PropNex Realty faces second lawsuit over 99-1 deals

A PropNex unit – together with its salesperson and a law firm – has been sued by an Indonesian couple claiming about S$850,000 over a 99-to-1 transaction, making this the second reported suit of such nature for the mainboard-listed company’s subsidiary.

This lawsuit came after PropNex Realty was one of the three defendants sued in January 2025 for S$1.2 million over a similar arrangement, where the buyer purchased properties holding 1 per cent stakes in a bid to reduce the Additional Buyer’s Stamp Duty (ABSD).

Kevin Rahim and Jessica Tjitra sued in February, naming PropNex Realty, salesperson Amos Koh and CK Tan Law Corporation as defendants in their claim of S$849,287.

The Indonesian couple alleged that Koh had told the duo that the so called 99-to-1 arrangement was a legal and workable structure, and that Rahim would only need to pay the 30 per cent ABSD for his 1 per cent interest in a property, rather than for the entire purchase price.

Tjitra acquired an apartment in the Riviere in her sole name for nearly S$3.3 million in July 2022, shortly after the Indonesian obtained Singapore permanent residency. She then sold 1 per cent of her condo unit to her then fiance Rahim for S$32,920 as tenants-in-common a month later.

The Inland Revenue Authority of Singapore (Iras) notified the couple in August 2024 that it would impose the ABSD rate of 30 per cent on the entire purchase price and a surcharge equal to 5 per cent of the amount of additional duty payable.

The two claimants said that Iras deemed theirs a case of “illegal stamp duty avoidance”, and therefore treated the purchase as if they had bought the property together from the outset.

Consequently, they paid S$849,287 to the taxman, which is the remaining amount owed out of the 30 per cent ABSD liability of S$987,600 and a S$40,442 surcharge, after offsetting the S$178,755 stamp duty and ABSD they earlier paid.

Now the couple alleged that Koh did not make sure what he had told them about the 99-to-1 arrangement was true and accurate, despite knowing that they would rely on his representations in structuring their purchase in this manner.

Their case against PropNex Realty is that the agency failed to ensure that Koh is adequately trained as a salesperson including being conversant in and comply with the relevant laws, regulation and rules.

The agency had breached the duty of care owed to the claimants by allowing Koh to make false representations to them and allowed the 47-year-old to advise them to use an illegal stamp duty avoidance method, alleged the claimants, who are represented by Gavin Neo of WongPartnership.

Also, it is responsible for Koh’s alleged negligent misrepresentation to them, the statement of claim said.

Similarly, the claimants alleged that CK Tan Law had failed to ensure that their 99-to-1 arrangement was legal nor advised them that the structure might be construed as unlawful when it represented them in the purchase of the Riviere.

“The third defendant fell short of the standard would be that expected of a reasonably competent and diligent conveyancing lawyer,” said the claimants.

Not claimants’ agent: PropNex and Koh

PropNex Realty, however, pointed out in its defence that Koh was not the claimants’ salesperson for the purchase as they had not entered into any estate agency agreement, and that neither the agency nor Koh received any commission or fee from the couple. It and Koh worked for Riviere’s developer, introducing buyers and brokering sales, and received commissions solely from the developer.

Moreover, Koh was an independent contractor and not its agent or employee, PropNex Realty claimed, and he had undertaken to comply with and observe the rules, policies and professional code it set down as well as those prescribed by the Council for Estate Agencies.

PropNex Realty also claimed that the salesperson had also undertaken that he would be personally liable for any unauthorised or wrongful acts, misrepresentations, fraud or wilful misconduct committed by him in the course of doing sales, and agreed to indemnify the company for claims and legal costs.

It denied that the 28-year-old husband and 33-year-old wife had relied on Koh’s representations as they were aware that he, as an estate salesperson, was not qualified to provide legal or tax advice.

Meanwhile, Koh claimed he received CK Tan Law’s presentation slides in a WhatsApp group chat of his division members in May 2020, where there was a section on the steps involved in the 99-to-1 method and that there would be savings on the total stamp duties.

He believed CK Tan Law’s representation gave the 99-1 method legitimacy as it was provided by a law firm.

PropNex Realty and Koh both contended that the law firm for the claimants’ purchase was under a duty to advise them on the structure as well as the stamp duties payable, and that the claimants must have relied on the firm’s expertise and professional advice.

“Not an illegal arrangement”

But CK Tan Law disputed the allegations, claiming that it was acting on the couple’s instructions on the 99-to-1 structure in the purchase and mortgage of the Riviere apartment. It also claimed that the couple did not query about the tax implications using this arrangement, and it did not provide any such advice to them either.

The defendant denied that the manner of the purchase could be characterised as “an illegal stamp duty avoidance arrangement” because Iras in exercising its powers to vary such an arrangement and impose a surcharge “did not make it an illegal arrangement”.

CK Tan Law contended its duty of care as the claimants’ conveyancing lawyer did not include ensuring that the manner of the purchase was not an illegal stamp duty avoidance arrangement, advising them that their method might be construed as illegal, and flagging that the taxman might vary the purchase arrangement and levy a surcharge.

This defendant claimed that the claimants had chosen to use Koh’s suggested 99-to-1 method in their purchase, thereby contributing to their own loss.

This lawsuit’s case conference is slated to take place on Apr 30. Meanwhile, the court case where PropNex Realty is being sued for S$1.2 million is believed to be going for mediation, as the courts have always encouraged litigants to settle their disputes by alternative dispute resolution.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

MAS to evaluate need to review asset managers’ liquidity risk management framework: Chia Der Jiun