Tan Siew Tian and Others v Lee Khek Ern Ken

[1] The plaintiffs are three of the subsidiary proprietors (“SPs”) of Strata Title Plan 1844, a condominium known as Airview Towers (“the Development”). On 13 June 2007, SPs claiming to hold at least 80% of the share values in the Development submitted an application to the Strata Titles Board (“STB”) under s 84A of the Land Titles (Strata) Act (Cap. 158, 1999 Rev Ed)(“the Act”) for an order for the sale of all the lots in the Development. The plaintiffs are the authorised representatives under s 84A(2) of the Act. On 31 October 2007 the STB dismissed the application. In this Originating Summons, the Plaintiffs appeal under s 98 of the Building Maintenance and Strata Management Act 2004 (No 47 of 2004) against that dismissal by the STB. The defendant is one of the SPs of the Development and he opposes the collective sale.

[2] The relevant law in this matter is the Act immediately prior to the amendments of 4 October 2007 and all references to the Act shall be to those provisions unless otherwise stated.

[3] The facts of the matter relevant to the issues before me are as follows. The collective sale process for the Development was initiated by some of the SPs in early 2006, resulting in the formation of a Sales Committee (“SC”). The SC invited a property consultant, DTZ Debenham Tie Leung (SEA) Pte Ltd (“DTZ”), to make a presentation of the intended sale of the Development and a firm of solicitors, M/s Sankar Ow & Partners (“SOP”), to present the intended collective sale agreement (“CSA”) to all the SPs. This was done on 1 April 2006, when the SPs met with DTZ, SOP and the SC. DTZ representatives explained to the SPs the aspects of the proposed collective sale and SOP explained the terms and conditions of the proposed CSA. Copies of the CSA and an explanatory note to it were circulated. Thereafter some of the SPs present signed the CSA. As 1 April 2006 was the date that the CSA was first signed, pursuant to paragraph 1A of the Schedule to the Act (“the Schedule”) this marked the commencement of the permitted time for the purposes of paragraph 1(a) of the Schedule, which period would end on 31 March 2007.

[4] Thereafter other SPs signed the CSA and on 22 February 2007, DTZ informed the SC that SPs holding 80.9% of the share value in the Development had signed the CSA. A letter dated 22 February 2007 was sent by the SC to all SPs of the Development wherein it was stated that the requisite 80% consensus had been obtained and the SC would launch the Development for sale by tender. On 26 February 2007, DTZ issued a tender and on 30 March 2007, the tender was awarded to the sole tenderer, Bukit Sembawang View Pte Ltd (“the Purchaser”), at the price of $202,168,000. The tender document which constitutes the sale and purchase agreement was dated 30 March 2007. About two and a half months later, on 13 June 2007, the plaintiffs, on behalf of the consenting SPs, applied to the STB in STB No 65 of 2007 for an order under s 84A.

[5] It should be noted that between 31 March 2007 (the last day of the permitted time) and the day the application was made to the STB on 13 June 2007, the SPs of another six units signed the CSA. The application of 13 June 2007 was actually made on the basis of the consensus of SPs representing 84.9% of the share values, including the SPs of these six units who had signed outside the permitted time, but excluding two units #12-10 and #04-06, the importance of which will be apparent shortly. Immediately prior to 31 October 2007, the date the STB dismissed the application, the SPs of the remaining units that had held out earlier - save one - changed their minds and consented to the sale. Therefore the consent owners on 31 October 2007 totaled 99% by share value. The last SP who did not consent to the collective sale was the defendant.

[6] Before the STB, the defendant raised the question whether as at 1 April 2007 the number of SPs who had signed the CSA had reached the requisite 80% threshold. The plaintiffs’ case was that as at 30 March 2007, 80.96% had signed the CSA. It would appear that the plaintiffs had accepted that the six units in respect of which the SPs had signed the CSA after the expiry of the permitted time could not be counted. However this would have reduced the percentage to 78.96%. The plaintiff took the position that the two units described in the previous paragraph, unit #12-10 and unit #04-06, could be included as part of the consenting owners and therefore counted as among those who were making the application to the STB. With these two units, the percentage rose above the threshold, to 80.96%.

