It is not expected to have a material impact on its financial position and performance
[SINGAPORE] A lawsuit against PropNex Realty, a wholly owned subsidiary of PropNex , has been withdrawn, the real estate services group said in a bourse filing on Friday (Oct 17).
In February, an Indonesian couple had filed a suit against PropNex Realty in the High Court of Singapore over a 99-to-1 transaction, seeking S$849,287 in damages.
The claims were for the unit’s alleged breach of duty of care owed to them, and for its “vicarious liability” arising from the alleged negligent misrepresentation by a PropNex Realty salesperson on a property transaction, a Feb 22 bourse filing showed.
In the Friday bourse filing, PropNex Realty said: “The company wishes to update shareholders that the claimants have discontinued and withdrawn the suit.”
Public records show that the claimants, Kevin Rahim and Jessica Tjitra, have discontinued the proceedings, the unit noted.
When queried by The Business Times on the reasons for the withdrawal, PropNex said it “is pleased with the discontinuance, but would prefer not to comment further”.
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The discontinued case is the second reported suit against PropNex Realty over a 99-to-1 arrangement – a tactic buyers use to avoid the additional buyer’s stamp duty (ABSD) payable on purchases.
Under such arrangements, a first-time buyer typically purchases a property, and within a short amount of time, sells a 1 per cent share of the property to another party who owns an existing property. This allows the co-owner with the existing property to pay a lower ABSD than would otherwise apply to a second-property purchase.
PropNex said that the withdrawal of the lawsuit is not expected to have a material impact on its financial position and performance for the financial year ending Dec 31.
Lawsuits over 99-to-1 deals
Indonesian couple Rahim and Tjitra had named PropNex Realty alongside salesperson Amos Koh and law firm CK Tan Law Corporation as co-defendants when they filed the suit in February.
Tjitra had bought a S$3.3 million condo unit in the Riviere under her sole name in July 2022 after obtaining Singapore permanent residency. A month later, she sold 1 per cent of her apartment to her then fiance Rahim for S$32,920, under a tenants-in-common arrangement.
The couple alleged that Koh said the 99-to-1 arrangement was legal; and that Rahim would only need to pay the 30 per cent ABSD for his 1 per cent stake in the unit, rather than for the full purchase price.
In August 2024, the Inland Revenue Authority of Singapore (Iras) notified the couple that it would impose the ABSD rate of 30 per cent on the entire purchase price, in addition to a surcharge equal to 5 per cent of the amount of additional duty payable.
The couple said that the taxman deemed their purchase a case of illegal stamp duty avoidance and thus treated it as if they had bought the unit together from the outset.
As a result, they had to pay Iras S$849,287 – which is the amount due from 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 paid earlier.
In a similar case in January, businessman Melvin Li sued PropNex Realty, alongside its agent Ian Sng and law firm City Law.
Li sought a claim of close to S$1.2 million for the sum he had to pay Iras over his purchase of a 1 per cent share in each of his parents’ newly bought properties.
He alleged that Sng and City Law advised him that such purchases were legal. City Law has denied Li’s allegations.
Shares of PropNex closed on Friday 5 per cent or S$0.12 lower at S$2.27.
