ERA Senior agent Mike Parikh got his wife Madam Sadiq (above) to buy a flat sold by his subordinate Mr Ang (below). The flat was resold for a hefty profit within weeks.
WHAT THE JUDGE SAID: Justice Choo Han Teck said that Mr Parikh and Mr Ang were ethically wrong and in breach of contract by creating a conflict of interest between their client and themselves.
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ERA told to return $257,000 to couple
Judge slams unethical agents who ‘flip’ properties for profit
By Selina Lum
6 February 2009
A High Court judge yesterday criticised the unethical behaviour of two ERA Realty Network agents and ordered the return of $257,000 to a couple who used the agency to sell their apartment.
Mr. Yuen Chow Hin, an IT company vice-president, and his wife, Madam Wong Wai Fan, a housewife, had let go of their two-bedroom downtown flat at $688,000. They took their ERA agent’s word that this was the best price they could get.
What they did not know was that the buyer of their Riverside Piazza unit was the wife of their agent’s boss, and that she re-sold it almost immediately for $945,000, making a hefty profit.
Yesterday, Justice Choo Han Teck ruled in favour of the Yuens, who had sued ERA for the ‘secret profit’ made in the second deal.
Justice Choo found that the conduct of agent Jeremy Ang and his boss, Mr. Mike Parikh, senior group division director at ERA, amounted to breach of duty and fraud.
He also had a stern reminder for the industry of its ethical responsibilities, as it had emerged in court that such practices were common.
The judge concluded that it was Mr. Parikh who wanted to buy the flat in order to make a quick profit during the property boom.
To distance himself from the deal, he used his wife, Madam Natassha Sadiq, as the buyer and Mr. Ang as the seller’s agent, the judge found.
Mr. Ang was the link but Mr. Parikh was the person behind the scheme, and his position made his subordinate’s breach of contract even more reprehensible.
The misconduct was of such magnitude that the judge said he felt bound to make the reasons clear in his judgment so that no property agent could now claim ignorance.
When a property agent is engaged to sell or buy property, he has a responsibility to act in the interests of the person who appointed him - not his own, or his friends’, or his relatives’ or his boss’, said the judge.
‘This responsibility that the agent bears is the foundation of the ethical rules and contractual principles that prohibit an agent from acting in conflict of interests and reaping secret profits for himself or his friends.’
Madam Sadiq was a party to the plan carried out by her husband and Mr. Ang.
‘The result of the concerted efforts of Jeremy, Mike and Natassha resulted in the plaintiffs selling their flat for less than what they might have had they been properly and honestly advised,’ said the judge.
Justice Choo rejected the testimony of ERA’s top brass - president Jack Chua and senior vice-president Marcus Chu - that the two men had done nothing wrong.
The judge said it was clear why they thought so - Mr. Chu admitted in court that he and others in the company, as well as agents in other companies, had done the same thing.
Justice Choo also rejected arguments by ERA that it was not liable for the actions of its agents, who are ‘independent contractors’.
The option form had ERA’s logo printed on it; the commission agreement was between Madam Wong and ERA; and the newspaper advertisements sought to persuade the public that they would have the backing of the company and its network by engaging an ERA agent.
It was also ERA - not Mr. Ang - which took the couple to the Small Claims Tribunal when they refused to pay the commission on the sale.
Yesterday, a relieved Madam Wong said: ‘Naturally, I’m very happy. I respect the decision of the court.’
In a statement, ERA president Jack Chua said: ‘ERA intends to appeal the court decision that finds our company liable as we did not benefit from the transaction.’
Mr. Jeff Foo, president of the Institute of Estate Agents, would only say the case could have been prevented if real estate agencies and their agents are licensed.
He said: ‘In this way, the industry will be regulated and everybody can be held responsible and accountable for their actions.’
The institute has a code of conduct and ethics for members.
Mr. Ang is not a member of IEA.
They dig through marriage records, old newspapers
Couple, awarded $257,000 in judgement against ERA, did detective work to uncover agent link in 'flipping'
By Tay Shi'an
February 08, 2009
THEIR first inkling that something was wrong came when they received a call from their lawyer.
The CPF Board wants to know why you sold your property for such a low price, the lawyer told the Yuens.
Mr Yuen Chow Hin, 50, an IT company vice-president, and his wife, Madam Wong Wai Fan, 48, a housewife, were surprised and puzzled.
