"As the plaintiffs are seeking a court order for the collective sale, then as a matter of general principle, it should be they who have the burden of persuading the court to grant the order." — Per Woo Bih Li J, Para 36
Case Information
- Citation: [2018] SGHC 256 (Para 1)
- Court: High Court of the Republic of Singapore (Para 1)
- Decision Date: 26 November 2018 (Para 1)
- Coram: Woo Bih Li J (Para 1)
- Counsel for Plaintiff/Appellant: Wong Soon Peng Adrian, Ang Leong Hao, Gan Hiang Chye and Norman Ho (Rajah & Tann Singapore LLP) (Para 1)
- Counsel for Defendant/Respondent: Tan Gim Hai Adrian, Ong Pei Ching and Goh Qian'en, Benjamin (TSMP Law Corporation) (Para 1)
- Case Number: Originating Summons No 841 of 2018 (Para 1)
- Area of Law: Land — Strata titles (Para 1)
- Judgment Length: Short oral judgment, approximately 38 paragraphs in the excerpt provided; the court stated that more elaborate grounds would follow (Paras 3-4)
Summary
The court was asked to approve a collective sale of Goodluck Garden under s 84A of the Land Titles (Strata) Act. The defendants objected on several grounds, including alleged conflicts of interest in the collective sale committee, alleged non-compliance with the Third Schedule concerning approval of the apportionment of sale proceeds and the collective sale agreement, and an alleged lack of good faith in the transaction. The court held that the mere fact that associates of two committee members owned other units did not, without more, establish an actual or potential conflict of interest, and therefore there was no breach of para 2(1)(g) of the Third Schedule. The court also held that even if those appointments were void, the application was not ultra vires because the remaining authorised representative would simply proceed as sole plaintiff. (Paras 6, 10-13)
On the procedural compliance issue, the court held that the approvals required by paras 7(1)(b) and 7(1)(c) had to be obtained at a general meeting, and that voting or some overt act of approval was necessary; mere attendance and apparent majority support were insufficient. The court therefore found a breach of those provisions. However, the court further held that non-compliance with the Third Schedule did not automatically invalidate an application to the High Court. Instead, the decisive question was whether the non-compliance, viewed in context, showed an absence of good faith under s 84A(9)(a)(i). (Paras 14-24)
In addressing good faith, the court treated Horizon Towers (CA) and Shunfu Ville (CA) as the starting point and held that the legal burden lay on the plaintiffs, as applicants seeking the court order, to persuade the court that the transaction was in good faith. The court also held that s 113 of the Evidence Act did not apply because the collective sale transaction was between the subsidiary proprietors and the purchaser, not between parties standing in a position of active confidence. The excerpt provided ends while the court is still explaining the burden of proof and the practical operation of that burden in contested applications. (Paras 25-38)
What Were the Main Issues Raised by the Defendants?
The defendants raised three main issues. First, they contended that Lim and Chan had failed to disclose actual or potential conflicts of interest before their elections to the collective sale committee because their associates owned other units in the Property, and that this breach rendered their appointments void under para 2(2) of the Third Schedule. Second, they argued that there was a flagrant breach of paras 7(1)(b) and 7(1)(c) because the approvals for the apportionment of sale proceeds and the terms and conditions of the collective sale agreement were not given at a general meeting. Third, they argued that the collective sale transaction was not in good faith, relying on the alleged undisclosed conflicts, the alleged procedural breaches, the alleged failure to inform and consult about the development charge and tender closing date, and the alleged flaws in the Colliers valuation report. (Paras 6-9)
Did Lim and Chan’s Alleged Non-Disclosure of Conflicts of Interest Void Their Appointments?
The court held that the mere fact that an associate of Lim and two associates of Chan each owned another unit in the Property did not mean that Lim or Chan had an actual or potential conflict of interest. On that basis, the court found no breach of para 2(1)(g) of the Third Schedule. The court therefore rejected the defendants’ primary submission that the appointments were void for non-disclosure. (Para 10)
If Their Appointments Were Void, Would the Collective Sale Application Have Been Ultra Vires?
The court held that even if, contrary to its primary view, Lim’s and Chan’s appointments were void, the application would not have been ultra vires. The court distinguished Lim Li Meng Dominic and others v Ching Pui Sim Sally and another and another matter [2015] 5 SLR 989, explaining that the problem there was that all authorised representatives were validly appointed but failed to act jointly. Here, by contrast, if Lim and Chan ceased to be plaintiffs, the second plaintiff would simply become the sole authorised representative. Accordingly, the application would still be maintainable. (Paras 11-13)
Were the Approvals Under Paras 7(1)(b) and 7(1)(c) Properly Obtained?
The court held that they were not. It rejected the plaintiffs’ submission that it was enough if more than 50% of the subsidiary proprietors who attended the relevant general meeting signed the collective sale agreement. The court held that the approvals of the apportionment of sale proceeds and of the terms and conditions of the collective sale agreement had to be given at the general meeting itself, and that para 7(2) made this even clearer by requiring the meeting to be convened before any subsidiary proprietor signed the agreement. Because there was no voting on those aspects at the meeting, the court held that there was a breach of paras 7(1)(b) and 7(1)(c). (Paras 14-18)
Did That Breach Automatically Invalidate the High Court Application?
