The court affirmed that Sale and Purchase Agreements remain valid despite the developer's liquidation, recognizing the purchasers as beneficial owners with rights to invoke equity principles against unjust enrichment.

Lee Swee Seng JCA:

[1] The appeal once again reveals the conundrum faced by many a purchaser who had signed a sale and purchase agreement ("SPA") for a building or house being built on a piece of land held under a master title which has not been subdivided yet and which is still charged to a master chargee by the developer/registered owner for a bridging loan.

[2] The Developer as the first defendant (D1) here then went into liquidation before completion of the factory units ("Properties") and years later the Liquidators appointed sold the whole of the Project Lands held under the various Master Titles to a third party with the consent of the chargee bank, the second defendant (D2) here, who said it took a haircut in agreeing to the purchase price for the sale in return for executing a discharge of charge over the Master Titles.

[3] The whole of the Project Lands were disposed of by the Liquidators in total disregard of the interest of the Plaintiffs/Purchasers here, who were not informed of the sale and had become aware of it only after the third party had become the new registered owner.

[4] The Plaintiffs argued that there was also no creditors' meeting called by D1 and as such, D1 had acted unreasonably by disposing the Plaintiffs' Properties without taking into consideration of the Plaintiffs' interest as the beneficial owners of the Properties.

[5] The Purchasers fell into 2 categories:

(a) Those who had obtained a loan to finance the purchase from the same bank as the master chargee D2 or from other banks in D3 to D5 and

(b) Those who were cash purchasers.

[6] Some Purchasers had taken their loans from D2 who is also the Master Chargee and others had taken their loans from Hong Leong Bank Bhd (HLBB) D3, CIMB Bank D4 and Public Bank Bhd (PBB) as D5. D3 to D5 shall collectively be referred to as the End Financiers and where the context allows this would also include D2 who besides being a Master Chargee, also end-financed some of the Plaintiffs/Purchasers.

[7] However as the Developer D1 had not applied for and obtained the subdivided titles at the time of sale or even up to the time it was wound up, the traditional documents of a loan agreement and deed of assignment were signed between the Purchasers and their End Financiers with the bridging financier D2 undertaking to the End Financiers D2-D5 that D2 would exclude the identified Properties from any foreclosure or order for sale and shall deliver a valid and registrable transfer in favour of the Purchasers/Borrowers and a valid and registrable charge in favour of the End Financiers and to refund all monies paid by the End Financiers to it as a bridging financier in the event that these instruments could not be registered when the individual subdivided titles are issued.

[8] The Developer D1 had also given a similar undertaking to the End Financiers to complete the Properties with a Certificate of Fitness (CF) issued and a valid and registrable transfer in favour of the Purchasers to enable a charge to be created in favour of the End Financiers.

[9] The Plaintiffs further argued that, in this connection, D1 had breached its own undertaking in refusing and/or neglecting to deliver to the Plaintiffs or their solicitors a valid and registrable Memorandum of Transfer and the Individual Subdivided Titles to the said Properties free from encumbrances to their respective Banks as End Financiers.

[10] On 14 September 2017 the winding-up Court had allowed the Plaintiffs' application for leave to commence action against D1 pursuant to s 226(3) of the Companies Act 1965 . On 4 October 2017, this action was filed.

[11] At the High Court the Plaintiffs by an Amended Originating Summons ("OS") in Enclosure 21 prayed for various reliefs as follows:

"1. A Declaration that the Plaintiffs are the lawful purchasers of their respective Industrial Lots which were built on the lands held under Plots No. T019, T006, T234, T240, T146, T147, T170, T171, T172, T173, T174, T272, T164, T024, T073, T199