sale would be “as good as dead” (see [31] above). He submitted that the fact that the original SC had proceeded with the sale to HPL despite its awareness of the consenting subsidiary proprietors’ unhappiness was a clear manifestation of bad faith. He further submitted that there had been a breach of the fundamental purpose of the sale of the Property, which was to achieve the best sale price, one with the healthy premium which First Tree had represented to the subsidiary proprietors would result from the collective sale. Mr Darmawan contended that the original SC had also breached cl 4.1(b) of the CSA (see [14] above) by its failure to follow up on the Vineyard offer and, even if there had been a follow-up, the failure to involve First Tree in such a follow-up breached the requirement in cl 4.1(b) for negotiations with all intended purchasers to be carried out “in conjunction with the Agents”.
[81] Finally, Mr Darmawan submitted that, because the original SC members had purchased additional units in the Property with bank financing, they were under financial pressure to sell the Property and were thus acting in a conflict of interest. This was a further instance of bad faith.
The respondents’ submissions
[82] Counsel for the respondents in the present appeals, Mr Chelva Rajah SC (“Mr Rajah”), submitted that the original SC had never concealed Vineyard’s offer. The existence of an offer of $510m was disclosed in the minutes of the 6 January 2007 SC meeting (albeit Vineyard was not referred to by name).
[83] Mr Rajah submitted that the original SC had (through Henry Lim) followed up on the offer from Vineyard by asking for a deposit as proof of the seriousness of its intent to purchase the Property, but Vineyard had never responded to that request or even attempted to negotiate the terms of the deposit. He submitted that, under these circumstances, the original SC had acted in good faith by choosing to accept the firm offer of a more reputable purchaser.
[84] It was also submitted that the 16 January 2008 D&N letter reaffirmed that the original SC had been advised that it was up to it to use its judgment and exercise due honesty, care and skill in arriving at its decision on the sale of the Property. The only contradiction raised in rebuttal by the 16 January 2008 D&N letter was that D&N had not been instructed to conduct due diligence on Shan & Su (contrary to what Henry Lim had claimed before the Horizon Board). This did not materially affect the finding of the Horizon Board that the original SC had relied on its solicitor’s advice in deciding to take up the HPL offer (see [55] above).
[85] Mr Rajah submitted that First Tree had not made any misrepresentation that the 80% premium would be obtained as its presentation at the 23 April 2006 EGM to the subsidiary proprietors had made it clear that the 80% premium was an estimate based on the latest transacted prices for individual units at that time. He also pointed out that the reserve price in cl 5 of the CSA was not arrived at on the basis of the 80% premium.
[86] He pointed out that the Horizon Board had considered and rejected the reports tendered by the objecting subsidiary proprietors which purported to value the Property at prices which were higher than $500m. Thus, the appellants had failed to substantiate their contention that the price of $500m was too low.
The intervener’s submissions
[87] Counsel for the intervener, Mr Ang Cheng Hock SC (“Mr Ang”), made substantially the same submissions as those of the respondents. In addition, he emphasised that the original SC’s conduct must be evaluated in the light of the events leading up to January 2007. He pointed out that, at that time, $500m was a record price for a 99-year leasehold strata title property, and that, prior to January 2007, a whole host of developers had been approached, to no avail. The only real and viable prospect was HPL’s offer. Under these circumstances, he submitted that the original SC had acted in good faith by choosing to sell to HPL, rather than holding out for a response from Vineyard.
[88] Mr Ang also contended that the role of an STB in applications for a collective sale was very circumscribed. According to him, it was never envisaged that contentious legal arguments pertaining to misrepresentation, breach of duties and suchlike would be put before an STB. Rather, an STB should only consider the factors set out in ss 84A(7) and 84A(9) of the LTSA in its determination of whether the transaction was in good faith.
The nature of an appeal from an STB decision to the High Court
[89] Before moving on to the substantive issues in the present appeals, we will first consider the nature of an appeal to the High Court from a decision of an STB on a collective sale application. Section 98(1) of the BMSMA states that:
[90] In Halsbury’s Laws of England vol 1(1) (Butterworths, 4th Ed Reissue, 1989) (“Halsbury’s”) at para 70 (since replaced by the 2001 edition but the statement of law remains largely similar: see para 77 of the 2001 edition), it is stated that:
[91] In Singapore, it has been accepted in several High Court cases that errors of law, as condensed in this passage from Halsbury’s, constitute ex facie errors of law which would in turn raise points of law subject to appeal under s 98(1) of the BMSMA. In Dynamic Investments Pte Ltd v Lee Chee Kian Silas [2008] 1 SLR 729 (“Dynamic Investments”), the court stated (at [11(b)]) that guidance as to the meaning of “point of law” could be found in this passage from Halsbury’s and from Lord Radcliffe’s statement in Edwards v Bairstow ([76] supra) (see [93] below), then concluded (at [14]) that:
[92] This approach was endorsed in Liu Chee Ming v Loo-Lim Shirley [2008] 2 SLR 764 (“Liu Chee Ming”) at [16]:
