The Appeal Court judgment

The Appeal Court judgment

The Court of Appeal yesterday reversed the sale of Horizon Towers, ending a 2 1/2-year battle over the estate’s collective sale. Chief Justice Chan Sek Keong and Judges of Appeal Andrew Phang and V. K. Rajah found that the condo’s sales committee had breached its duties to unit owners and that the Strata Titles Board (STB) and High Court judge Choo Han Teck had erred in allowing the sale. The original sales committee comprised chairman Arjun Samtani, secretary Wee Hian Siew, and members Tan Kah Gee, Henry Lim, Bharat Mandloi, Claude Reghenzani, Dr Chan Siew Chee, Shahrukh Marfatia and George Eapen. These are the main points of the judgment.
WHERE THE SALES COMMITTEE ERRED

By not acting with due diligence and transparency in appointing the marketing agent, First Tree Properties, which has two shareholders, neither of whom is a licensed valuer. The appointment was done in haste and ‘reflected a lack of conscientiousness’;

By failing to follow up on a higher offer for Horizon Towers made by Vineyard Holdings, a Hong Kong company;

By not using the Vineyard offer as leverage in negotiations with Hotel Properties Ltd (HPL), the eventual buyer of the estate;

By not getting advice from an independent property expert prior to the sale;

By proceeding with the sale to HPL in ‘undue haste’ in a soaring property market;

By ignoring conflicts of interest. Two of the sales committee members - Mr Samtani and Mr Tan - had bought additional units in Horizon Towers with the help of ’substantial’ bank loans right before they were appointed to the committee. They did not disclose these purchases. First Tree was also eager to seal a deal before its mandate as marketing agent expired;

By not consulting, or even updating, the majority owners on the sale, despite knowing that the property boom had pushed up the market value of the individual units and significantly eroded their estimated premiums from the collective sale.
WHERE THE STB ERRED

By refusing to subpoena Mr Arjun Samtani to testify;

By allowing the sales committee to assert ‘legal privilege’, that is, to not divulge the advice it had received from its lawyers;

By not considering whether there was a possible conflict of interest in the sales committee members’ purchase of additional units;

By not asking whether the price was the best one ‘reasonably obtainable’;

By concluding that the original sales committee had ‘acted in good faith’ in selling the property to HPL just because the committee had received and relied on legal advice.
WHERE JUSTICE CHOO HAN TECK OF THE HIGH COURT ERRED

By taking a ‘restricted view’ of the duties of a Strata Titles Board in approving a collective sale;

By deciding that the only issue to rule on was that of price, and that the STB had determined the price was fair.

Source : Straits Times - 03 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

It’s final: Horizon Towers sale is off

It’s final: Horizon Towers sale is off
Surprise ruling vindicates stand of minority owners
By Joyce Teo, Property Correspondent

One of Singapore’s longest-running property dispute has ended with the Court of Appeal’s hard-hitting ruling. — ST PHOTO: JOSEPH NAIR

THE Court of Appeal halted the contentious Horizon Towers collective sale once and for all yesterday with a hard-hitting ruling that singled out the estate’s sales committee for scathing criticism.
The dramatic judgment caught many by surprise and vindicated the four sets of minority owners who opposed the sale from day one - about 3-1/2 years ago, when the idea was first mooted - and spent nearly $1.5 million in legal costs.

One of those owners, Mr Hendra Gunawan, told The Straits Times yesterday: ‘I am very happy that at last we can protect our homes.’

‘We can’t do anything about it if 80 per cent agree to sell but they have to do it properly so that everyone’s home will be sold at a proper price.’

Industry experts are also hailing the decision as a landmark judgment that will set clear parameters for en bloc deals.

Yesterday’s ruling was clear in its condemnation of the way the en bloc process was conducted and was particularly critical of the estate’s sales committee.

Among a litany of criticism, it pointed to the committee’s failure to follow up on a higher offer for the estate, its undue haste in agreeing to a sale price in a rising market and its sloppy procedures in appointing a marketing agent and keeping owners up to speed on the transaction.

