"I am a BLOGGER NOT an expert. This is a BLOG not a 'go-to' website for official information. I represent no one's view save my own. I have neither legal nor financial training, nor do I have anything to do with the real estate industry. My understanding of the Collective Sale Process is from a layman's position only. My calculations, computations and tables are homespun and may contain errors. Please note that nothing in this blog constitutes any legal or financial advice to anyone reading it. You should refer to your lawyer, CSC or financial adviser for expert advice before making any decision. This disclaimer is applicable to every post and comment on the blog. Read at your own risk."
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There is one thing worse than an Enbloc ----- and that is an Enbloc done badly. Since the majority have the necessary mandate to sell, then they owe it to all SPs to make a success of it. Minority SPs can only watch and wait, if they sell then lets pray it's at a price we can move on with, if they don't sell, then we are happy to stay for a few more years.

Factors which led to en bloc failure

Only three factors can be taken into account when the STB decides whether or not to withhold its approval to a sale. 

Lack of good faith in :-

(A) the sale price
(B) the method of distribution of sale proceeds
(C) the relationship of the purchaser to the any of the SPs

Tampines Court failed in two; (A) and (B) which is, I believe, unprecedented.

 (A) The Sale Price

Chronological order of events:-
8 March 2007: Sim Lian offer for half plot (offer open until 7 April)

18 March 2007: Property Agent's diary stating that Sim Lian would revert back by 23 March if they were interested in going ahead with the next plot.
20 March 2007: Letter of Offer from FEO for $405 million. 
The 3 sale committee members signed letter of offer on the same day (a salient point left out in their Affidavit), effectively tying their hands to further negotiations with other parties as as they had accepted this price. They didn't wait to see what Sim Lian had to offer, even though they knew one was coming.
22 March 2007: Sim Lian letter to all SPs - came back with offer of $420 million for whole plot with conditions (offer open until 7 April)
23 March 2007: FEO gave signed S&P and cheque to sale committee
25 March 2007: due diligence by SC on Sim Lian offer (just a telephone call with an underling, no negotiation with boss)
25 March 2007: SC signed with FEO for $405 Million, $10 million of which went towards the formation of a Beta sum.

I believe this is what the Board meant when it said the sale was not done in good faith with regard to the Sale Price

Another possible issue of bad faith was the fact that in the application, the majority gave their sale price as $405 million. Stamp duty was paid on this amount. On submission, they tried top change that position to sale price $395m and the $10m beta was to cover difficulties such as insufficiencies. I believe the board will see the sale price as being that on which stamp duty was paid - the $405m. Therefore they SC illegally carved out 10 million and reduced each owners sale proceeds by $18k without their express permission. Robbing Peter to pay Paul as it were.

Another possible issue of bad faith regarding the sale price could be the Valuation. Sreenivasan for the minority showed that the expert witness' Valuation report was erroneous and claimed that the witness was therefore incompetent and that the submitted calculations (and hence the valuation itself) were incorrect. Usually, the STB is dismissive of differences in valuations between majority and minority; as valuation is 'not an exact science' and hence open to subjectivity. But in this case it was different: the valuation was incorrectly calculated. So maybe this is yet another reason why the STB concluded the sale price did not show good faith.
(B) method of distribution
I have covered this point below. Examples were given from the Alpha & Beta Tabulation A2 Table as to how the distribution of the remainder of the Beta sum was so unfair. For example, One owner had claimed just over $3k from Beta not knowing that the remainder distributed amongst the other owners who had not claimed Alpha or Beta would be in the region of $17k. It would have been better for him not to claim, but he did not know this. Nobody knew. There was no transparency in the method and owners were not informed enough to make a decision. This method of distribution was not in the CSA.

Alpha owners (financial loss owners) were also unfairly excluded from claiming the remainder of the Beta sum, as pointed out by a panel member.

It was obvious that the Beta sum was sunk from day 1 at the Hearing. No panel in the world could have honestly passed such a non-transparent method of distribution.
So, in the end, it did not matter whether the STB took 1 day or 1 month to deliberate – to any layman sitting in the courtroom, it was a forgone conclusion.

Of course, another factor which could stop a sale from being approved is not having the requisite 80% signatures at time of application for sale at the STB. This actually was our third prong in our three pronged approach. The minority applicants had gathered sufficient evidence, or so they thought, on the matter and were prepared to show the STB that the majority did not have 80%.
However, after day 1 of the hearing at the STB, the lawyers for the minority assessed that there would be insufficient time to tackle the third point and felt confident they could win showing bad faith in sale price and method of distribution only. So, the minority never got to subpoena owners, never got the opportunity to prove that the Notices were not an accurate reflection of the signature collection at the time of posting on the Notice Boards (as shown by doing a comparison with the submitted execution forms) ... among other things. There simply was not enough time.


  1. Anonymous26 July, 2008

    Dear "itshometome" I have been following this Blog since the STB hearing began last month and I must admit I am impressed with your analytical thinking. I am in agreement that the reasons expounded by you will be exactly the basis of the reasons for the STB ruling which will be released later...good job...

  2. Anonymous26 July, 2008

    Pardon my ignorance...but if the alpha owner had presumably had their losses covered by the alpha sum, why would they have been entitled to more money under the Beta sum?

  3. Re: Pardon my ignorance...

    It is only fair that everyone should get at least their buy price in a collective sale. It puts everyone on the same footing. It is an LTSA requirement that there be no financial loss. So it does not matter if you paid $200k for your unit in 1989 or $700k in 1996, you are both entitled to start from that same footing. This was also pointed out by a panel member.