STB is good enough

Not collectively speaking
Today- 26 June 2009

Time to revamp the Strata Titles Board
Today - 22 June 2009
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This call for change has been made before (see LET JUDGES decide Weekend Today - 5 Jan 2008) and it is timely to rethink the matter in the light of the recent decision of the Horizon Towers Court of Appeal decision. (and Summary of Case)

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In my opinion the Strata Titles Board is good enough if indeed the vetting process of an en bloc sale stopped there. Time and time again, though, a decision is dragged to the High Court and the Court of Appeal regardless of the parliamentary assurance that the STB decision is final and cannot be appealed except on points of law. This cuts both ways for the minority and majority - but the minority are definitely at a disadvantage as justice at the Courts comes at a very high price indeed. I wonder how the poor gentleman in Airview Towers has managed to pay his legal bills even though he was exercising his parliamentary given right to object to the sale as a minority owner. A single owner, self-represented, saddled with 3 layers of legal bills for all the proceedings at STB, the High Court and the Court of Appeal - estimated to be between $150k and $300k - disgraceful. Will this deter future minority owners from challenging the en bloc sale? Maybe. Is this a desirable outcome? Definitely not. If the STB does not approve the sale - then the minority owner should not have to bear the consequences for the STB's "mistake" or "misguidance" if the ruling is subsequently overturned at the HC ot CoA. Perhaps the government should pick up the tab...

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From my experience with Tampines Court, the composition of the Board is all important and having 5 knowledgeable panel members in relevant fields who are able to ask probing and pertinent questions of property agents, accountants, lawyers etc is vital if a matter is to be closely examined. They know when an expert witness is talking bull and I have every confidence in their intelligence, reasonability and impartiality; SO LONG AS THEY ARE LEFT ALONE TO DO THEIR JOB.

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The Courts in the past repeatedly stripped them of their ability to review cases objectively, and instead directed the Board to look at the overarching reason-d'etre of the en bloc legislation and ignore the statutory requirements laid out in the LTSA, which led them to turn a blind eye to legitimate claims of bad faith. That, I believe, was becoming a bit of an embarrassment with possibly some political backlash until the HT Court of Appeal put some bite back into the STB. It remains to be seen how the STB will handle cases post HT, but I am hopeful they will dispel the growing sentiment that they are just a rubber-stamping tribunal, wasting everybody's time and money (including thier own).

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Sales committees in the past, knowing that the chance of a sale being rejected at the STB was low, engaged in unscrupulous behaviour with impunity. If the STB were free from interference and were able to rule on each case on the evidence and guided by the LTSA and not some wishy-washy purposive approach - then I believe their track record would be better. 5 out of 300+ collective sales is a pretty miserable batting. A few more cases such as Tampines Court might cause the sales committees/lawyers/PAs of the future to sit up, take note and clean up their acts. TC: a sale thrown out on two counts of bad faith; in the matter of distribution of sales proceeds and the price. It's a pity the panel didn't come out with a written decision; it could have scared the bejabbers out of those with crooked intentions.

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So, I say keep the Strata Titles Board, empower them to do their job, have faith in their ability to sniff out wrongdoings, leave them to make honest decisions:-

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  Allow them to hear cases over 8 days instead of 5
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  Double the size of the Hearing room!
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  Maintain the Board's composition from relevant fields of expertise (lawyers, architects, surveyors etc),
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  Do not allow Senior Counsels to represent either side - they simply add unnecessary cost to the proceedings.
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  Give the Board free rein to make reasoned, sensible decisions based on the facts, arguments, evidence, and an honest reading of the LTSA. No legal gymnastics to push a bad sale through, please.
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  Let them use their newly acquired inquisitional powers
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  Allow them to throw out as many sales as they see fit
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  Make all their decisions FINAL.

BOTANIC GARDENS VIEW

Interesting things are happening at Botanic Gardens View...check out their blog here

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So, when a resident wanted to put forward a resolution at the EGM specially convened for en bloc to remove the indemnity enjoyed by the sales committee - it was blocked by the SC (and presumably the MC as EGM/AGMs are convened by the MC). When he tried to put it forward at the following AGM - it was blocked again (by the pro-enbloc MC).

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The management council has no power to block a resolution if it has been duly received by the secretary of the management council prior to the Notice of AGM being sent out to all the residents. Indeed, the MC is obliged to include it in accordance with the BMSM Act 2004. The MC can only deny a motion if:

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Motions out of order

4. At a general meeting of a management corporation or subsidiary management corporation, its chairperson may rule that a motion submitted at the meeting is out of order if he considers that the motion, if carried, would conflict with this Act [BMSM] or the by-laws or would otherwise be unlawful or unenforceable.

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But if the sale committee also blocks such resolutions then surely that is a huge loophole in the LTSA - it strips owners of all their power to shape an en bloc in accordance to their wishes. Someone is at fault here - and it is both the sales committee and the management council - which are one in the same in this instance

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Note: The Managing Agent accpeted the proposed resolution so it must have been okay.

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Indeed, when I sent in my list of questions to be tabled at the EGM in 2007 (in the nick of time, too; they were stuffing envelopes with the Notices at the MA office!), the enbloc lawyer knew better than to block my request. I believe this 'Mr. Lee' at BGV could be in trouble if he were to face the STB over this matter...