In July 2007, three months before the call, they had sold their two-bedroom apartment at Riverside Piazza for $688,000 through ERA agent Jeremy Ang.
The buyer, said Mr Ang, was one of his 'regular clients', Madam Natassha Sadiq. He told the Yuens that the valuation for the unit was between $650,000 and $700,000, and Madam Sadiq's offer was the best price they could get.
Unknown to the Yuens, Madam Sadiq sold the apartment almost immediately for $945,000.
The valuation which the new buyer, a MrTeo, got was much higher than $688,000, which led to the red flag from CPF.
The Yuens immediately queried Mr Ang, and then played detective to find out what had happened.
What they uncovered led to a High Court case which ended with the judge ordering ERA to pay the couple the $257,000 difference in the sale prices. He also blasted the two agents for their unethical behaviour.
ERA last night said it was suspending the two agents and introducing measures to improve transparency and accountability to its customers.
After checking a copy of the caveat lodged for their property, the Yuens realised that MrTeo had exercised his option to buy the unit from Madam Sadiq on 25 Jul - one day before she exercised her option to buy the unit from the Yuens on 26 Jul.
Suspicious about the dates, the Yuens decided to track down Mr Teo. His address was listed on the caveat.
Madam Wong told The New Paper: 'We wanted to find out, how did he buy our house, who he bought it from. The timing didn't sound correct.'
She said that although the thought of knocking on a stranger's door was scary, she and her husband were determined to find answers.
But trying to track down Mr Teo was not easy. The first few times the Yuens went to his house in Toa Payoh, he was not home. The couple also left a note in his letter box, but he did not respond.
Finally, in late November, they managed to contact him.
That's when he told them he had bought the unit through an ERA agent called 'Mike'.
The Yuens then went through newspaper archives and found three advertisements 'Mike' had put up on 7, 9 and 14 Jul 2007.
Madam Sadiq was granted the option to purchase only on 12 Jul.
By matching the handphone number on the advertisements with other promotional material they found, they confirmed 'Mike' was Mr Ang's boss, Mr Mike Parikh, an ERA senior group division director.
The Yuens were surprised - Mr Parikh was the agent who had helped to sell Mr Yuen's brother Steven's flat in 2006.
It was through Mr Parikh that they hired Mr Ang to sell Mr Yuen's mother's flat as well. The Yuens' Riverside Piazza unit was the third property the family had entrusted with ERA in two years. The couple had, by now, drawn a link between the two agents involved in the two transactions. But how did Madam Sadiq fit into the picture?
Said Madam Wong: 'We were thinking and brainstorming, wondering if there was any linkage. Then we thought, maybe she's (someone's) wife.'
Based on the hunch, and Madam Sadiq's IC number on the caveat, the Yuens did searches at the Registry of Marriages in December 2007 and discovered that Madam Sadiq was married to Mr Parikh.
Said Madam Wong: 'That's when we realised there was definitely something going on, some internal arrangement.
'It was a big surprise to us. (Mr Ang) had seemed genuine and helpful... We felt indignant that our trust had been misplaced.'
The Yuens refused to pay Mr Ang's 1 per cent commission of $7,361.60, including GST, and wrote to ERA about their findings.
ERA wrote in reply that the two agents had done nothing wrong.
Then, in January last year, ERA made a claim against the Yuens at the Small Claims Tribunal for failing to pay the commission.
It was after this that the Yuens filed their lawsuit against the company.
When the verdict was handed out on Thursday, Madam Wong hugged their lawyer, Ms Gan Kam Yuin, in joy.
Mr Yuen was not in court as he was abroad on a business trip.
But his mother and brother - Mr Parikh and Mr Ang's former clients - and his sister were there to give Madam Wong support.
Madam Wong admitted that the case, which took about a year, and its five-figure costs gave her many sleepless nights.
She said: 'It does occupy your mind. Now I can get a chance to sleep well.'
* * * * *
ERA suspends the two agents, sets new rules
THE two agents involved in the Yuens' case have been suspended, Mr Jack Chua, president of ERA Realty Network, told The New Paper last night.
He said: 'We reserve our rights as to what further actions we may take against them.'
This is a turnaround from what Mr Chua had said during the trial, when he said he felt the two agents had done nothing wrong.
ERA has yet to decide if they will take legal action against the agents and/or Madam Sadiq to claim back the $257,000 and costs that the court had ordered it to pay the Yuens.
