Singapore High Court grants sale order to Chuan Park’s S$890 million en bloc deal

THE High Court granted a sale order to Chuan Park’s S$890 million collective sale on Friday (May 26), with the judge concluding that there is no evidence the deal was not arrived at in good faith by its collective sales committee (CSC).

Justice Kwek Mean Luck said the six minority owners who submitted grounds of objection before the High Court had also failed to show evidence for why Chuan Park’s gross floor area (GFA) should be higher than the plot ratio of 2.1. 

Last year, some Chuan Park owners filed objections to the Strata Titles Board (STB), alleging that the condominium’s CSC and marketing agent ERA Realty failed to disclose material facts relating to a higher development baseline for the condominium. 

The minority owners claimed this translated into a “deep discount” for the buyers, when the 99-year leasehold condo was sold via private treaty for S$890 million on Jul 5, 2022, to buyers related to developers Kingsford Group and MCC Singapore. The sale price was 5.1 per cent below the S$938 million reserve price.

Yet, they claim, this information was used when marketing the site to potential buyers, as the buyer had stated in its offer to purchase that the deal was subject to obtaining outline planning permission for developing the land “with a minimum floor area of 89,824 sq m for development baseline as reflected in the reply dated Aug 30, 2017, from the Urban Redevelopment Authority (URA)”.

Last December, STB issued a stop order for the collective sale of Chuan Park after three rounds of mediation, The Business Times (BT) reported. 

The sale price was arrived at based on a valuation report by GB Global’s Yick E-Ling, based on a GFA of 78,152.76 square metres (sq m) and plot ratio of 2.1. The dissenting owners relied on valuer Stella Seow from OrangeTee.

The minority owners previously told BT that a letter from URA in Aug 2017 showed that a development charge for the site would kick in for development above the maximum gross floor area of 89,824 sq m. This would assume a plot ratio of 2.4.

A higher baseline ratio – as opposed to Chuan Park’s gross plot ratio of 2.1, which was used in the valuation – would mean the buyer could build an additional 11,671 sq m of built-up area, they said. As a result, the property could have been sold for higher profits.

This would have been material to Chuan Park owners when considering whether to support the deal, they added.

In a written judgement, Justice Kwek said: “However, it is clear from the URA Letter 2017 and URA-ERA e-mails in 2021 that it was incorrect for Ms Seow to assume and apply a GFA of 89,824 sq m based on a 2.41 GPR to come to her valuation.”

The URA letter had indicated that the 89,824 sq m figure was for the purpose of computing a development charge and did not indicate the allowable development potential on the site.

The e-mail from URA to ERA had also clarified that the development baseline “had no bearing on the permissible development intensity”.

Hence, the valuation of the sales price should not be based on a “speculative” estimate of a property’s potential, Justice Kwek said.

The minority owners had also alleged that the S$890 million price was not arrived at in good faith, as the CSC did not verify Chuan Park’s GFA. They claimed the committee had allowed ERA to exclude from its scope of services the verification of the development’s GFA and the development baseline. 

Noting that ERA had done such checks, as proven by e-mail exchanges between the real estate agency and URA in 2021, Justice Kwek said he found “no merit” to the defendants’ submission that the committee was “not conscientious or prudent”.

The minority owners have until Jun 23, 2023, to file an appeal. 

In a statement to BT, the minority owners said they were seeking to ensure that the sale “should only be at the right price” and that they were disappointed the email exchange between ERA and URA was only disclosed shortly before the hearing.

“Our professional valuer had valued Chuan Park at S$930 million, much higher than the sale price of S$890 million,” they said. “We are considering our options and we appreciate that the court took one month to consider the matter.”

When contacted, Kingsford Huray Development and MCC Land, which will jointly develop the land, told BT they are excited that the sale order has been granted. “We look forward to redeveloping Chuan Park into a new-concept residential development,” they said. 

The parties had bought the site subject to several conditions, one of which is approval to redevelop the site to accommodate no fewer than 919 dwelling units, based on an average size of 85 sq m per unit.

If these conditions are not met, the buyers can back out of the deal and be refunded their deposit, understood to be S$5 million thus far.

A circular sent to Chuan Park owners on Friday said the completion date for the sale can only be scheduled after all necessary redevelopment approvals have been obtained by the buyers as stipulated in the sale and purchase agreement and any appeals are “exhausted or withdrawn”.

Owners of the 444 homes in Chuan Park stand to receive gross proceeds of about S$1.16 million for a 710 square foot (sq ft) unit, and up to S$2.53 million for a 2,045 sq ft unit. Of the two commercial units, the 474 sq ft one will receive S$1.09 million, and the 1,238 sq ft one, S$2 million.

Chuan Park sits on a 400,588.7 sq ft site and is located near the Lorong Chuan MRT station.

The condo’s collective sale tender was launched on Mar 14, 2022, and before that, it was put up for tender in late 2021.