But perhaps the most serious censure was directed at its failure to take heed of a possible conflict of interest that arose when two owners bought additional units in the estate just before they were appointed to the sales committee.

‘The sale committee’s duty is to achieve the best price under the circumstances, and not just a fair price,’ said Mr Karamjit Singh, managing director of Credo Real Estate, which has handled many collective sales but not that of Horizon Towers.

The Strata Titles Board, which backed the sale, was also criticised for the way it took too much at face value - whether opinions on price or legal points - when it should have been more questioning. It was also rapped for not being more vigilant on the possible conflict of interest issue regarding sales committee members.

One immediate effect of the ruling is that one of Singapore’s most drawn-out en bloc deals is finally over.

The sale of the Leonie Hill estate was first mooted in October 2005. The owners agreed to a reserve price of $500 million the following year, just before the dramatic run-up in the property market.

A deal was signed in January 2007 when the majority owners accepted a price of just below $850 per sq ft of gross floor area from Hotel Properties and its two partners.

The 199 owners of the 99-year leasehold estate would each have pocketed about $2.3 million while the 11 penthouse owners would each have received around $4 million to more than $6 million.

A series of court challenges followed. Even some majority owners turned against the deal when they saw how the soaring market had made their sale price look like a giveaway.

The property market has since slumped and the en bloc market has dried up.

‘On paper today, the owners would have lost out, but probably by just 10 per cent,’ said a property expert who declined to be named.

Only a handful of the minority owners who objected to the sale fought on until the end, spending millions along the way.

Mr Ng Eng Ghee, Mr Gunawan and his wife Sulistiowati Kusumo and Madam Ong Sioe Hong were represented by Harry Elias while Mr Rudy Darmawan represented himself, his wife and aunt at the hearing.

Madam Ong said her group incurred expenses of more than $1.5 million. Another group of objectors - who fought against the sale earlier - has spent around $1 million. Property industry experts said yesterday’s landmark ruling has struck a decisive blow for transparency.

‘This is the first time the court of appeal has held in favour of the minority owners,’ said Mr Phillip Fong, a partner of Harry Elias Partnership, which represented four minority owners.

‘There’s now substantial clarity on the extent of the duties of the sale committee.’

Credo’s Mr Singh said: ‘The judgment is undoubtedly significant. It clarifies what constitutes, for example, good faith and conflicts of interest.’

THE OBJECTORS
FOUR sets of minority owners lasted the full distance to see yesterday’s final victory in overturning the Horizon Towers sale.
Those left standing after the marathon battle were Madam Ong Sioe Hong, Mr Hendra Gunawan and his wife, Mr Ng Eng Ghee, and Mr Rudy Darmawan, his wife and aunt.

Mr Darmawan, an Indonesian living here, represented himself, his wife and his aunt at the Court of Appeal. He is believed to be an executive at a multinational corporation.

Mr Gunawan, another Indonesian living here, runs his family’s manufacturing business in Indonesia. The 53-year-old and his wife Sulistiowati Kusumo, and two sons have lived in Horizon Towers for eight years.

Madam Ong is the managing director of the department store operator Metro and the sister of Mr Jopie Ong, boss of Metro Holdings. Their father is Metro founder Ong Tjoe Kim.

Madam Ong, her husband and their two sons have lived in Horizon Towers for more than 20 years.

Retiree Mr Ng, was a property developer and is listed as the director of companies such as Hi-Rise Builders and Bideford Realty.

The long-running and costly legal battle saw many minority owners fall by the wayside.

Two out of nine sets of minority owners - a couple representing themselves and a foreign firm - had dropped out of the fight by the time the case went to the High Court in March last year.

By the time the case got to the Court of Appeal stage, more owners had dropped out.

VERY HAPPY
‘We are very, very, very happy that we get to keep our home. All the minority homeowners are very passionate in working together towards keeping our home. We are also fortunate to have very professional and passionate legal counsels.’

