Introduction

Purchasing a property with loved ones can mark a joyful milestone, symbolizing a shared commitment and mutual aspirations. However, as circumstances and relationships evolve, disagreements may arise, potentially straining co-ownership arrangements. In some cases, unresolved tensions or diverging interests may leave co-owners considering difficult decisions—such as selling their share in the property or buying out the other party’s interest.

When disputes arise and amicable resolutions are not feasible, legal intervention may become necessary to determine the fate of the property. This was the situation in the recent case of Tan Siew Kheng (personal representative of the estate of Tan Siew Cheng) v Teo Kian Kian (personal representative of the estate of Tan Siew Hiang) [2023] SGHC 268 (hereinafter known as “Tan Siew Kheng v Teo Kian Kian”). The case illustrates the complexities of co-ownership disputes and the court’s role in balancing competing interests to achieve a fair outcome, particularly when the relationship between co-owners has broken down.

Case of Tan Siew Kheng v Teo Kian Kian

The dispute in this case arose between the personal representatives of two estates regarding the co-owned property located at Hai Sing Road, Singapore. The property was jointly owned by two sisters—Tan Siew Cheng and Tan Siew Hiang—each holding an equal 50% share.

Tan Siew Cheng’s estate was managed by Siew Kheng who was the executrix, while Tan Siew Hiang’s estate was represented by Kian Kian.

Tension arose between the co-owners after the passing of the two sisters. Thereafter, Siew Kheng, as executrix, sought to sell the property on the open market at or above a valuation of $2.4 million. Kian Kian and Yong Kian, the beneficiaries of their mother Siew Hiang’s estate, opposed the sale. Given that both Kian Kian and Yong Kian were residing at the property, they had also expressed reluctance to part with it and did not provide an alternative valuation.

This dispute raised two key issues for the court to decide.

Issue #1 – Should the court order a sale of the property despite objections?

Issue #2 – Could the court compel one co-owner to buy out another co-owner’s share?

Court Decision on Issue #1

Regarding the first issue, the court concluded that based on the facts of the case, selling the property was the most practical solution to resolve the tensions between the beneficiaries. Their personal relationships had become strained, making it difficult for them to continue as co-owners. Additionally, some beneficiaries were elderly, which increased the urgency for a resolution that would allow them to access their financial entitlements in a timely manner.

The court emphasized the importance of achieving a “clean break”—a final separation of interests—so that the beneficiaries would no longer need to manage or negotiate co-ownership issues. Maintaining joint ownership under these circumstances would have led to ongoing conflict and administrative complications, which could have undermined the interests of everyone involved.

In balancing the parties’ interests, the court decided that selling the property was less harmful than refusing the sale. If the property were not sold, the beneficiaries would remain stuck in a situation where they could not easily realize the value of their shares. By ordering a sale, the beneficiaries would receive a fair market price, allowing them to access their share of the property’s value. This outcome ensured that no one was unfairly burdened by continued co-ownership.

Court Decision on Issue #2
On the second issue of whether one co-owner could be compelled to buy out the other’s share. The court made it clear that it did not have the power to make such an order. Forcing a buy-out would amount to judicial expropriation—where the court takes away property rights by requiring a transfer at a fixed price, which goes against the principles of property ownership.

The court explained that co-ownership rights include the freedom to decide when and how to sell one’s share. If a court were to compel one co-owner to buy another’s share, it would interfere with this right and could force a sale at an unfair or below-market price. Instead, the court maintained that the only fair option was to allow the property to be sold on the open market, where the true value could be determined through competitive offers.

However, to balance the interests of the co-owners, the court confirmed that a co-owner could be given a right of first refusal. This means that if one co-owner is willing to buy the other’s share, they must match the highest offer received from the open market. This ensures that the selling co-owner gets the best possible price and no party is forced into a sale at a lower value.

Reasoning for Court Decision
The court’s decision relied on Section 18(2) of the Supreme Court of Judicature Act and the First Schedule. These provisions give the court the authority to order the sale of a property when it is necessary or expedient. The court emphasized that this power is particularly important in situations where the relationships between co-owners have broken down, making joint ownership unmanageable.

The ruling also reaffirmed that while the court can facilitate the sale of property, it cannot interfere with the property rights of individual co-owners by forcing one to buy out another’s share at a set price. This approach ensures that the co-owners have access to the best possible outcome through an open market sale and protects their rights to receive fair compensation.

Conclusion

This case highlights the challenges of co-owning property, especially when relationships break down or unforeseen events, like a death, cause disputes. It emphasizes the need for clear agreements between co-owners about managing shared assets.

The court’s decision shows that while the law can help resolve disputes—like ordering a sale when co-owners can’t cooperate—it can’t force a buyout, as that might unfairly affect one party.

The principle that co-owners should secure the best market value reflects the legal goal of fairness. Whether through inheritance, joint investments, or personal conflicts, co-owners may encounter similar situations. This case underscores the importance of planning ahead, such as drafting agreements or wills, to avoid disputes. Co-ownership requires trust, cooperation, and foresight—without these, conflicts can arise, leading to costly legal battles and unexpected outcomes. Understanding the legal framework can help individuals make better decisions and prevent future complications.

If you have any questions or need legal advice on property ownership matters, feel do not hesitate to contact us for further assistance.