PropNex says S$849,287 lawsuit against unit over ‘99-to-1’ deal has been dropped

It added that this is not expected to have a material impact on its financial position and performance for the financial year ending Dec 31

A lawsuit against PropNex Realty, a wholly owned subsidiary of PropNex, has been withdrawn, the real estate services group said in a bourse filing on Friday (Oct 17).

The claimants were seeking S$849,287 in damages from PropNex Realty, the company indicated in a Feb 22 filing.

This was for the unit’s alleged breach of duty of care owed to the claimants, as well as for its vicarious liability arising from the alleged negligent misrepresentation of a PropNex Realty salesperson on a property transaction. PropNex was named as one of three co-defendants in the suit that was filed in the High Court of Singapore.

In the Friday bourse filing, PropNex Realty said: “The company wishes to update shareholders that the claimants have discontinued and withdrawn the suit”.

While the announcement did not disclose further details about the lawsuit, The Business Times reported in April that an Indonesian couple had sued PropNex Realty in February over a 99-to-1 transaction seeking S$849,287 in claims – the same figure mentioned in the filing.

In the lawsuit, the couple – Kevin Rahim and Jessica Tjitra – named the PropNex unit alongside salesperson Amos Koh and CK Tan Law Corporation as defendants.

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This was the second reported suit against PropNex Realty over a 99-to-1 arrangement, which refers to a structure that buyers often use to avoid tax by reducing the rightful 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 an existing property to pay a lower ABSD than would otherwise apply to a second-property purchase.

PropNex added 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.

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Shares of PropNex closed Thursday 3.6 per cent or S$0.09 lower at S$2.39.