Madam Ong Sioe Hong, one of the four appellants to the Court of Appeal

VINDICATED

‘I had to pinch myself a few times. These three years have been quite an emotional rollercoaster. The minority owners are happy that we have been vindicated in the fight for our homes. For us, the price was never an issue.’

Ms J. Tan, a homeowner who objected to the sale

OVER AT LAST

‘As consenting parties, obviously we wanted the sale. What is disappointing is that it took that long (to reach a conclusion). So much time and money has been spent on this. At least the last two months’ anxiety is over. Whichever way it goes you have to accept it and move on.’

Mr Bharat Mandloi, 49, a commodities business director, homeowner and resident

PEACEFUL PLACE

‘Together in Horizon Towers we always had a peaceful environment (throughout the proceedings), and it’s still a wonderful place to live. I feel that justice has been done to what the minority objectors raised.’

Ms Mamata, 40, a real estate agent and Horizon Towers homeowner

FINE WITH VERDICT

‘I am fine with the verdict. I have a great apartment and I will continue to live in it.’

Mr Anil Ahuja, 46, who lives in a penthouse

ADDITIONAL REPORTING BY JOANNA SEOW AND LINETTE LAI

Source : Straits Times - 03 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Abdullah resigns as Prime Minister

Abdullah resigns as Prime Minister

KUALA LUMPUR: The Malaysian King yesterday accepted the resignation of Prime Minister Abdullah Badawi, paving the way for the transfer of power to successor Najib Razak.
The day started with Datuk Seri Abdullah arriving at the palace for an audience with Sultan Mizan Zainal Abidin. He was followed by Datuk Seri Najib, who had a separate audience with the King.

Mr Abdullah, 69, left the palace after about an hour.

‘It’s up to his majesty now,’ he said, as he smiled and waved to about 50 reporters outside the palace.

Mr Najib, 55, also smiled and waved, but did not speak when he left.

Mr Abdullah took office in October 2003. His five years and five months in office is the shortest tenure recorded by a premier.

His last day as Premier saw him bidding farewell to civil servants.

‘My final advice is for you to work hard. Whatever I have done wrong, please forgive me,’ he told senior officers from the Prime Minister’s Department at his official residence.

He also said goodbye to staff at the Defence Ministry.

Dressed in a black suit and songkok, he inspected a guard of honour and shook hands with the military’s top brass before standing in an open-top jeep pulled by two dozen men as a choir sang Auld Lang Syne in Malay.

As the country awaited Mr Najib’s appointment as its new Prime Minister, the opposition tried to derail it.

All 81 opposition MPs signed a petition to the King to call for a postponement, citing scandals linked to Mr Najib such as crooked military procurement deals and the case of murdered Mongolian interpreter Altantuya Shaariibuu.

But if all goes according to plan, Mr Najib will be sworn in as Prime Minister at 10am today at the palace in a ceremony to be telecast live.

HAZLIN HASSAN

Source : Straits Times - 03 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Appeal Court blocks Horizon Towers sale

Appeal Court blocks Horizon Towers sale

By Joyce Teo

SINGAPORE’S longest-running dispute over a collective property sale ended yesterday with a dramatic twist.
After five years of legal wrangling, the Court of Appeal ruled that Horizon Towers in Leonie Hill will not be sold after all to a consortium led by Hotel Properties.

The owners of five units fought all the way to block the sale, which would have given the private estate’s 199 owners payouts of between $2.3 million and more than $6 million each.

The appeal judges led by Chief Justice Chan Sek Keong overturned earlier decisions by the High Court and the Strata Titles Board.

They criticised the Horizon Towers sales committee for its failure to follow up on a higher offer, undue haste in agreeing to a sale price, some sloppy procedures and a possible conflict of interest as two members had bought additional units just before becoming members of the sales committee.

Industry experts yesterday described the court decision as a landmark judgment that will set clear parameters for future en bloc deals.

