United Overseas Bank (UOB) will have to cede ownership of a floor of Springleaf Tower in Anson Road to contractor Yongnam Holdings after losing it

United Overseas Bank (UOB) will have to cede ownership of a floor of Springleaf Tower in Anson Road to contractor Yongnam Holdings after losing its case in court yesterday.

The Court of Appeal dismissed UOB’s appeal with costs and ordered the bank to transfer the 23rd storey of Springleaf Tower to Yongnam. It also ordered Yongnam to pay the difference between the sale price and the value of its work, which is estimated to be about $3 million, to take possession of the floor.

The problem arose when the developer of Springleaf Tower, a subsidiary of the now defunct Ban Hin Leong Group, ran into financial problems in the late 1990s and was unable to pay its contractors, including Yongnam, for the completion of the 37-storey building. As Yongnam was owed about $3 million for work it had done, it stopped work.

Ban Hin Leong suggested that Yongnam purchase a floor and that it set off the value of its work against the sale price of the floor, which was agreed to by UOB who was the mortgagee.

The sale price of the floor was set at $1,300 per sq ft or about $14 million in total. Yongnam agreed to purchase the 23rd floor although it agreed with Ban Hin Leong that the price would be discounted by about $3 million so that, apart from the value of its work estimated to be $11 million, it would not be required to pay anything more by cash.

However, Ban Hin Leong did not inform the bank of this arrangement.

After Yongnam completed the work, UOB refused to release its mortgage. UOB said that it did not encourage or endorse the barter arrangement and later foreclosed on the building.

Yongnam then sued UOB to protect its interest. Judicial Commissioner Sundaresh Menon ruled that the bank transfer the title to the contractors. Yesterday, UOB lost its appeal against that ruling.

Yongnam finance and executive director Chia Sin Cheng told BT yesterday that the company intends to sell the floor although it has not approached any buyers or decided on the price yet.

Yongnam shares rose 1.8 per cent yesterday to an all-time high of 55.5 cents before trading was halted pending the court’s decision.

UOB was represented by Thio Shen Yi from TSMP Law Corporation, while Yongnam was represented by Harish Kumar from Engelin Teh Practice.

Source: The Business Times, 12 July 2007