Chief Editor December 07 2023

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Buyer of S$18.68m Good Class Bungalow loses lawsuit against property agency on drainage reserve

Jane Lam, who acquired a Good Class Bungalow (GCB) for S$18.68 million, has filed a lawsuit against her real estate agency, Realstar Premier Group. She alleges that the agency's property agent misrepresented the property by falsely claiming that the entire land area of 12,454 sq ft was available for redevelopment.

On December 29, 2021, Jane Lam paid $747,200 to exercise the option to purchase (OTP), this is on top of the $186,800 for an option to purchase it.

On January 7, 2022, Jane Lam and her father, Patrick Lam, founder of JBE Holdings, were notified by their conveyancing lawyers that the drainage reserve of 278.8 sq ft on the landed property could not be used in any redevelopment.

On January 13, 2022, the Lams were allowed inside the GCB and saw the drainage reserve for the first time.

In her legal action, Lam contends that the agent is responsible for passing on a misleading marketing brochure from the seller, resulting in a distorted perception of the property's redevelopment potential. Lam claims losses amounting to S$418,160.76, calculated by dividing the purchase price by the proportion of the property area unsuitable for redevelopment.

The High Court, however, dismissed Lam's claim of negligent misrepresentation on December 5, asserting that any misconception regarding the entire land area's redevelopment potential was solely Lam's misunderstanding. Senior Judge Lai Siu Chiu emphasized that the Realstar's property agent, Darren Teo, acted as a conduit in providing the brochure and was not obligated to independently verify its contents.

Teo, who first engaged with Patrick Lam in July 2021, informed him on December 14, 2021, about the GCB property on Lewis Road, available for a negotiable price of S$21 million. Following a meeting on December 15, during which Lam and her father viewed the property's external compound, they submitted an offer of S$18.68 million, which was accepted the same day.

The dispute arose when, on January 7, 2022, the Lams discovered a drainage reserve of 278.8 sq ft on the property via an email from their lawyers. Lam argued that Teo, through the brochure, falsely represented that the entire land area was available for redevelopment, breaching his duty of care as a property agent. However, Justice Lai ruled against Lam's claim, stating that Teo had no knowledge of the drainage reserve, and the brochure did not imply the entire landed property could be used for redevelopment.

What is a drainage reserve?

Ar crucial consideration is the presence of a Drainage Reserve within the site's boundaries. A Drainage Reserve (DR) designates land reserved for drainage purposes as per approved development proposals. Depending on the project type (A&A / Re-Construction / New built), DRs must be vested to the Government to facilitate drainage works. This vesting is mandatory, irrespective of the development's nature. The existence of a DR directly impacts the new house's building setbacks, restricting any construction within the DR to accommodate potential government drainage improvement works in that area.

Who is JBE Holdings?

JBE is a Singapore property developer established in 2004. It has developed private residential condominiums and executive condominiums (EC) including The Commodore, Signature at Yishun, The Luxe, The Oasis of the North, Luxe Ville and Skypark Residences.