Source : Straits Times - 03 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Trillion dollar cushion for economies

Trillion-dollar cushion for economies

G-20 leaders agree on tighter regulations to rein in excesses

LONDON: World leaders agreed on a regulatory blueprint for reining in the excesses that fed the worst financial crisis in six decades and pledged more than US$1 trillion (S$1.5 trillion) in emergency aid to cushion the economic fallout.
The Group of 20 policy makers called for stricter limits on hedge funds, executive pay, credit-rating companies and risk-taking by banks. They also boosted the resources of the International Monetary Fund (IMF) and offered cash to revive trade to help governments weather the economic and social turmoil.

They sidestepped the question of whether to deliver more fiscal stimulus in their own economies.

A final communique from the summit said concerted measures taken by the G-20 economies will raise world output by 4 per cent by the end of next year.

‘We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs that would otherwise have been destroyed, and that will, by the end of next year, amount to US$5 trillion, raise output by 4 per cent and accelerate the transition to a green economy,’ the communique said.

‘We are committed to deliver the scale of sustained fiscal effort necessary to restore growth,’ it said.

The statement also said G-20 central banks had pledged to maintain expansionary policies as long as necessary and to use all available policy tools.

‘This is the day that the world came together, to fight back against the global recession. Not with words but a plan for global recovery and for reform and with a clear timetable,’ said British Prime Minister Gordon Brown.

Mr Brown said that while there were ‘no quick fixes’, the decisions meant that ‘we can shorten the recession and we can save jobs’. French President Nicolas Sarkozy said the results were beyond what could have been imagined.

Addressing a key demand from France and Germany, Mr Brown said the leaders agreed ‘there will be an end to tax havens that do not transfer information on request. The banking secrecy of the past must come to an end’.

He said leaders agreed to commit new resources of US$1 trillion that are available to the world economy through the IMF and other institutions.

This included US$250 billion of IMF reserve units called Special Drawing Rights. ‘This is available to all IMF members,’ Mr Brown said. In addition, the IMF would see its own resources tripled, with up to US$500 billion of new funds.

The G-20 also agreed a trade finance package worth US$250 billion over two years to support global trade flows.

It also ordered the IMF to sell billions of dollars of gold reserves to help the world’s poor countries and new rules on pay and bonuses for corporate chiefs, Mr Brown told a press conference.

He said the IMF and World Bank would undergo major reforms to reflect changes in the power structure of the world economy.

The G-20 commitments amount to a transatlantic compromise and an effort to rewrite the rules of capitalism to address an integrated world economy that has outgrown the ability of individual governments to keep it in check.

‘Global problems require global solutions,’ Mr Brown said. ‘Our prosperity is indivisible.’

German Chancellor Angela Merkel said that the package of measures agreed on is ‘very, very good’. The G-20 agreed to build a new ‘financial market architecture’, she told reporters.

BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE

Source : Straits Times - 03 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Geithner says markets show recovery signs

Geithner says markets show recovery signs

Main danger is that banks and investors refrain from betting on recovery, he says

(WASHINGTON) US Treasury Secretary Timothy Geithner has said that there are ‘encouraging signs’ that financial markets are recovering and expressed confidence in the response of global policymakers to the crisis.

Mr Geithner: Expresses confidence in global policymakers’ response
‘You’re seeing encouraging signs of improvement in our markets - we want to reinforce that,’ Mr Geithner said on Wednesday in a Bloomberg Television interview in London. ‘I’ve never seen this much support, this much’ cooperation among governments.

Mr Geithner’s remarks reflect the view of some analysts that the worst of the economic downturn may be over, even as some banks are likely to fail and unemployment is set to worsen. He said that the main danger is that banks and investors take too little risk and refrain from betting on a recovery.

Stocks have rallied in the past month on signs that US bank earnings have improved since the start of the year and after the Federal Reserve and Treasury stepped up efforts to thaw credit markets. The Standard & Poor’s 500 Stock Index has jumped 21 per cent from its March 6 low, with the S&P 500 Financials index soaring 56 per cent.