The company still intends to appeal against the court's decision.
ERA also released a statement last night introducing measures to improve transparency and accountability to its clients.
It claimed these steps are a first for the Singapore real estate industry.
1) Effective immediately, agents will have to make a set of disclosures and give an undertaking to all customers at the start of each proposed transaction.
The customer will be assured that he is the agent's top priority and service expectations will be set. Assurance will also be given that all possible conflicts of interest will be properly disclosed.
The undertaking will also make clear that the agent is an independent contractor of ERA. This is important as the judge had stated that, unless the agent's client was expressly told otherwise, the client is entitled to regard him as a servant or agent of the agency. This is one of the reasons ERA was found liable.
This clause seems to imply that a client cannot hold ERA liable in future for the agent's actions.
To this, Mr Chua said it is to improve the client's understanding by fully disclosing the agent's position in relation to the company.
2) All buyers must declare that they are not ERA agents or members of their immediate family, before any offer to purchase an ERA-marketed property is accepted.
3) Within three months, an amended code of ethics governing its agents will be in place.
* * * * *
Judge: ERA agents created conflict of interest
DID the two agents do anything wrong? If so, could ERA be held liable for their actions? High Court judge Choo Han Teck ruled 'yes' and ordered ERA to pay the Yuens $257,000, plus costs and interest.
He sharply criticised the Yuens' agent, ERA senior marketing director Jeremy Ang, and his boss Mike Parikh, a senior group division director, saying their actions amounted to a breach of duty and fraud.
Their misconduct was a matter of such importance that he felt bound to explain clearly why he thought their actions were so wrong, so that no property agent can claim ignorance after this.
He found Mr Parikh and Mr Ang were ethically wrong and in breach of contract by creating a conflict of interest between their client and themselves.
He agreed with the Yuens that had they known Madam Sadiq is Mr Parikh's wife, they would not have sold the unit to her, and would have hired another agent.
More importantly, the Yuens did not know that Mr Parikh placed newspaper advertisements for the sale of the unit for his wife, while Mr Ang did not do so for the Yuens - even though he told Madam Wong 'no one had responded to the advertisement'. Mr Ang told the court that he believed telling his regular clients verbally about the unit constituted advertisement.
Chastising him, Justice Choo said: 'I think that it is fair to say that most people know the huge difference between (a tip-off and an advertisement).'
The judge also noted that while Mr Ang was the agent, Mr Parikh was the person behind the scheme, and the latter's senior position in ERA made the breach 'even more reprehensible'.
ERA claimed that they could not be held liable for the two agents' actions as they were 'independent contractors', and had signed associate agreements stating they were not employees of the company.
But the judge rejected this, as the option form had ERA's logo on it, the commission agreement was between Madam Wong and ERA. Therefore, unless a client is expressly told otherwise, he is entitled to regard the agent as a servant or agent of ERA.
The judge also noted that when the Yuens refused to pay the commission, it was ERA, not Mr Ang, who filed the case at the Small Claims Tribunal.
Said Justice Choo: 'This kind of misconduct is never easy to discover because it is carried out in stealth and in breach of trust; and far too many homeowners and potential purchasers are at risk.'
A forumer by the nick of Noranth
in HWZ posted the following post...
ERA is the rule not the exception
By Noranth
06-02-2009, 08:51 PM
A Senior Group Director at Propnex did the same thing to me in 2007 on my sale of a unit at the Berth at Sentosa. I am a former licensed Realtor and developer from US and had nightmares trying to sell my unit from Jan to April 07 near the peak of the market. Had several agents (don't deserve to be called Realtors), play games trying to double end deals and giving me low ball offers. Even had agents I never met listing ads for my unit in the paper...all at different prices.
I finally hired the supposed top agent at Propnex who sold me on his talking. I was stupid to disclose the best price I would take and that I needed to sell fast to fund my company here. I set my asking price with his advice about 5% above my bottom line. Ieven offered a $5k bonus if he could get my asking price. After a few showings and bringing in a few low offers verbally he said he had a buyer that he had just sold another unit for and would tried to get my asking price. He came back with a story that he tried hard but could not get my asking price only my bottom line and to make the deal he needed the $5k bonus as the kicker. I needed cashflow for my business so I asked for a bigger deposit than normal and friustrated after 4 months of showings caved in.