The court held that the breach did not automatically invalidate the application. It reasoned that s 84A(7C) expressly addresses non-compliance at the Strata Titles Board stage and allows the Board not to invalidate an application if the non-compliance does not prejudice any person. Although the provision does not mention the High Court, the court held that the omission appeared deliberate and that non-compliance would not, by itself, invalidate an application to the High Court, even if the non-compliance was not merely technical. However, the court held that such non-compliance could lead to dismissal if the circumstances showed an absence of good faith under s 84A(9)(a)(i). (Paras 19-24)
What Test Did the Court Apply to Determine Good Faith?
The court held that the starting point for the good faith inquiry was the Court of Appeal’s decisions in Horizon Towers (CA) and Shunfu Ville (CA), not the High Court decision in Tsai Jean v Har Mee Lee and others. The court noted that Horizon Towers (CA) treated “transaction” as embracing the entire sale process, including marketing, negotiations and finalisation of the sale price, and that Shunfu Ville (CA) framed the test as whether the sale price was appropriate in the circumstances. The court also noted the Court of Appeal’s observation that, absent improper motives, conflicts of interest, or clear evidence of unfairness or transactional deficit, approval is less likely to be refused. (Paras 25-29)
Who Bore the Burden of Proving Good Faith?
The court held that the legal burden lay on the plaintiffs to establish that the transaction was in good faith. It considered and rejected the plaintiffs’ reliance on Woo Hon Wai and others v Ramachandran Jayakumar and others [2017] 4 SLR 74, and it treated the Court of Appeal’s discussion in Horizon Towers (CA) as supporting the view that once prima facie evidence of bad faith is produced, the applicants must disprove it. The court also held that s 113 of the Evidence Act did not apply because the relevant transaction was between the subsidiary proprietors and the purchaser, not between parties standing in a position of active confidence. (Paras 30-38)
What Did Each Party Argue?
The plaintiffs argued that the burden of proving absence of good faith lay on the defendants, relying on the High Court decision in Shunfu Ville and the language of s 84A(9)(a)(i). They also argued that it was sufficient if more than 50% of the subsidiary proprietors attending the meeting signed the collective sale agreement, and they resisted the defendants’ challenge to the committee appointments. The defendants, by contrast, argued that the burden shifted once prima facie evidence of bad faith was shown, that the approvals under paras 7(1)(b) and 7(1)(c) had to be obtained at the general meeting, and that the alleged conflicts, procedural breaches, development charge issue and valuation flaws collectively showed lack of good faith. (Paras 6-9, 14-18, 30-38)
Why Does This Case Matter?
This case is significant because it clarifies, at least at the High Court level, that procedural non-compliance with the Third Schedule does not automatically defeat a collective sale application in the High Court; instead, the court will examine whether the non-compliance goes to good faith under s 84A(9)(a)(i). That approach gives practical effect to the statutory scheme and prevents purely technical objections from automatically derailing a sale, while still preserving the court’s ability to refuse approval where the irregularity reflects substantive unfairness or want of probity. (Paras 19-24)
The case is also important for its treatment of the burden of proof in contested collective sale applications. The court expressly held that the applicants bear the legal burden of persuading the court that the transaction is in good faith, and it explained why s 113 of the Evidence Act does not govern the relationship between subsidiary proprietors and the purchaser in a collective sale. That analysis is likely to be relied on in future disputes where objectors allege bad faith and applicants seek to characterise the objections as insufficiently proved. (Paras 30-38)
Cases Referred To
| Case Name | Citation | How Used | Key Proposition |
|---|---|---|---|
| Lim Li Meng Dominic and others v Ching Pui Sim Sally and another and another matter | [2015] 5 SLR 989 | Distinguished | The Court of Appeal case was said to be different because the authorised representatives there were validly appointed but failed to act jointly, whereas here the issue was whether two plaintiffs’ appointments were void and whether the remaining plaintiff could proceed alone. (Paras 12-13) |
| Ramachandran Jayakumar and another v Woo Hon Wai and others and another matter | [2017] 2 SLR 413 | Relied upon | The Court of Appeal’s discussion of good faith in collective sale transactions was treated as a starting point for the applicable test. (Paras 25-29) |
| Ng Eng Ghee and others v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appeal | [2009] 3 SLR(R) 109 | Relied upon | The Court of Appeal’s formulation of “transaction” as encompassing the entire sale process and its discussion of good faith were treated as foundational. (Paras 26-29, 32) |
| Tsai Jean v Har Mee Lee and others | [2009] 2 SLR(R) 1 | Cited | The court noted that the plaintiffs relied on this High Court case, but the court said it was not the starting point for the good faith analysis. (Para 26) |
| Woo Hon Wai and others v Ramachandran Jayakumar and others | [2017] 4 SLR 74 | Cited | The plaintiffs relied on this High Court decision for the proposition that the objectors bore the burden of proving absence of good faith, but the court did not accept that submission. (Para 31) |
Legislation Referenced
- Land Titles (Strata) Act (Cap 158, 2009 Rev Ed), including s 84A(1), s 84A(1A), s 84A(2), s 84A(3), s 84A(7C), s 84A(9)(a)(i), and s 84A(10) (Paras 1, 21-24, 26-38) [CDN] [SSO]
- Evidence Act (Cap 97, 1997 Rev Ed), s 113 (Paras 32-34) [CDN] [SSO]
Source Documents
This article analyses [2018] SGHC 256 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.