[93] We should briefly explain the reference to Edwards v Bairstow. In that case, two men had embarked on a joint venture to purchase a complete spinning plant, agreeing between themselves not to hold it but to make a quick resale. The Commissioners of Income Tax determined that the given transaction was not an “adventure in the nature of trade” taxable under the Income Tax Act 1918 (c 40) (UK) and therefore not subject to tax. The Crown appealed against this determination. The Court of Appeal dismissed the appeal on the ground that the determination was not erroneous in point of law and, accordingly, it was not open to interference by the court. The House of Lords took the opposite approach. Lord Radcliffe stated (at 35–36):
[94] Lord Radcliffe noted that the two men had put their money into buying the machinery with no intention of using it as machinery or even holding their purchase at all. They had planned to sell the machinery even before they bought it and did in due course sell it for profit. On these facts, he found that the transaction was inescapably an adventure in the nature of trade and upheld the Crown’s appeal.
[95] The proposition in Edwards v Bairstow, that a determination may be challenged on a point of law (in addition to an error of law ex facie that bears upon the ultimate determination) if the facts were such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal (see [93] above), has now been consistently approved at the High Court level, such as in Ng Swee Lang v Sassoon Samuel Bernard [2008] 1 SLR 522 (“Ng Swee Lang”) at [27], Dynamic Investments ([91] supra) at [16] and Liu Chee Ming at [16].
[96] On the other hand, there have been earlier local cases on appeals against arbitral awards which articulated a different and, in some senses, narrower view of appeals on a “question of law”. In Northern Elevator Manufacturing Sdn Bhd v United Engineers (Singapore) Pte Ltd (No 2) [2004] 2 SLR 494 (“Northern Elevator”), the appeal was against the grant of leave to one of the parties to appeal against an arbitral award. Section 28(2) of the 1985 Arbitration Act (Cap 10, 1985 Rev Ed) (which the parties in Northern Elevator had agreed would govern the arbitration proceedings) read: “[A]n appeal shall lie to the court on any question of law arising out of an award made on an arbitration agreement”.
[97] The Court of Appeal distinguished between a “question of law” and an “error of law”, stating that the former conferred jurisdiction on a court to grant leave to appeal against an arbitration award, while the latter in itself did not (at [17]). At [18], it approved G P Selvam J’s reasoning in Ahong Construction (S) Pte Ltd v United Boulevard Pte Ltd [2000] 1 SLR 749 at [7]:
[98] The Court of Appeal in Northern Elevator concluded (at [19]):
[99] The wording of s 28(2) of the 1985 Arbitration Act is quite similar to s 98(1) of the BMSMA. Although the body of s 98(1) of the BMSMA refers to a “point of law”, rather than a “question of law”, nothing turns on this as the heading of s 98(1) is “Appeal to High Court on question of law”. Thus, it may be said with some force that the narrower view taken in the arbitration cases cited in [96] and [97] above should also apply in cases of collective sales. However, the context in which an appeal on legal issues is statutorily permitted is also important. The definition of “questions” or “points of law” in each context may be wider or narrower depending on the underlying policy considerations.
[100] It can persuasively be said that the policy considerations undergirding the arbitration scheme, where party autonomy is the primary consideration, are quite different from those of the collective sale scheme under the LTSA, where a qualifying majority of owners is allowed to override the wishes of the minority owners. In the case of the former, a limited right of review by the courts of arbitral decisions accords with the legitimate expectations of the contracting parties as regards finality. In our view, therefore, the High Court has rightly declined to apply the approach in the arbitration cases in the context of appeals against STB decisions. In the High Court decision of Ng Swee Lang ([95] supra), the court rejected the narrower approach in the arbitration cases, citing, inter alia, the different policy considerations in the context of private arbitrations, which were underpinned by the principle of party autonomy, as compared with a hearing before an STB under the LTSA. It astutely observed (at [24]):
[101] We agree that ex facie errors of law would entitle a party to appeal under s 98(1) of the BMSMA. Such an approach affords the court greater oversight over administrative and other inferior tribunals, and thus accords better protection to private rights. In this respect, we find much force in the following observations from a leading academic treatise, Sir William Wade & Christopher Forsyth, Administrative Law (Oxford University Press, 9th Ed, 2004) at pp 947–948:

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Ng Eng Ghee and Others v Mamata Kapildev Dave And Others (Horizon Partners Pte Ltd, intervener) and Another Appeal

Laws this judgment relies on

Grounds of decision

Introduction

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The background

The preliminary steps

The launch of the formal collective sale process and the terms of the collective sale agreement

Name

Unit

Appointment

(a)

Mr Arjun Samtani

Chairman

(b)

Mr Wee Hian Siew

Secretary

(c)

Mr Claude Reghenzani

Member

(d)

Dr Chan Siew Chee

Member

(e)

Mr Tan Kah Gee

Member

(f)

Mr Bharat Mandloi

Member

(g)

Mr Shahrukh Marfatia

Member

(h)