September 1, 2010
In April 2010, the Court of Appeal dismissed the appeal filed by Mr. Goh Teh Lee, the single dissenting owner opposing the collective sale of Koon Seng House development. The dismissal was on the basis that Mr. Goh did not have locus standi to object because his co-owner did not object to the same collective sale (see Goh Teh Lee v Lim Li Pheng Maria and Others  SGCA 18).
This was a collective sale of a freehold property comprising a four storey apartment block of 24 flats and nine terrace houses. Built in the 1960s, the 24 flats were not strata subdivided and were comprised in 999,999 year leaseholds. A single proprietor had owned all nine terrace houses and the reversionary interest in the land. The land came within the regime of collective sale rules via section 84E of the Land Titles (Strata) Act ("Act").
In late 2007, the majority of the owners secured a purchaser for Koon Seng House development. Since they were not able to secure unanimous consent to this collective sale, they applied to the Strata Titles Board ("Board") in early 2008 for an order approving this collective sale ("Collective Sale Order"). By the time the Board heard the case and issued the Collective Sale Order, Mr. Goh had become the sole remaining objector. His co-owner (with whom he was in the process of divorcing) had already consented to the collective sale. Mr. Goh then appealed to the High Court, where he lost, and finally to the Court of Appeal.
Types of co-ownership of concurrent interests
The Court of Appeal, comprising Judges of Appeal Chao Hick Tin, Andrew Phang and V. K. Rajah, decided unanimously to dismiss the appeal without hearing Mr. Goh on his substantive objections. The Court of Appeal found that Mr. Goh did not have the locus standi to object to the collective sale without his co-owner's participation in the process. The Judges of Appeal decided that all co-owners of a unit must act together to either support or oppose a proposed sale. Chao Hick Tin JA, in a written judgment, explained that their decision was premised, firstly, on the nature of concurrent interests held by the co-owners in the same property and, secondly, on the collective sale regime under the Act.
Chao JA spent some time explaining the two distinct forms of co-ownership of concurrent interests in the same property. In a joint tenancy, each joint tenant holds the whole of the property jointly and nothing severally. In contrast, a tenancy in common is a form of co-ownership where co-owners own specific undivided shares in the property, but each tenant in common does not own any specific part of the property.
The "proprietor" in a collective sale
Chao JA then went to examine the relevant provisions of the Act relating to the collective sale regime. His Honour looked at the word "proprietor" in section 84E(5) as being that person with the right to file an objection with the Board. Chao JA went on to use the definition of "subsidiary proprietor" in section 3 of the Act to conclude that that person with the right to file an objection should be the "subsidiary proprietor for the time being of the entire estate in a lot…". The learned Chao JA then explained that a single tenant in common cannot be a subsidiary proprietor to file an objection with the Board. In the case of joint tenancy (which is the form of co-ownership for Mr. Goh's unit), Chao JA emphasised that each and every joint tenant must act in any dealing with the whole of the legal estate. It then follows that one joint tenant may not sue or be sued without joining the other joint tenants.
Essentially, the Court of Appeal took the legal position that all joint tenants must act jointly in order to effectively bind the entire estate of the property which they hold jointly, whether the act is by way of a sale or by way of a law suit. The Court of Appeal then applied the legal position to the regime of a collective sale and concluded that all joint tenants of a property must either support or object together. The choice of any one joint tenant will not prevail over that of the others, just like Mr. Goh's co-owner cannot consent or agree to the collective sale without Mr. Goh. In the opinion of the Court of Appeal, Mr. Goh's unit does not fall into a category of owners who positively oppose the collective sale. It falls instead into a category of owners who have abstained from voting; it neither supports nor opposes the sale.
Respectfully, we think that the filing of an objection with the Board to oppose a collective sale application is possibly distinguishable from an act of disposition of interest in a sale or from an act of filing a law suit. In the case of a sale, co-owners are dealing with the disposition of an interest in the property and they must all sign the transfer document to dispose of that interest. In the case of filing an objection with the Board to oppose a collective sale, there is no requirement to transfer or deal with any jointly held interest in the property. In a collective sale regime, the objective of the objector is to prevent, in accordance with law, the intended disposition or dealing of the interest, and to continue the status quo for the ownership of the property.
It is also important to appreciate that a joint tenant who is precluded from defending a law suit (pertaining to the property of which he is a joint tenant) effectively allows his joint tenant to deal with the same property without his consent, thereby compromising his interest. If Mr. Goh is not allowed to object on valid grounds allowed by law, then he is in fact deprived of his right to protect his interest in the property, which cannot be the policy intent of Parliament. After all, the filing of an objection with the Board in the collective sale regime is a defensive act authorised by Parliament to protect the proprietary interests of owners who may be unfairly compromised in a collective sale. If the objection is without merit, then it will be rejected or dismissed eventually by the Board (or now by the High Court).
If we look closely at section 84E(5) of the Act, the relevant words are "A proprietor of any flat... may each file an objection…". If you look at another similar provision, namely section 84A(4), the relevant words are "A subsidiary proprietor of any lot… may each file an objection…". It is indeed worthy to note that Parliament could have used the words "All proprietors of any flat" or "All subsidiary proprietors of any lot" in the relevant sections, but it did not.
Respectfully, the definition of "subsidiary proprietor" in section 3 of the Act should not constrict the right of an owner (whether co-owner under joint tenancy or tenancy in common) to object pursuant to section 84A(4) or section 84E(5), as case may be. Each co-owner is no less an owner who should be entitled to raise valid grounds of objections to a collective sale. This argument is not inconsistent with the undisputed legal position that all co-owners must sign a collective sale agreement in order to agree to a collective sale and all co-owners must sign a transfer document to transfer title upon a successful event of sale.
In conclusion, the Court of Appeal has emphasised the importance of unity of action for co-owners in deciding whether to oppose (or to support) a collective sale. This landmark decision should be welcomed by lawyers and property consultants handling collective sales since it effectively reduces the number of possible objectors to any collective sale effort. Property consultants will want to secure the signature to the collective sale agreement from at least one of the co-owners of any unit so that they can prevent an objection being filed later by the other co-owner with the Board.