Friday, January 16, 2009

Owner told to pay $382k agent’s fee

She withheld payment as she blamed agent for not telling her that buyer was neighbour

A JUDGE has ordered the owner of a $25.5 million house to pay the commission that she had withheld from an property agent for alleged wrongful conduct.

Madam Lam Cheng Yee, who owned the unit at 32H Nassim Road, had claimed she was entitled to cancel the payment to Ms Cindy Wong of Areco International who had clinched the sale. At 1.5 per cent commission for the sale, the amount came to $382,500.

She argued that she lost the opportunity to get a better price because it later emerged that the buyer was a neighbour after the sale went through.

The agent, she said, had told her that the buyer, who remained anonymous during the transaction, wanted the house because of its feng shui.

She claimed that Ms Wong had been deceitful as the buyer’s address on the option document was listed as an office in Temasek Boulevard, rather than 32K Nassim Road.

The buyer was Mr Chew Hua Seng, founder and chairman of Raffles Education Corporation. He was ranked No. 10 in the Forbes list of Singapore’s top 40 richest persons in 2007.

Madam Lam’s bungalow on the 1,250 sq m piece of land adjoins his unit at the rear with a narrow passageway leading to the main road. Seen from Nassim Road, both units are separated by
another unit, 32G.

Madam Lam’s husband, Mr Thio Keng Thay, a former deputy managing director of Malaysia Dairy Industries, handled the sale on her behalf.

Mr Thio had testified in his affidavit for the civil suit heard last July that an adjacent property would ‘command a substantial premium over the market value’. He added he would not have sold the bungalow for $25.5 million if Ms Wong had told him the buyer was a neighbour.

Ruling against Madam Lam, Justice Kan Ting Chiu said in his written judgment made public on Wednesday that her allegation that she had been misled by Ms Wong could not be supported.

The judge said, among other things, that ‘good feng shui’ could not be the reason Madam Lam was willing to sell the house.

Mr Thio also did not say he wanted the buyer’s residential address to be disclosed as a condition of sale and had in fact set the asking price of $25.5 million. Nor did he ask Ms Wong if it was a good selling price or if there were other factors he should consider in setting the price.

Even if he had sought advice from Ms Wong, the issue would then be whether an agent is expected to know that a property can command a higher price from the owner of an adjoining property.

Ms Wong, Justice Kan noted, was not engaged as a valuer and did not hold herself out to be knowledgeable in property valuation.

Separately, the judge took issue with Madam Lam’s lawyer Lin Ming Khin for following her instructions to revoke the commission payable to Ms Wong ‘without demurral’.

He asked if this was appropriate as the agent’s entitlement would be in jeopardy if the seller happened to be outside the jurisdiction of the Singapore courts or is unable to pay the commission by the time the court rules in the agent’s favour.

‘Prudent solicitors in such a situation’, he said, would have taken steps to retain the commission pending the outcome of the dispute.

Property analysts say that generally, an adjoining property will command a premium as such opportunities are rare. Said Savills Singapore director Steven Ming: ‘It makes sense to pay a higher price as when the buyer combines the cost with what was paid years ago for the property he currently owns, the cost per sq m would have averaged out to a lower level for the total lot.’

Source : Straits Times - 16 Jan 2009

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