‘There is a very powerful programme of stimulus already in place,’ said Mr Geithner, who accompanied President Barack Obama to London for meetings with counterparts from the Group of 20 major developed and emerging nations. ‘You can see some early signs’ of traction ‘in some economies already’.

US economic reports in the past month showed that consumer spending stabilised in the first two months of the year after tumbling in the fourth quarter of 2008, and durable- goods orders and home sales rose in February.

Banks may report first-quarter earnings that are better than the ‘quite miserable’ fourth quarter, reflecting gains in home sales, John Dugan, US Comptroller of the Currency, said on Tuesday.

US policymakers don’t anticipate a recovery from what’s on course to be the longest recession since the Great Depression until later this year. Data continue to show an economy that’s deep in recession.

Mr Geithner said that the Obama administration is considering a ‘range of options’ for US carmakers, which have yet to submit plans that would ensure their viability over the longer term. ‘They’ve made some progress but they’re not there yet.’

Mr Geithner also said that the administration would work with Congress on financial-rescue efforts, particularly a set of new programmes designed to attract private investment to help clean up banks’ balance sheets. Investors need to ‘take a chance on recovery’ and not shy away from risk, he said.

‘For them to do that, they need to have confidence that the rules of the game are going to be clearly and consistently applied in the future. We’re going to have to work with Congress.’

Mr Geithner’s observation about the economy was also shared by a top Goldman economist. Jim O’Neill, Goldman’s head of global economic research, said that the US economy is showing the first signs in months that it could be getting ready to crawl out of a long recession.

He said that among key leading indicators, the measure of ‘new orders less inventories,’ derived from the Institute for Supply Management March factory report, was a bright light. At +9 in March, against -0.7 in February, it was ‘the best sign for a few months that the severity of the US recession might be easing’. — Bloomberg, Reuters

Source : Straits Times - 02 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

STI skyrockets 6% on recovery hopes

STI skyrockets 6% on recovery hopes

US data, G-20 optimism help fuel powerful Asian rally

By R SIVANITHY

(SINGAPORE) An improvement in US economic numbers ignited hopes yesterday that a recovery could be taking shape and sent the Straits Times Index up 101.08 points, or 5.9 per cent, to a three-month high of 1,803.34.

The rise was in tandem with gains elsewhere, led in the region by a 7 per cent jump in Hong Kong’s Hang Seng Index and a 100-point rise in June futures on the Dow Jones Industrial Average.

Turnover here, excluding foreign currency issues, which dropped to a low $755 million on Wednesday, rose to 1.8 billion units worth $1.7 billion yesterday.

The last time the index closed at this level was Jan 9, when it ended at 1,806.02. In the three weeks since touching 1,456.95 on March 9, the index has gained 346.39 points, or 24 per cent, on hopes of a US-led economic recovery.

‘Bear market rallies can be very powerful and can sometimes last a few months,’ said a dealer, suggesting further upside is still possible. But most also admit that unless economic figures show clear signs of improvement, the upcoming earnings reporting season could slam the brakes on the market’s rise.

Yesterday’s push was fuelled by hopes that the US economy was improving, following improved residential construction figures and a manufacturing report that was bad, but not as bad as expected. Also helping were comments by officials that there are signs that coordinated international action to spur the global economy is gaining some traction.

‘There’s speculation that something good will come out of the G-20 meeting, so the buying is also in anticipation of this,’ said a dealer. Leaders from the 20 nations started their meeting in London yesterday.

Assessing local news of a 13.8 per cent drop in private property prices in the first quarter, DMG & Partners said that although there will be more prospective buyers, most will only window-shop until prices become considerably more attractive.

‘HDB prices should fall further on the back of economic weakness, job insecurity and filtering of interest into the mass market condominiums, which should result in an increase in bargaining power of buyers,’ DMG said.