[7] The facts with respect to the aforesaid two units are as follows. At the start of the permitted time on 1 April 2006, the SPs of unit #12-10 were Tan Soon Lai and Shirely Wee (“the Tans”) and the SPs of unit #04-06 were Nio Toh Nee and Lam Yee Ling (“the Nios”). The four of them signed the CSA between 1 and 4 April 2006. However, unknown to the SC, on 2 October 2006 the Tans transferred unit #12-10 to a company, Stream Peak International Pte Ltd (“Stream Peak”), of which Tan Soon Lai is a director and a substantial shareholder. The Tans did not inform the SC of this because they had regarded the transaction as an internal transfer. As a result the CSA was not executed by any agent of Stream Peak. In the case of unit #04-06, the Nios sold it to a couple (“the Sharmas”) and completed the sale on 27 December 2006. The Nios notified the SC of the sale in November 2006 and the SC had instructed DTZ to arrange for the Sharmas to sign the CSA pursuant to Clause 6.1.3 thereof. However, due to an inadvertence, this was not done. Upon discovering these omissions, DTZ procured the signatures of Stream Peak and the Sharmas to the CSA on 18 June 2007, i.e. after the permitted time.

[8] The appeal turns entirely on the question whether these two units could be counted for the purpose of ascertaining the percentage in s 84A(1). It is not disputed that without these two units, the threshold requirement of 80% would not be met. Since the application to the STB was, in the end, made by the SPs of these units representing 80.96% (which includes the aforesaid two units, but excludes the six units in which the SPs had signed out of time), I shall hereafter refer to these SPs as “the Applicants”.

[9] The starting point is s 84A(1) of the Act, the relevant part of which provides as follows:

As the Development is more than 10 years old, the matter falls under paragraph (b) of s 84A(1), in which the threshold is 80%.

[10] However under s 84A(3), the Applicants are precluded from making an application under s 84A(1) unless they have complied with the requirements in the Schedule to the Act. Section 84A(3) provides as follows:

The relevant portions of the Schedule are as follows in paragraphs 1 and 1A:

[11] Paragraph 1 of the Schedule states that before making an application to the STB, the SPs referred to in s 84A(1) (viz the Applicants) shall execute a CSA within the permitted time. From the definition in paragraph 1A(a), the “permitted time” in this case is the period from 1 April 2006 (being the date of the first signature on the CSA) to 31 March 2007 (being 12 months after the date of the first signature).

[12] Under s 3 of the Act, “subsidiary proprietor” is defined as “the registered subsidiary proprietor for the time being” of the relevant unit. Thus, the problem in this case is that, by the date of application, the SPs of unit #12-10 and unit #04-06 were Stream Peak and the Sharmas but they had not signed the CSA within the permitted time, i.e. between 1 April 2006 and 31 March 2007. It would therefore appear that the requirement in paragraph 1 of the Schedule has not been complied with. As mentioned above, without the share values associated with these two units the combined share values would fall below the 80% threshold.

[13] The issue before me essentially is whether, pursuant to s 84A(3), such non-compliance precluded the Applicants from making the application under s 84A(1) and therefore the STB was correct in dismissing it.

[14] The plaintiffs’ first submission was that the omission of the execution of the CSA by Stream Peak and the Sharmas is irrelevant as the previous SPs, namely the Tans and the Nios, had executed the CSA within the permitted time. Counsel for the plaintiffs pointed out that s 84A(15) provides that “subsidiary proprietor” includes a successor in title and therefore there was compliance with paragraph 1 of the Schedule.

[15] The reference point in s 84A is the making of the application to the STB in subsection (1). All references to subsidiary proprietors are based on this event. Thus subsection (1)(b) refers to “subsidiary proprietors of the lots with not less than 80% of the share values” and subsection (3) speaks of “the subsidiary proprietors referred to in [subsection (1)]”. Read with the definition of subsidiary proprietor in s 3 as being “the subsidiary proprietor for the time being”, there is no question that the references to subsidiary proprietor in s 84A are to the SP at the time of the application to the STB and not a predecessor SP. The same reference obtains in paragraph 1 of the Schedule, i.e. “the subsidiary proprietors referred to in section 84A(1) … shall (a) execute within the permitted time … a collective sale agreement ...”. Therefore the requirement in paragraph 1 to execute the CSA within the permitted time does not pertain to the Tans and the Nios who were not SPs by the time the application to the STB was made on 13 June 2007. In relation to the two units that we are concerned with, it is Stream Peak and the Sharmas who are the SPs and who have to comply with paragraph 1.

[16] The second argument concerning s 84A(15) can be very simply disposed of. This subsection provides as follows:

Stream Peak and the Sharmas are the SPs who are required to execute the CSA. The Tans and the Nios are not their successors in title but are in fact their predecessors in title. Hence they are not, for the purposes of s 84A, “subsidiary proprietors”.

