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"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.

REGENT GARDENS - It's OK to pay Minority Owners extra sums of money

REGENT GARDENS
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Straits Times - 30 May 2009
Regent Garden enbloc deal: majority owners lose appeal
THE Court of Appeal yesterday dismissed an appeal by the majority owners of Regent Garden who oppose a $34 million collective sale deal with Allgreen Properties.
The appeal was lodged on May 15, 2008, by 23 of 25 majority owners of the 31-unit project, who were unhappy that Allgreen made extra payments totalling $2 million to six minority owners who initially opposed the collective sale.
The appeal was lodged after Allgreen obtained an order from the High Court on April 16, 2008, compelling the majority owners to complete the sale and purchase of Regent Garden.
Four months earlier in January 2008, the Strata Titles Board rejected the sale on the grounds that the valuation was too low and the deal was not done in good faith.
In its judgement, the Court of Appeal dismissed the appeal of the majority owners, saying that there was nothing in the agreement between buyer and seller, or the law, to prohibit Allgreen making additional payments to the minority owners.
The Court of Appeal also reiterated that the Land Titles Strata Act exists to protect minority owners and not to protect majority owners from their own 'improvident' bargain.
Allgreen, represented by Davinder Singh of Drew and Napier, also relied on an affidavit of Knight Frank managing director Tan Tiong Cheng which said: 'It is also my experience that it is not uncommon for the developer to contribute to the payment of the premium to the minority owners to procure their consent to the collective sale.'
On whether the collective sale was done in good faith, the Court of Appeal said: 'A purchaser does not owe any duty of care, much less duty of good faith, to a vendor of property in relation to the price of the property. The general principle is caveat emptor.'
In its concluding observations, the court said collective sales committees that do not want to find themselves in a similar predicament vis-a-vis incentive payments can easily make provision for similar contingencies by providing for them in the sale-and-purchase agreement. 

Business Times, 30 May 2009
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Today:-
Joy for minority owners
THE six erstwhile minority owners who received about $2 million more than their 25 neighbours from the Regent Garden’s $34 million en bloc sale — arising from additional payments from purchaser Allgreen Properties — can keep the sum to themselves, the Court of Appeal ruled on Friday.
The collective sale went through last May but 23 of the 25 majority owners went to the highest court of the land to seek a share of the additional payments.
Dismissing the majority owners’ appeal against Allgreen with costs, the Court of Appeal ruled that while the practice of developers making extra payments to minority owners may be “potentially divisive and may even sometimes be ethically challenging”, the law does not prohibit such incentive payments.
Allgreen had made the extra payments in order to clinch a unanimous sale agreement. The condominium’s sales committee later tried to scupper the deal after it emerged that initial estimates of the development charge were 87 per cent higher than the actual $951,000, thereby translating into a sale price lower than market valuation.
Agreeing with an earlier High Court decision, the Court of Appeal said the sales committee “sowed the seeds of its present unhappy predicament” when it made a “deliberate decision” not to spend $11,000 on ascertaining the development baseline of their condominium in order to achieve a sale at the earliest possible date.
Appeal Court Justice V K Rajah also said that the Strata Titles Board — which had previously axed the deal following the majority owners’ appeal that the deal was not done in good faith — “should not have entertained the sales committee’s objections”.
He noted that the appellants have “attempted to belatedly rectify their mistake”, saying that the collective sale regime was not designed to “protect a sales committtee from its own errors”. Teo Xuanwei
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So, now it is official - the Court of Appeal says it is okay for developers to pay minority owners extra sums of money. This is very good news especially for those estates whose sale committees undersold the property by cutting corners, pushing the sale through by all means or ignoring the arguments of the minority who knew better. Of course, the developer must have a REASON to pay out extra sums - in the Regent Garden case, it was to secure the withdrawal of the minority's objections at the STB.
Regent Court was highly unusual in that it was the MAJORITY who were appealing and wanted a share of the extra sum. Thank goodness they lost.
They cut corners.
They set the price.
They sold their estate at an undervalue.
They were fools
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The minority are at the mercy of incompetent players and should be compensated fully for the forceful sale of their property.
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Chua Choon Cheng and Others v Allgreen Properties Ltd and Another Appeal[2009] SGCA 21
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90 Allgreen has not breached any express or implied terms in the CSA or SPA by giving the Additional Payments to the Minority Owners. The SC sowed the seeds of their present unhappy predicament when, to save a mere sum of $11,000, it made a deliberate decision not to accurately ascertain the development baseline of the Property. While one should be slow to take issue with their decision by coldly equating hindsight with foresight, the stubborn facts that cannot be lightly erased are that, acting in the interests of the Majority Owners, the SC, firstly, inappropriately opted to save costs and then, secondly, preferred the comfort of having the certainty of a binding contract with Allgreen to the uncertainty of re-negotiating the Sale Price upon the ascertainment of the actual development baseline. Since they opted to seize and keep the proverbial bird in the hand, it is only just that they cannot now be allowed to complain that the bird is not what they thought it was. While we can understand the appellants’ dismay in relation to how events have unhappily conspired against them, that is not in itself a basis for implying novel new terms in fact or in law into the Agreements. The present circumstances have without doubt been precipitated largely by their own deliberate conduct.
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91 We acknowledge that the practice of some developers in making direct payments to minority owners to secure their consent can be potentially divisive and may even sometimes be ethically challenging. This, nevertheless, does not mean that the law, as it now stands, prohibits such incentive payments. The Act itself, while comprehensively dealing with a host of contractual issues, plainly does not proscribe such payments. It is also probable, that not infrequently, the majority owners will have no real complaints about such payments, as their overriding interest will be in ensuring that the collective sale is successful (and to collect the sale proceeds early) rather than to quibble about incentive payments made on the sidelines.
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REGENT GARDENS POST HERE

1 comment:

  1. Anonymous06 June, 2009

    News black out imposed on the minority, they were ignored, no one would lisen to them. So they gave the majority a taste of their medicine.

    ReplyDelete