Proprietors of church face suit on alleged breach of $18.5m deal

Proprietors of a church who allegedly failed to honour an $18.5 million deal to sell its Bedok premises and lease another site in Eunos are being taken to court for damages and breach of contract.

Legacy Strategies, the buyer of the building that houses Bethesda Community Church, has named the church's pastor Philip Tan and five others as defendants, in seeking to enforce the sale.

The church has also intervened in the case, claiming that the six defendants are not authorised to sell the premises, according to court documents filed.

A High Court pre-trial conference is due next week.

Legacy Strategies, an investment holding company owned by businessman Chaw Chong Foo, had inked the deal to buy the Bedok property in June 2014. The deal also required the sellers to obtain HDB's approval for the sale. It provided for Legacy to buy up the shares of the Newgate Learning Hub, the registered proprietor of the 99-year HDB lease on the property within which the church operates.

Legacy, through lawyers from Lee & Lee, further allege that the transfer of the sale shares was agreed by both parties to be completed by March last year but remains incomplete. They also allege that the defendants failed to seek HDB's clearance for the sale.

Contesting the claims, Pastor Tan and the other defendants, who are church trustees, claim that they were misled by Mr Chaw and induced into the deal. The defendants include Newglobe Venture, the corporate vehicle set up to manage the assets of the church.

They claim the deal was conditional upon the church leasing new premises at 115 Eunos Avenue, which is understood by The Straits Times to be used by three other church groups on the third and fouth levels of the building.

The multi-storey complex at 115 Eunos Avenue is owned by Zhaolim Pte Ltd, which is owned by Mr Chaw.

In court documents filed by their lawyer Lawrence Chua, the defendants argue that they are not obliged to go through with the sale as it was conditional on them taking up the tenancy at 115 Eunos Avenue, which they have rescinded.

They claim to be justified to rescind the tenancy pact based on the alleged misrepresentation by Mr Chaw.

Such issues nullified the initial in-principle agreement by Pastor Tan, after consulting the rest of the church leaders in early 2014, for the sale of the Bedok premises to Mr Chaw, said the defence.

They also added in court documents filed that Mr Chaw had breached a collateral contract in assigning the third floor instead of the promised fourth floor of the building. They further said the terms of the contract were also unfair, which the plaintiff disputes.

The 200-strong church community has also weighed in on the case, with Rodyk & Davidson lawyers led by Senior Counsel Lok Vi Ming filing court papers on its behalf.

Among other things, it argues that while Pastor Tan and the other defendants form the church executive committee, they do not have express powers under the church Constitution to sell the property.

It says the Bedok premises was bought with donations and governed by a charitable purpose trust, of which the church is the beneficiary.

It further claims that the $18.5 million sale price was a " substantial undervalue" and the sales pact is voidable at the church's behest.

The church wants the court to void the Newgate share sale.

It is understood that Bethesda leaders have informed church members of the ongoing court case.

vijayan@sph.com.sg

melodyz@sph.com.sg

This article was first published on May 23, 2016.
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