‘While we are cognisant of units disposed at distressed prices in the secondary market, these remain selective ones. For the remaining year, we should see an increased quantum of such transactions, especially from the 10,000 units that will receive TOP (temporary occupation permits) in 2009. As such, we are keeping our neutral call for the property sector.’

In his latest market commentary dated April 1, fund manager Marc Faber said that the current bounce is because stock markets were heavily oversold and are experiencing a powerful bear market rally. ‘While I do not expect any full-market recovery within the next few years (after that, we shall need to see how much money will be printed) I would not be surprised to see some further headway until summer 2009,’ Dr Faber said.

‘Very near-term, the stock market has become overbought and should correct. But for the immediate positive stance to be maintained, it is important that the November 2008 low of 741 for the S&P 500 not be violated on the downside.’

The S&P 500 closed at 811.08 on Wednesday.

Dr Faber also pointed out that although US residential construction appears to have stabilised, non-residential construction has only just started to contract, so talk of a recovery is premature.

Source : Straits Times - 02 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

G-20 strikes US$1 trillion deal to roll back recession - LONDON

G-20 strikes US$1 trillion deal to roll back recession - LONDON

(LONDON) World leaders agreed to a trillion-dollar deal yesterday to combat the deepest economic downturn since the Great Depression.

First order of business: US President Barack Obama (bottom right) greeting some of the world leaders and top financial officials yesterday as they prepare to pose for a group photo
The Group of 20 (G-20) leaders called for stricter limits on hedge funds, executive pay, credit-rating companies and risk-taking by banks. They also boosted the resources of the International Monetary Fund (IMF) and offered cash to revive trade to help governments weather the economic and social turmoil.

But they sidestepped the question of whether to deliver more fiscal stimulus in their own economies.

The group of leading industrial and developing nations also agreed to create a new supervisory body to flag potential problems in the global financial system.

‘This is the day that the world came together, to fight back against the global recession. Not with words but a plan for global recovery and for reform and with a clear timetable,’ British Prime Minister Gordon Brown, the summit host, said.

Mr Brown says the G-20 will create a new financial stability board to ensure cooperation across frontiers, to spot risks to the world economy and - together with the IMF - provide ‘the early warning mechanism that this new global economy needs’.

Mr Brown says it is essential that the world does everything necessary to ‘rebuild trust’ and make sure ‘a crisis such as this’ never happens again.

World markets reacted positively. The index of top European shares was up 5 per cent after Japan’s Nikkei gained 4.4 per cent. On Wall Street, the Nasdaq was up 4 per cent and the Dow Jones 3.6 per cent.

Mr Brown said that while there were ‘no quick fixes’, the decisions meant that ‘we can shorten the recession and we can save jobs’.

French President Nicolas Sarkozy said the results were beyond what could have been imagined while German Chancellor Angela Merkel said that the package of measures agreed on by the leaders was ‘very, very good’.

The G-20 agreement is ‘a victory for common sense’ and an ‘important step towards order’ in markets, Ms Merkel told reporters. The G-20 agreed to build a new ‘financial-market architecture’, a key German demand, she added.

Mr Brown said the leaders agreed ‘there will be an end to tax havens that do not transfer information on request. The banking secrecy of the past must come to an end’.

He said leaders agreed to commit new resources of US$1 trillion that are available to the world economy through the IMF and other institutions.

This included US$250 billion of IMF reserve units called Special Drawing Rights.

‘This is available to all IMF members,’ Mr Brown said.

In addition, the IMF would see its own resources tripled, with up to US$500 billion of new funds.

The G-20 also ordered the IMF to sell billions of dollars of gold reserves to help the world’s poor countries and a trade finance package worth US$250 billion over two years to support global trade flows. — Reuters, AP, AFP, Bloomberg

Source : Straits Times - 02 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Court quashes en bloc sale of Horizon Towers

Court quashes en bloc sale of Horizon Towers

Landmark ruling also redefines roles of sales committees, Strata Titles Board

By UMA SHANKARI

(SINGAPORE) The minority owners of Horizon Towers have finally won the fight to block the $500 million collective sale of the development, ending a battle that lasted more than two years.

