ERA To Appeal Court Order

Source: The Straits Times, Feb 6, 2009

Judge slams unethical agents who 'flip' properties for profit

ERA Realty Network, which was ordered by the High Court on Thursday to return $257,000 to a couple, has said it intends to appeal the court decision.

PHOTO: ZAO BAO, BRYAN VAN DER BEEK FOR THE STRAITS TIMES

In a statement to the media, its president Jack Chua said: 'ERA intends to appeal the court decision that finds our company liable as we did not benefit from the transaction.'

Two ERA agents were slammed by High Court Judge Choo Han Teck for their unethical behaviour in the transaction of a two-bedroom downtown flat.

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.

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. -- PHOTOS: ST FILE, LIANHE ZAOBAO

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.

On Thursday, Justice Choo ruled in favour of the Yuens, who had sued ERA for the 'secret profit' made in the second deal.

The judge 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.'

WHO'S WHO:

The plaintiffs: Mr Yuen Chow Hin, 50, and his wife, Madam Wong Wai Fan, 48.

The agent: Mr Jeremy Ang, 40, who was hired by ERA senior director Mike Parikh after he was retrenched in 1999.

The boss and his wife: ERA senior group division director Mike Parikh, 44, and his wife, Madam Natassha Sadiq, 40.

WHAT HAPPENED

June 2007: The Yuens appoint Mr Ang to sell their Riverside Piazza apartment.
The agent says the market value is between $650,000 and $700,000, and says a 'regular client' is interested in buying the property. No valuation is done and Mr Ang omits to mention that the interested buyer is his boss' wife.

Mr Ang does not advertise the property for sale.

July 7 and July 9: Mr Parikh advertises the property for sale on behalf of his wife, Madam Sadiq, before she has an option to buy.

July 12: The Yuens give Madam Sadiq an option to buy for $688,000.

July 14: Mr Parikh places a third ad, setting the price at $945,106 and saying the property has en bloc potential. A buyer responds, and Mr Parikh handles the deal.

July 18: Madam Sadiq grants the buyer an option to buy at $945,000.

July 25: The new buyer exercises the option.

July 26: Madam Sadiq exercises her option from the Yuens.

October 2007: The couple discover the flat was resold after the CPF Board asks why they sold well below the valuation obtained by the new buyer.

Dec 19, 2007: The couple find out that Madam Sadiq is married to Mr Ang's team leader, Mr Mike Parikh.


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.

ARRANGEMENTS BASED ON DECEPTION

'Jeremy's duty to act honestly required him to disclose his boss' interest in the sale and purchase. The arrangements made and carried out by him in collaboration with Mike and his wife Natassha depended on deception.' - Justice Choo

MANY OWNERS, BUYERS AT RISK

'Mike has 200 agents working for him and we do not know how many agents the defendant has, nor how many housing agents there are in all. 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. The defendant and its two agents have done a grave disservice to the honourable and honest members in their rank.' - Justice Choo