Landmark ruling

http://www.todayonline.com/articles/265710.asp

Friday, July 18, 2008

Landmark ruling

Judge sets out role of Strata Titles Board and whichof its findings can be challenged

Zul Othman

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IT IS a situation that may apply to some en bloc deals: The selling price could have been higher if the sales committee or its agent had tried harder to secure a better deal.

In the case of Horizon Towers, a potential buyer was even standing by with a higher price than the one that was eventually chosen.

But that cannot be reason enough to disallow an en bloc sale, according to Justice Choo Han Teck as he brought a protracted saga to an end.

In a landmark decision, the judge set out the role of the Strata Titles Board as well as which of its findings can be challenged, and which ones cannot.

When it comes to price, as long as the STB finds that a purchase price is fair, which would make it a “finding of fact” in legal parlance, it would have fulfilled its duty and is entitled to approve an en bloc sale.

Minority residents at Horizon Towers who argued that the $500-million sale to Horizon Partners Private Limited (HPPL) was done in bad faith — as evidenced by Vineyard Holdings’ higher offer of $510 million :— had failed to prove their case.

Justice Choo found “no error of law” and said the High Court “cannot and will not” interfere in findings of fact made by the STB.

“Whether it was the right time to sell, or that the sales committee ought to have made a little more effort to persuade the purchaser to offer more, are not crucial matters that oblige the STB to withhold approval.

“Nor would it be the concern of the STB that some, or all, of the appellants might have consented had the Vineyard offer been made known to all of them,” he said.

If the STB were to make such enquiries, it “would never get its job done within the time limited”.

The minority owners had appealed to reverse a Dec 7 decision by STB to approve the sale. But if residents believe that the sales committee had “deliberately or negligently” not pursued a higher offer, resulting in a financial loss to them, the recourse is through litigation in the courts, said Justice Choo.

“It is necessary for this point to be made, not to encourage further litigation, but to emphasise that a subsidiary proprietor who does not wish to sell his unit can only object to the en bloc sale on such grounds as the relevant statutes allow,” he said.

And, the statutes do not allow the STB to deal with “allegations and counter-allegations against parties” as its tribunal hearing does not give such parties “the full recourse of trial to defend themselves”.

He concluded that all sides were treated fairly in this deal as “fairness requires only that the rules and regulations of each en bloc deal to be properly and duly administered”.

http://www.todayonline.com/articles/265907.asp

Weekend, July 19, 2008

Time to relook en bloc rules?

Letter from Ong Cher Meng


I REFER to “Landmark ruling” (July 18).

The judge has ruled that the fact that a higher offer was received for the en bloc sale of Horizon Towers is not within the purview of the Strata Title Board (STB); neither are any allegations of less-than-stellar conduct among the parties.

And that if the STB has to hear such matters, it would never get its job done.

So, if I get an offer for my home of say, $7 million and the en bloc sales committee of my condo gets an offer of $5 million, would my recourse be to sue in the courts while the STB can rule in favour of the $5-million sale and proceed? This defies logic and good business sense.

Moreover, if the STB is not equipped to handle matters pertinent to good faith, the highest sale price, the conduct of sales committee, et cetera, it is time that the approval of en bloc sales be given to a specialised legal tribunal which is equipped to do so.

Further, if the Land Titles (Strata) Act does not provide sufficient coverage to protect the rights of a subsidiary proprietor who expects a fair and holistic hearing of their grievances, it is time for all en bloc sales to be held in abatement until such matters can be seriously addressed.

Horizon Towers is a mega test case for en bloc sales and it is time to take stock of our laws.

‘Right call was made’ More factors to considerthan just higher bid price

Monday • July 21, 2008
Today Online

I REFER to “Time to relook en bloc rules?” (Weekend Today, July 19-20).

On the contrary to what the letter-writer said, there are already enough en bloc rules. Without being privy to certain information, it is incorrect to infer that the Horizon Towers deal was done in bad faith and the proprietary owners did not get the highest price and were “shortchanged” as a result.

In fact, the Judge ruled that the Strata Title Board found the sales committee had made a judgment call to proceed with the offer, and the objectors did not prove the committee had acted in bad faith.

The pertinent question is whether the committee had made the right judgment call.

It was reported that a higher offer was made from a Hong Kong developer, *Vineyard Holdings. But who is this developer? Does it have the financial means to complete the deal? The objectors were unable to shed any light.

Whether there was a genuine offer on the table, the objectors were also not able to tell.

The additional $10 million is not exactly compelling when apportioned over 210 condo units. It is also not an amount so huge that Horizon Partners could not counter with a higher offer.

Since Horizon Partners’ offer met the reserve price, it is logical and makes good business sense to secure a sure deal with an established buyer. On that basis, the committee made the right judgment call to seal the deal.

It is noted that the unhappiness and manoeuvre came about when it was learned that a neighbouring development was sold for more than double the price.

Our laws should not be changed just because certain factions failed to get their ways.