Thomson View en bloc sale: Hearing starts

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http://www.straitstimes.com/premium/...tarts-20130625

Thomson View en bloc sale: Hearing starts

Objectors claim some residents were paid to consent to $590 million collective sale

Published on Jun 25, 2013

By Melissa Tan


THE huge $590 million collective sale of Thomson View Condominium finally went to court for approval yesterday, after hitting a legal snag earlier this year.

The en bloc sale needs the High Court's approval in order to proceed after some owners filed objections.

Market watchers said the outcome of the case would likely have a significant impact on the en bloc market, which only recently began showing signs of taking off.

The case is seen as important given the size of the sale, which could reach almost $1 billion after factoring in upgrading premiums and development costs.

The tender for the 540,314 sq ft Thomson View site was awarded to mainboard-listed Wee Hur Development and private equity investment firm Lucrum Capital at $712 per sq ft (psf) per plot ratio last September.

The five-day hearing before High Court Justice Andrew Ang began with collective sale committee (CSC) chairman Philomene Ngui taking the stand.

One issue before the court is that CSC's marketing agent HSR paid some owners to consent to the sale.

HSR has been allowed to participate in the case and is represented by Rajah & Tann. In its submission, the firm said the compensation paid to those unit owners came out of its own fee. "HSR lost money, not the objectors, not any of the other owners, and not the CSC," it added.

HSR's head of investment sales Jeffrey Goh is likely to take the witness stand today.

Ms Ngui is one of the representatives appointed by the owners of 215 units in the project who consented to the en bloc sale. They are represented by Wong Tan & Molly Lim.

The objectors - represented by Drew & Napier, Daisy Yeo & Co and Kelvin Chia Partnership - are arguing that the sale should not be approved as it was not made "in good faith".

One bone of contention is the claim that the sale price of $590 million was too low in light of a government announcement in August last year that an MRT station along the Thomson Line would be built nearby.

Wee Hur and Lucrum said earlier this month that they would give the consenting owners of Thomson View a deadline extension of six more months, until December, to obtain the sale approval. The original deadline was June 4 this year.

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http://www.businesstimes.com.sg/prem...-sale-20130625

Published June 25, 2013

Court to decide fate of Thomson View's en bloc sale

By Grace Leong


[SINGAPORE] The fate of a $590 million collective sale of Thomson View Condominium is being decided at a week-long hearing, which began yesterday in the High Court.

At issue is whether the sale of the 255-unit site to a joint venture between Wee Hur Development and Lucrum Capital was made in good faith and should be approved.

A group of 17 owners of 12 units object to the sale, saying that Wee Hur-Lucrum's offer undervalued the site. To back their case, they cite a report which valued the site at $728 million.

However, the owners of 215 units, comprising more than than 84 per cent of share value, have agreed to the sale of the site for $590 million.

The group that objects to the sale has a new objection - that secret payments were made by marketing agent HSR to owners of four units to get them to sign the collective sale agreement. It alleges that HSR agreed to compensate the owners of the four units about $548,000 and to reimburse the travel expenses of the owner of one other unit as an incentive to get their signatures.

The group said this amounts to bad faith, and that HSR and the Collective Sale Committee (CSC) were in breach of their duties.

But the consenting owners' lawyers said these objections were raised on the back of a court case over the en bloc sale of Harbour View Gardens; in that case, the High Court slammed the Harbour View CSC and its marketing agent for offering a $200,000 inducement to a couple to join a $33 million collective sale of the property.

Justice Belinda Ang refused to allow the Harbour View sale to go through, saying its CSC had acted in breach of its fiduciary duties as it had "knowledge" and had "acquiesced" in the payments by the marketing agent. The case is now under appeal.

Lawyers for Thomson View CSC chairman Philomene Ngui and two other CSC members, who represent the consenting owners, said the CSC did not make any inducement payments, nor was it aware of HSR's payment arrangement with the four units' owners. HSR has confirmed this.

Senior Counsel Molly Lim of Wong Tan & Molly Lim LLC argued that the objecting owners have not made out their case as they "have not shown that the CSC acted dishonestly or in bad faith in the sale process".

Ms Lim also disputed the dissenting owners' allegations that the CSC acted in undue haste in accepting Wee Hur-Lucrum's bid within a day, when it had three days to revert.

Arguing that $590 million was the best price the CSC could get, she said there was no reason to wait another two days and risk the purchaser backing out of the deal.

Ms Lim also said there was no requirement under the terms of the collective sale agreement to convene a vendors' meeting to discuss the amended tender contract, which the dissenting owners say had been altered materially. That is because the amended terms were "not materially adverse to the consenting owners and were in line with market practice".

But Tan Yeow Hiang of Kelvin Chia Partnership, who represents one group of dissenting owners, noted that the amended terms imposed "new onerous financial obligations" on the condo owners.

For instance, the condo owners now could pay up to 16 per cent of the value of their units as sellers' stamp duty depending on when the unit was purchased; the original contract said the stamp duty is to be borne by the purchaser.

"The CSC ought to have carefully deliberated whether the ($590 million) offer, which was only $10 million above the reserve price, was an attractive and acceptable offer, given the materially less favourable nature of the amended terms of sale," Mr Tan said.

Adrian Tan and Joseph Yeo of Drew & Napier LLC, representing another group of dissenting owners, alleged that the CSC failed to create competition between interested buyers (Secure Development Pte Ltd, owned by the UOL Group, and UIC Ltd) and to get independent valuations after the Upper Thomson MRT station, part of the upcoming Thomson Line, was announced during the property's tender period.

The CSC relied on Chesterton's "flawed valuation" of $492 million, which they claimed did not take into account the MRT announcement and other factors.

The dissenting owners also applied for discovery to determine whether the incentives had been offered only to the four units' owners because Goh Hock Seng, HSR's head of investment sales, did not say in court documents if HSR approached others with similar payments, and how much was offered.

HSR made the incentive payments in an effort to get the required 80 per cent majority consent before the expiration of the collective sale agreement on Oct 30, 2011, or it would not be entitled to engagement fees with the CSC, they said.

Even though Mr Goh, in court documents, alleged the CSC was not informed because the payments were made out of HSR's own funds, it does not absolve the CSC from liability, they said.