Overturning the High Court and STB rulings, the Court of Appeal ruled that there were problems with the sale of Horizon Towers from the start.

The Court of Appeal yesterday dismissed the en bloc sale after several owners appealed to it to throw out last July’s High Court decision, which backed the sale of the property to Singapore-listed Hotel Properties Ltd (HPL) and its partners Morgan Stanley Real Estate and Qatar Investment Authority.

Yesterday’s judgment is final - and means that the sale of Horizon Towers will not go through.

In the judgement, Justice V K Rajah also redefined the duties of a sales committee and the Strata Titles Board (STB) when dealing with collective sales. But some market watchers say that sales committees may find the new scope of duties difficult to carry out.

The judgment marks the first time that the Supreme Court has decided in favour of minority owners in a disputed en bloc sale, said the minority owners’ lawyer Philip Fong, a partner with Harry Elias Partnership.

The Horizon Towers saga began in January 2007 when the majority owners accepted a price of just under $850 per square foot (psf) of gross floor area for the 99-year leasehold property in Leonie Hill.

But when the property market continued to boom after the deal was signed, many owners believed that the $500 million reserve price was too low. Residents who were against the sale argued that it was done in bad faith and said that a higher $510 million offer from Hong Kong firm Vineyard Holdings was not taken seriously.

STB and the High Court dismissed the minority owners’ objections. The High Court decided that as long as STB finds that a purchase price is fair, it has fulfilled its duty and is entitled to approve an en bloc sale.

But yesterday, overturning the High Court and STB rulings, the Court of Appeal ruled that there were problems with the sale of Horizon Towers from the start. Justice Rajah said that the sales committee did not fulfil its duty because it did not secure the best price obtainable for the property.

In his judgment, he also spelled out the court’s view of a sales committee’s duties. Among other things, a sales committee is expected to follow up all expressions of interest and offers, and carry out sufficient investigations and due diligence to determine their genuineness. A sales committee is also tasked with creating competition between interested purchasers and ‘waiting for the most propitious timing for the sale in order to obtain the best price’.

Likewise, Justice Rajah said that STB must play a pro-active role when it comes to disputed cases, rather than simply listening to the evidence and arguments of both sides and then ruling on their differences.

‘Despite the reference to its ‘mediation-arbitration’ function, STB has a significant inquisitorial role to play,’ he said. ‘It is not confined to what is presented to it by the contending parties, but must seek out the facts whenever there is evidence that the SC (sales committee) has not disclosed everything about the transaction to STB.’

Market players welcomed the greater clarity on the duties of sales committees and STB, but said that the new guidelines could dampen the collective sale market. ‘The imposition of the more defined duties and standard of conduct for a sales committee may deter owners from volunteering to serve on the committee,’ said Karamjit Singh, managing director of Credo Real Estate.

Justice Rajah also pointed out that a primary objective of the collective sale scheme was to promote the rejuvenation of older estates and the optimal use of prime land to build more quality housing in land-scarce Singapore. But now, ‘the lure of ‘windfall profits’ has been a siren song for many (especially absent landlords and speculators), to the detriment of those who do not want to lose their homes at any price’, he said.

The Court of Appeal’s ruling means that HPL and its partners will not be able to go ahead with their plan to build a 253-unit condo and eight detached houses on the site.

At $850 psf of gross floor area, the developers would have had to sell new units at about $1,500 psf to make a small profit - which might be possible for them to attain even in today’s depressed property market.

The would-be buyers are not better off for having had the sale fall through, said one industry veteran. And likewise, the owners will get to keep their homes but will not get a much better price now than what HPL and its partners offered in 2007.

‘At this stage, it does not appear that there is a clear winner or a major loser,’ said the industry veteran.

Source : Straits Times - 02 April 2009

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com