The deal was made in April and set to close June 6,2007. In May I see ads for my unit by this agent for $220,000 above my upcoming sale price. I called him on it and he said my unit was difficult to rent with no services and lots of construction noise at Sentosa and the buyer asked him to market just in case he could not find a tenant as he would not be able to cary the unit as an investment. The market was moving quickly at that point but I figured the soon to be buyer was just fishing. A month after the deal closes for my sale I found out a deal was made at full price within a couple weeks (maybe earlier before my transaction closed). What makes it even worse is that he sold to another client of his.
I spent a month feeling sick about it and spoke to the agent who put me off just saying it happened by chance. The time effort and energy to go to court whaen I was swamped with setting up a new company and not always in Singapore forced me to just take it. Many people said that's just the way it is here and I would have no chance in court. Well this verdict sets a necessary and dangerous (for good / against agents) precendent that seems long in coming.
In the US Realtors beyond taking a oath of ethics are licensed and regulated heavily on what is called "Dual Agency". The agent and his/her Company must meet their fiduciary resposibility to their clients (Both legally and Ethically). An agent should not and can not represent two sides in a transaction unless fully disclosed and mutually accepted in a "Dual Agency Agreement". Even if both Buyer and Seller agree the agent can only act as an intermediate to allow both parties to fairly come to agreed terms on a sale. They can never act to the benefit of one party and the detriment of the other. Also they can not disclose confidential information provided by a client such as lowest acceptable price without facing both civil and criminal penalties including fines and loss of license. The Company the agent acts as an independent agent for is severally liable for their actions and must insure themselves against such liability.
In Singapore which prides itself on being a safe place to do business, real estate is truly the wild west, dog eat dog, get paid and ask questions later environment. As a foreigner I became a target of getting screwed (not just with the sale but on my purchase as well) even with my years of experience (over $45 million USD in ethical transactions from 2000-2005), I fell under a false sense of security and was taken.
Anyone no a good local attorney *(Also nearly impossible to find here) and want to comment on if I should now take action given this precedent?
Justice Choo rejected the testimony of ERA's top brass - president Jack Chua and senior vice-president Marcus Chu - that the two men had done nothing wrong.
The judge said it was clear why they thought so - Mr Chu admitted in court that he and others in the company, as well as agents in other companies, had done the same thing.
* * * * *
Urgent: Laws to tighten property brokerage trade
Feb 7, 2009
IT HAS taken a High Court judgment to amplify an alarm that something is rotten in the real estate business. Justice Choo Han Teck said this week in a civil action, over which he found for the plaintiffs against ERA Realty Network, that property agents owed their primary duty of care to their client, not to themselves or to third parties related to them. It is an indictment of the trade and a comment on the shambles of its self-policing, that a judge needed to remind practitioners of what is commonsensical, so as to avoid conflicts of interest.
What ought to follow the development is a policy review by the Inland Revenue Authority, which licenses real estate agencies but, oddly, not individual agents. The objective should be legislation to professionalise the practice and subject violators to statutory penalties in the form of fines, suspension or a permanent ban. The only way ethical conduct can be entrenched is to require people wanting to be property brokers to pass a common national-level written test to obtain a licence. Practitioners will be subject to a professional code, with obligations, responsibilities and forms of censure spelt out.
Just now, the trade is a jumble of in-house courses, half-hearted tests that no one takes seriously, and non-existent censure for such common infractions as misleading clients, abetting payment of kickbacks and gross misconduct, as in the case Justice Choo heard. An agent sacked for questionable practices can work for another firm. And anybody can be an agent. During the last boom in 2007, numbers swelled to about 30,000. Complaints to the consumers' association against shoddy service peaked that year, no surprise as brokerages and agents were in a race to make easy money. Many were nomads, who shipped out as soon as deals thinned.
It is partly the absence of a professional compliance code that has rendered the vocation vulnerable to abuse. It is an abysmal state of affairs that agents can work unregulated in a sector whose value to the economy is reckoned in the billions of dollars. It need scarcely be said that home ownership also defines Singaporeanness, a bedrock value of citizenship.
Until the vocation is tightened and even after, consumers have also a duty to themselves to not rely on an agent completely. In the case before Justice Choo, the plaintiffs, Mr and Mrs Yuen Chow Hin, could have saved themselves grief if they had obtained an independent valuation of the flat they were selling. Their agent not only gave them a low, false value but also did not advertise the flat for sale. The shabbiness could not have happened if there was an enforceable compliance code.
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