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What is happening in that estate can very well apply to all estates - and the minority fighter in this instance is a retired lawyer - so well worth reading his point of view from a legal stance.

The final chapter

So, after 11 months, the final chapter of the failed Tampines Court enbloc has been closed. The objecting minority didn't go for blood; preferring instead to accept an offer to bring matters to an end and simply for all to get on with their lives. We were prepared, though, to bring issue to Court for the full amount had the matter dragged on any longer.

Going through the blog posts, I realise I have not highlighted clearly what exactly went wrong with the en bloc in Tampines Court. I held back many things. Mainly the problem was  lack of transparency, hoodwinking and a compliant sale committee. And these are the milder compaints.

If you go through the PITFALLS  you may get a feel for my grievances which all have a basis in fact.

NEPTUNE COURT

Neptune Court Showdown
Today -10 May 2007

Neptune Court's en bloc dilemma

WANT to privatise?
Sure, pay us $144 million first, said the Ministry of Finance (MOF).
That’s how much it has valued the piece of land at Neptune Court, which it owns.
This means each household there will have to fork out about $191,000 to privatise their 99-year-leasehold estate before they can even think about selling it en bloc.
There are about 752 households in Neptune Court at Marine Parade and they have been leasing the land from the MOF for the past 32 years.
It looks like their proposed $1 billion enbloc dream will be scuttled for now.
As a rough comparison, residents in HUDC estate Eunosville will have to pay about $30,000 for the privatisation of their estate.
There are 330 apartments in Eunosville, located opposite Eunos MRT station.
At Neptune Court yesterday, there was an air of disbelief as groups of residents gathered to discuss the high price they have to pay.
A letter from the Neptune Court Owners’ Association was pasted on the notice boards by each lift landing, saying that the estimated cost of privatisation was about $144m.
This is probably one of the highest privatisation fees here.
The letter was put up on Wednesday.
Retiree Alex Lee shook his head while trying to calculate how much he has to fork out.
He paid about $500,000 for his 1,700 sq ft unit about 10 years ago.
Another resident, who has lived there for over 30 years, was also shocked at the amount.
This resident, who declined to be named, paid about $50,000 for his 1,600 sq ft unit.
He said: ‘I nearly fell out of my chair when I saw the amount. I don’t understand how they (MOF) arrived at this amount.
WHO WILL PAY?
‘Who’s going to cough up this money? It’s very high. And even if the privatisation is successful, will the en bloc process be successful too?
‘I don’t think many residents here in their right mind will pay this amount. But I’m sure those en bloc die-hards will find a solution.’
The land area there is about 780,000 sq ft - about the size of 15 football fields.
All the residents we spoke to baulked at the amount MOF is asking for.
The Neptune Court Owners’ Association didn’t want to comment.
The MOF said that $144m for the common properties is a preliminary estimate provided to the residents so that they may decide whether or not to pursue privatisation.
This estimate was derived by comparing the capitalised value of the annual net rents at Neptune Court with those of a comparable private condo.
Said a MOF spokesman: ‘Should the residents decide to privatise the estate, the valuation will be updated based on the prevailing market conditions.’
In privatisation, the residents essentially pay HDB (or the MOF in this case) to take over the ownership of common property, such as carparks and landscaped areas.
Owners pay about $25,000 to $30,000 each for privatisation, which covers the cost of common property that has been transferred to owners, legal costs, survey and other processing fees.
Credo Real Estate’s managing director Karamjit Singh was surprised by the huge sum.
He said: ‘Normally, privatisation fees per household ranges from $12,000 to $30,000. This is a huge amount. It will be difficult to get residents to fork out $190,000.
‘Selling en bloc is slim but not impossible. It will be possible if the Government is willing to do a tripartite deal where it gets paid out of the sales proceeds paid by the developer.’
The estate started its en bloc efforts in May last year.
The committee hired law firm Phang & Co and property consultant Chesterton International to kickstart the privatisation and en bloc sale, according to a report in The Straits Times in May.
It offered owners a sale agreement that promised a reserve price of $1.37m or $1.67m, depending on the unit size. The New Paper - 24 Nov 2007

Privatise Neptune Court? - pay $144m
Straits Times- 2 Dec 2007
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Neptune Court privatisation surprise
The New Paper - 8 June 2009
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So, was the Ministry of Finance playing the en bloc game too? Trying to fleece owners out of substantial sums of money? If the present figure of $40m is closer to the market value, what then was $144m based upon? Pure greed? What was the thinking back then? That the Ministry should reap some of the 'windfall' should the estate go en bloc? "let's slap on our own premium and ride the en bloc wave"?

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Well, someone in the Ministry must have had a rethink - or maybe the Ministry of National Development stepped in and told the MOF to let the estate go; that the national agenda of maximisation of land use is more important than making a quick buck off the residents' backs.

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Will they jump at the 'opportunity' to privatise now? $50k is still a lot of money and believe me - IT IS NOT WORTH IT!

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Neptune Court was sold under a different scheme to the HUDCs - not sure what the difference was - and there is a Neptune Court Owners Association (NCOA). So, it is not HDB run (as highlighted by a comment below), but the land is government owned.