[17] The plaintiffs’ second submission was that the court should take a purposive approach to the matter rather than a technical one. Therefore although Stream Peak and the Sharmas had not executed the CSA within the permitted time, the following facts should compel the court to hold that there was substantial compliance:

(i) at all material times, more than 80% of the SPs by share value wanted the collective sale as the transfers by the Tans to Stream Peak and by the Nios to the Sharmas were done on the basis that the transferees consented to the collective sale;

(ii) by the time the STB decided on the matter, the SPs of all the units save one, comprising 99% of the total share values, were agreeable to the collective sale;

(iii) as there were contractual provisions in the CSA obliging a party selling his unit during the permitted time to procure the agreement of the purchaser to execute the CSA, and the sale and purchase agreements in relation to the two units required the purchasers to execute the CSA, equity would bind Stream Peak and the Sharmas to the provisions of the CSA. The court would issue an order for specific performance if they should refuse to transfer their property to the Purchaser pursuant to the sale and purchase agreement and CSA.

[18] In relation to point (iii), the plaintiffs point to the following provisions in clause 6.1 of the CSA:

[19] There is no question that the word “execute” in paragraph 1(a) of the Schedule, with reference to the CSA, means the signing of that agreement by a party with intent to give it legal effect vis-à-vis all parties to it. The plaintiffs submit that in the circumstances of the case, the court should adopt a purposive approach and interpret that condition as being satisfied in relation to the two units under consideration.

[20] In order to determine this question, it is necessary to consider the objective behind Part VA of the Act. This was enacted in 1999 to facilitate collective sale of a development under a Strata Plan notwithstanding that there is no unanimity for the sale by all SPs. In Ng Swee Lang v Samuel Bernard Sassoon [2008] SGCA 7 (Ng Swee Lang), the Court of Appeal elaborated on this policy in the following manner at [5] - [7]:

[22] At the beginning of the debate the Minister of State for Law had said that the safeguards are in the procedures as well as the substantive powers of the STB. He elaborated at col 603 (Singapore Parliamentary Debates):

[23] The Minister of State for Law described the position at the time, in which unanimous consent would be required for a collective sale to go through. He highlighted the case of Kim Lin Mansions and the unsatisfactory state of affairs it had engendered at col 602 (Singapore Parliamentary Debates):

[27] I turn then to examine whether the non-compliance in question precludes the Applicants from making the application to the STB under s 84A. In Ng Swee Lang’s case, the Court of Appeal held that the failure to specify the proposed method of distributing the sale proceeds in the sale and purchase agreement was not fatal to the application. The decision concerned the interpretation of s 84A(1) of the Act which, in that case, provided as follows:

[28] The question was whether, on a proper construction of s 84A(1), the omission of the method of distribution of sale proceeds in the sale and purchase agreement would require the STB to dismiss the application. It bears noting that the distribution method was set out in the CSA and was known to all parties including the minority owners. The Court of Appeal upheld the adoption by the judge below of the modern approach towards statutory interpretation, which was to consider the scheme and purpose of the Act, weighing the importance of the particular requirement in the context of the purpose and considering whether the legislature would have intended the consequences of a strict construction, having regard to the prejudice to private rights and the claims of the public interest. The Court of Appeal said at [23]:

[29] The Court of Appeal proceeded to analyse the language of s 84A(1), and said at [32]:

[30] The Court of Appeal also said at [35] that this was a truly technical objection that had not caused any prejudice to the minority owners. However the situation was different as regards compliance with the provisions in the Schedule which is governed by the express provision in s 84A(3). The court said at [34]:

[31] The Court of Appeal was dealing with the version of the Act after the amendments of 4 October 2007, which has four schedules, whereas the version prior to that had only one schedule. However the substantive provisions are the same as well as the principle. Section 84A(3) of the version of the Act under consideration before me (also set out above at [10]) provides as follows:

[32] As held by the Court of Appeal, an application under s 84A(1) for collective sale may only be made if the majority owners (meaning the Applicants) have complied with the requirements of the Schedule. The Schedule itself contains a large number of provisions and bears reproduction in full:

[33] It can be seen that the requirements in the Schedule fall into two categories. The first category comprises those requirements that, if not complied with before the application is made, may easily be cured by subsequent compliance and a refiling of the application. For example, under paragraph 1(d), if the sales committee had not advertised the particulars of the application in approved newspapers at the time the application was filed, this may be cured by causing the advertisements to be duly published and making a fresh application. Into this category fits most of the requirements in the Schedule. The second category pertains to those requirements which cannot be cured by mere refiling because the time for compliance has lapsed. The primary example of this category is paragraph 1(a) which requires the Applicants to:

The reason that this omission cannot be cured by a simple refiling is due to the definition of “permitted time”. Paragraph 1A of the Schedule provides that this is a period that commences from the date that the first SP signs the CSA and ends not more than 12 months after that. The period is fixed with reference to date of the first signature (which in the present case is 1 April 2006). Any signature after the 12 month period, i.e. after 31 March 2007, would not be in compliance with this requirement. The only way to cure this is to start the process all over again with a new CSA. There is only one other requirement in the Schedule that belongs to the second category, that is contained in paragraph 1(b). Again this is due to the reference there to the start of the permitted time.

[34] The question I have to decide is whether, on the modern approach to statutory interpretation endorsed by the Court of Appeal in Ng Swee Lang, it was the intention of Parliament for s 84A(3) to operate to invalidate the application if there was no compliance with the requirement in paragraph 1(a) of the Schedule.

[35] The plaintiffs have submitted that the SPs of the two units had agreed all along to the CSA and the failure to actually put their signatures on it was due to mistake or inadvertence and is therefore a mere technicality. The plaintiffs also point out that as at the date of the hearing by the STB, the SPs of 99% share value wanted the sale to proceed and only the SP of one unit, representing less than 1% share value, refused to sell. These are compelling arguments indeed but to succumb to such arguments would, in my view, defeat the safeguards put in place by the legislature to protect the minority. I have set out above the gist of the Parliamentary debate on the matter. The scheme of Part VA was laid out before Parliament and there was considerable debate by members particularly concerning how this was a derogation of property rights of the individual. In the end Parliament passed the Bill in its present form. The legislature had considered that the protection enshrined in the legislation constitutes an appropriate balance between the individual rights it has taken away and communal interests it has promoted. It is therefore not for the court to water down the protection afforded by the legislation in its present form in favour of the majority, vast though it may be.

[36] The legislature had carefully crafted a scheme, in the form of paragraph 1(a) of the Schedule, whereby the Applicants would have up to 12 months from the date of the first signature to persuade SPs to sign up and commit themselves to the terms of the CSA. There is also a further requirement for the Applicants to apply to the STB within 12 months of the final execution (this pertains to the provision “but in no case more than 12 months before the date the application is made”). Altogether, therefore, the collective sale process is envisioned to last not longer than 24 months from the date of the first signature to the application. The legislation also required the SC to report, at eight-week intervals, in the four official languages, the number of SPs who have adhered to the CSA within that period and the new percentage of adherents.

[37] Although there is nothing in the Parliamentary debates that directly explains the purpose of the requirements of paragraph 1(a) of the Schedule, it has nevertheless been expressly stated by the Minister of State for Law that the “safeguards are found in the procedures” (Singapore Parliamentary Debates col 603). Further, it is not difficult to divine the reason for these safeguards. Timing is important because the longer the process is dragged out, the greater the likelihood that market conditions will change.

[38] To take the plaintiffs’ position would mean that so long as 80% or more agree to sell by the time of the hearing before the STB, then the STB should make the order for sale. That would in effect cast out the scheme passed by Parliament. It would also negate the safeguards that it had enacted after much debate and deliberation. Therefore it is not possible to say that the non-compliance with paragraph 1(a) in the present case is a mere technicality.

[39] I have established that the requirement in paragraph 1(a) of the Schedule is set out in clear terms. It expressly provides that, before making an application to the STB the SPs (defined in s 3 as SPs for the time being) of lots having at least 80% share values “shall execute within the permitted time … a collective sale agreement.” The SPs in relation to the two units had not done so. It is provided in s 84A(3) that the Applicants may not make an application under s 84A(1) unless they have complied with the requirements set out in the Schedule. This was held by the Court of Appeal in Ng Swee Lang to be a substantive prohibition. I have considered the legislative debate during the passage of the Bill and concluded that Parliament had intended a process that is simple and expeditious, particularly in respect of any provision that is expressed in clear terms. I have considered that the requirement in paragraph 1(a) is a substantive condition put in place by the legislature to protect the legitimate rights of the minority. In view of the foregoing, I cannot say that it was not the intention of Parliament to invalidate the application upon breach of paragraph 1(a) of the Schedule.

[40] Accordingly, the plaintiffs must fail in their appeal against the dismissal by the STB of their application.