28 KAP Mall shop owners suing Oxley unit for misrepresentation
Developer denies claims and names Huttons as 3rd party defendant.
A group of 28 shop owners who bought 19 units at the freehold strata KAP Mall has banded together to sue the developer Oxley Sanctuary, a subsidiary of Oxley Holdings, for alleged misrepresentation. The defendant denies the allegations and has named KAP's exclusive marketing and sales agent Huttons Asia as a third party in the lawsuit.
The plaintiffs allege that Oxley Sanctuary, through Huttons and the latter's co-broke agents Savills Singapore and ERA Realty Network Singapore, had misrepresented in the course of marketing the property that McDonald's or Cold Storage or both were returning as anchor stores at the mall.
McDonald's and Cold Storage had been tenants at McDonald's Place at King Albert Park before the two-storey commercial building was sold at S$150 million in 2012. The site was re-developed by Oxley Sanctuary into a retail-commercial property known as KAP Mall with 107 shop units and KAP Residences with 142 apartments.
Represented by Subramanian Pillai of CNPLaw, the plaintiffs in seeking unspecified damages from Oxley Sanctuary, claim that they were separately and verbally informed by Huttons or its co-broke agents that units had been reserved for McDonald's and Cold Storage at KAP Mall, with the basement unit designated for the supermarket.
They allege that they were induced to buy - mostly in mid-2013 - their respective units at prices ranging from S$1.415 million to S$9 million, on the basis that their purchase would be an attractive investment with strong rental yield and capital appreciation because the fast-food restaurant and supermarket would be present and are crowd-pullers.
But the representations were not true, the plaintiffs allege. They took possession of their respective units in late 2016 or early 2017, and up to now, neither McDonald's nor Cold Storage has moved in.
They claim that the absence of McDonald's or Cold Storage has resulted in little customer traffic, which in turn caused them to be unable to procure tenants for long periods of time.
"The business environment within the KAP Mall was neither vibrant nor robust. This in turn resulted in a negative impact on the capital appreciation of the plaintiffs' units in that each of the units suffered a substantial diminution or loss in their open market value," according to the statement of claim.
The plaintiffs said their units could only be rented out after substantial periods of vacancy at "low" rental rates in an effort to mitigate their losses.
Two of the units have not been leased out since their owners took possession in November 2016. Another plaintiff said that having paid nearly S$40,000 in renovations for businesses to rent the unit by the hour, the property "generated less than S$1,000 per annum".
The rest of the owners in the lawsuit collected monthly rentals ranging from S$750 to S$12,650, with the latter for the unit that most plaintiffs allege they were told by agents had been reserved for McDonald's.
When the suit was filed through CNPLaw in May, there were a total of 49 plaintiffs owning an unspecified number of shop units on board. The number of plaintiffs has since decreased to 28.
Oxley Sanctuary, represented by Paul Tan of Rajah & Tann Singapore, rejects the allegations, and says it has no knowledge of Huttons' co-broking arrangements.
The company said it did not instruct Huttons that McDonald's and Cold Storage would be tenants at KAP Mall after redevelopment, or authorise the marketing agent to make such representations to prospective buyers.
Oxley Sanctuary pointed to marketing materials prepared jointly with Huttons saying nothing in the materials stated the supermarket or fast-food joint would be a part of KAP Mall.
It also cited disclaimers in the marketing material including the parts that said all statements shall not be relied on as representations of fact and "all plans, internal layouts, information and specification are subject to change and shall not form part of an offer or contract".
The property developer is also questioning how the fast-food restaurant and supermarket as anchor stores would have been critical to the commercial viability of the units and, in turn, their rental yield and capital appreciation.
Oxley Sanctuary has named Huttons as a third party in the lawsuit, meaning that if it is found liable, it seeks indemnity or contribution from Huttons. Defence from the marketing agent, which has engaged lawyer K Anparasan of WhiteFern, is pending upon Oxley Sanctuary filing its statement of claims in the third-party action.
Regulatory filings in 2013 showed that Oxley Holdings, Unique Rezi and Luxe Development had entered into a joint venture agreement for stakes of 55, 30 and 15 per cent respectively in Oxley Sanctuary. Unique Rezi is in turn owned by a Heeton Holdings unit, a KSH Holdings subsidiary and Zap Piling, while Luxe Development is a unit of Lian Beng Group.
The next pre-trial conference is on Nov 14.
Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.