SINGAPORE – Real estate agency Huttons Asia, which found itself entangled in a dispute between 28 shop owners at KAP Mall and developer Oxley Sanctuary, has refuted allegations of misinforming shop owners about the return of key tenants McDonald’s and Cold Storage.
A 36-day trial is set to take place from March to May 2024 over the lawsuit filed by the shop owners against Oxley Sanctuary, a subsidiary of Oxley Holdings, which bought the land at King Albert Park in 2012 and redeveloped it into the present KAP Mall that was completed in 2016.
The shop owners, who bought 19 units in the freehold strata mall in 2013, are accusing Oxley of misleadingly marketing the property, asserting they were told that the McDonald’s fast-food restaurant or Cold Storage supermarket, or both – which were occupants of the two-storey commercial building before Oxley’s acquisition – would be returning as tenants.
Oxley, represented by senior counsel Koh Swee Yen at law firm Wong Partnership, had refuted the claims and brought marketing agent Huttons into the fray as a third party in the lawsuit, seeking indemnity or contribution should it be found liable.
In its defence filed in January 2022, a copy of which was seen by The Straits Times, Huttons, represented by lawyer K. Anparasan of WhiteFern, denied the allegations, underscoring that its property agents adhered to their fiduciary duties.
Mr Anparasan highlighted in the defendant’s reply that marketing material prepared by Oxley had allegedly shown a unit at the mall’s basement level, which was designed to house a supermarket.
During a VIP preview event, Oxley had allegedly announced and confirmed the sale of “the supermarket unit” by e-mail, noted the court documents.
Huttons said it had never informed its property agents that units at KAP Mall were reserved for occupation by McDonald’s or Cold Storage.
The agency also denied making any representations to the shop owners that there was a correlation between the respective units’ prices and their proximity to the alleged units reserved for McDonald’s or Cold Storage.
It further denied having knowledge of any alleged representations made to the shop owners by co-broke agents from other real estate agencies.
Court documents filed with the High Court in 2019 said Huttons was appointed the sole marketing agent for the sale of commercial units at KAP Mall on May 28, 2013.
Huttons had also jointly marketed, by way of co-brokerage, the sale of the units with other real estate agencies, including Savills Singapore and ERA Realty Network.
The shop owners, represented by lawyer Subramanian Pillai of CNPLaw, claimed they were told by property agents in 2013 that McDonald’s or Cold Storage – “well-known” and “popular” tenants at McDonald’s Place at King Albert Park – would be returning as tenants of KAP Mall.
The property agents apparently also told the shop owners that units had been reserved for the two big brands, which would attract substantial customer traffic.
The shop owners, who paid between $1.415 million and $9 million for their respective units, claimed they were made to believe their purchases would be “an attractive commercial investment with strong rental yield, and capital appreciation”.
In its defence, Oxley claimed it did not know of Huttons’ co-broking arrangements and the representations were not made based on instructions it had given Huttons.
The shop owners alleged that they found out that neither McDonald’s nor Cold Storage would be setting up shop in KAP Mall only after they took possession of their respective units between November 2016 and January 2017.
They argued that the absence of McDonald’s or Cold Storage, which resulted in low customer traffic in the mall, had caused them substantial losses as they were unable to procure tenants.
“Most of the units were vacant for long periods of time and could be rented out only after substantial periods of vacancy at low rental rates, in an effort to mitigate the plaintiffs’ losses,” noted the shop owners in their statement of claim. “The business environment within the KAP Mall was neither vibrant nor robust. This, in turn, resulted in a negative impact on the capital appreciation of the plaintiffs’ units, in that each of the units suffered a substantial diminution or loss in their open market value.”
At least six units were vacant for more than two years after the shop owners took possession of them, noted the court documents.
Before Oxley’s acquisition in 2012, the space was occupied for more than two decades by the King Albert Park McDonald’s fast-food restaurant, along with its corporate offices and training facilities, based on court documents.
Oxley later redeveloped the site into KAP Mall, comprising 107 shop units, and KAP Residences with 142 apartments.
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