Hotel developer seeks $6m from condo owners for encroachment

A hotel developer is seeking nearly $6 million in damages from 30 unit owners of a condominium in Killiney Road because their building allegedly encroaches on the neighbouring plot, where a hotel is being built.

The alleged encroachment involves a strip of the boundary wall that extends over the boundary line into the hotel developer’s freehold plot - it includes up to 1.6 cm of reinforcing bars and 4 cm of the cement covering them.

Some rectification work has been done to the alleged intrusion, which was initially greater. It had involved a 35m strip of concrete originating from the Killiney 118 condominium which measured about 10 to 20cm deep.

Lucrum (Killiney) Hotel and Lucrum (Killiney) Commercial, which own 110 and 112 Killiney Road allege that this encroachment caused a 180-day delay to their hotel development plans, and resulted in losses exceeding $4.5 million.

They also estimated that it led to a $1,075,000 reduction in their property’s value, due to the loss of 36.22 sqm of gross floor area. This is in addition to a sum of $472,102 spent on rectification.

Despite the partial removal of the encroachment, 1.94 square meters of land remain affected, court documents obtained by The Straits Times show. Both parties are due back in court in December for a case conference.

In court filings, the hotel developer said removing this residual encroachment could compromise the structural integrity of the boundary wall.

The Business Times reported in April 2024 that private equity firm Lucrum Capital had put a freehold boutique hotel at Killiney Road that was under construction, up for sale at $195 million.

This seven-storey Mama Shelter Singapore Orchard hotel in District 9 will be operated by French hospitality company Accor’s Ennismore and is expected to open in the first quarter of 2025.

In their statement of claim filed against the Management Corporation Strata Title of Killiney 118, on Aug 1, 2024, the claimants said they discovered the encroachment in October 2022, and that it deprived them of the use of 36.22 sqm of gross floor area.

This lawsuit comes 11 years after the freehold condominium Killiney 118 was completed in 2013, and seven years after the claimants bought over the adjacent Tai Wah Building in 2017. They would go on to demolish it in 2019 to build the hotel in its place.

Killiney 118 is a freehold strata-titled development comprising a single six-storey apartment building with 29 residential units and one commercial unit.

The claimants are represented by lawyers Keith Lim and Joel Moosa of Quahe Woo & Palmer.

The claimants’ parent company, Lucrum Ventures, is owned by private equity veterans David Lawrence Batchelor and Kan May May, who are also founding partners of Lucrum Capital. 

In its defence, the MCST denies any responsibility for the alleged encroachment.

The MCST argued that it was formed only after the condominium was completed and attributed the alleged encroachment to the condominium developer Creslin - a subsidiary of Amara Holdings - which dissolved in 2019.

Represented by lawyers Daniel Chen, Enzel Tan and Drashy Trivedi of Lee & Lee, the MCST contended that the “concrete backfill” was a standard construction measure to fill the gap between the buildings and prevent rainwater and debris from collecting.

They argued that this was necessary to avoid water damage and structural degradation to both Killiney 118 and the claimants’ property.

The MCST’s lawyers further said the encroachment should not have been a surprise because it was “clearly visible” when the claimants demolished Tai Wah Building in 2019, and had been evident for more than six years before the lawsuit was filed.

They also said the claims are time-barred under the Limitation Act, which imposes a six-year limit for such cases.

The MCST also noted that the encroachment is minimal and insignificant in the context of the overall development.

The defendants said the alleged intrusion, which the developers say deprives them of the use of 36.22 sqm of gross floor area spread over five floors, represents only 0.59 per cent of the total land area.

The MCST also named the surveyor, architect and structural engineer engaged by the building developer, as parties in the lawsuit.

The third parties - Tang Tuck Kim Registered Surveyor, IPLI Architects and WTS Consulting Engineers - are accused of failing in their professional duties and should indemnify the MCST for any damages arising from the encroachment.

Residents of Killiney 118 said they were surprised when this dispute came to their attention in 2022.

Mr Guido Adelfio, a 43-year-old banker from Italy, said he had bought a resale unit in 2019 as an investment.

He said the lawsuit would serve as a warning for future investors in Singapore real estate, as issues like these are hard to predict and not within a buyer’s control.