http://www.straitstimes.com/Money/St...ry_721088.html

Firm fails in appeal over $37m bungalow

It would be unjust to grant ECI's bid to buy house for $20m: Court

Published on Oct 8, 2011

By K. C. Vijayan, Law Correspondent


The Ridout Road home, bought by Mr Agus Anwar in 2006, sits on a 40,600 sq ft plot, with a tennis court and swimming pool, in the Holland Road good-class bungalow area. -- ST FILE PHOTO

A LONG-RUNNING dispute over who has the right to buy a $37 million bungalow in the Holland Road area has finally been settled in the Court of Appeal.

After years of legal battles, the court has ruled that the owner, businessman Agus Anwar, is entitled to sell it to former Goldman Sachs banker Thomas Chan.

The two-storey Ridout Road home sits on a 40,600 sq ft plot, complete with a tennis court and swimming pool, in the Holland Road good-class bungalow area.

Indonesian-born Mr Agus bought the house through his firm Ridout Residence for $28 million in 2006. He had paid

$11 million in cash and taken $17 million from a $30 million facility extended to him by Hong Leong Finance.

But when the 2008 global financial crisis rocked his financial position, Hong Leong recalled the loan, so Mr Agus was in need of cash.

In June 2009, Mr Agus granted an option to buy the home for $20 million to EC Investment Holding (ECI), owned by Mr Tan Koo Chuan of Yi Kai Group and Mr Melvin Poh of Fission Group.

ECI paid Mr Agus $1.5 million for the right to hold this option but Mr Agus had to option to cancel the deal within 60 days if he paid a cancellation fee. By September 2009, both had agreed that ECI would not exercise its option to buy if Mr Agus paid $3.5 million which involved a higher cancellation fee.

The next month, Mr Agus granted Mr Chan the option to buy the home for a much heftier price tag of $37 million.

ECI, on learning this, warned Mr Agus that it would apply to court to enforce its option to buy, and both settled that he would pay ECI $5 million to cancel its purchase. This included the $1.5 million option fee. But he failed to meet the settlement's November deadline.

ECI then went to the High Court to try to enforce its contract but lost its case, and again on appeal.

In its written judgment released yesterday, the Court of Appeal held that although there was a genuine agreement between ECI and Mr Agus' Ridout Residence, which owned the property, it was inappropriate to enforce the agreement.

The court, comprising Judges of Appeal Chao Hick Tin, Andrew Phang and V. K. Rajah, ordered Ridout to pay damages suffered by ECI as a result of its failure to honour the agreement. The damages payable to ECI will be assessed at a separate hearing by a court registrar.

Explaining why it refused to order the property to be acquired by ECI instead of Mr Chan, the court noted that ECI had earlier been 'quite content to forgo its right to acquire the property if the compensation was right'.

As the property market improved in 2009, the compensation that ECI sought escalated from $180,000 to $3.5 million under a September 2009 settlement, and to $5 million two months later.

ECI had also 'implicitly permitted' Mr Agus to look for other buyers as it knew he had no other means to pay the compensation except by selling to another party.

At one stage, Ridout had asked for a two-day extension to pay the $5 million compensation to ECI but ECI refused because it opted for a bigger payout by wanting to claim the property for itself, as prices were rising, said the court.

The court said granting ECI's request to buy the home would cause 'tremendous hardship' to a third party, Orion Oil, which had lent $10 million to Mr Agus.

There would be very little left from the sale proceeds to repay Orion if the house was sold to ECI for $20 million, compared to Mr Chan for $37 million. As it stood then, Hong Leong Finance, the mortgagee to the property, was also entitled to a chunk of the sale proceeds.

The court, in a 35-page judgment, ruled it would be unjust and inequitable to grant ECI's appeal to enforce its contract with Mr Agus.

ECI, in a statement through its lawyers from Rajah & Tann yesterday, said 'although the Court of Appeal did not grant us specific performance, we are pleased that the court reversed parts of the High Court judge's earlier findings. In particular, the Court of Appeal agreed with ECI that the transaction was a genuine agreement for the sale of the property by Ridout to ECI and that ECI had approached the court with 'clean hands''.

Mr Agus was once a significant shareholder in two Indonesian banks, Bank Kredit Asia and Bank Pelita, but there was a run on these banks during the 1997 Asian financial meltdown and they were taken over by the Indonesian Bank Restructuring Agency.

He came to Singapore in 2000 and became a citizen in 2004.

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