STB decided to grant the enbloc sales for Horizon Towers

It was a sad day for many Horizon Tower owners when STB delivered their judgment for granting the collective sales yesterday.

STB rejected the majority owners' application for collective sales order in August 3, 2007 based on merely three missing pages. With legal threats and twist and turns, owners of Horizon Tower had gone through many hardships, first, the High Court Appeal to overturn STB first ruling, then a new round of STB hearing. There were at least five SC (Senior Council) and some over 30 lawyers involved the case, bearing in mind, all paid by owners of Horizon Tower. Now, after so much "inside" stories had been uncovered, many were disappointed at such a ruling.

The inside stories include:
- the incompetence and conflict of interest of market agency
- the conflict of interest of some members of first sales committee
- the conflict of interest of between majority owners (CSP)'s lawyer and buyers
- the method of valuation, Land Title Authority gross land area and method of distribution shares.

Had not these unfortunate legal batters happened, many owners would not have known all these inside stories.

To be fair to many owners, they have been always ready to honor their contract with HPPL even after market price has taken a sky-high soaring. It is the moral and legal obligation that they are willingly to comply. It is however certainly unpleasant to discover that along the way of collective sales, something, (intentionally or unintentionally, for the benefit of doubt) had gone terribly wrong and could have prevented.

The objectors had argued that the first sales committee had not acted in good faith in all the proceeds in accepting HPPL offers,especially, they refused, at least, three majority owners' request that the deal should go back owners to deliberate before accepting the option.

They contended that the sales committee who represent all owners should have acted for the best interest of owners. They argued that in such circumstance STB should consider whether it was the intention of legislation in question to permit such a sale. In their opinion, it was bad faith within the meaning of law for the first sales committee proceed the sales considering all above factors.

The Strata Title Board relied on section 84(A)for its ruling. In one particular section of Parliamentary debate, it spells out that STB can only rely on the following factors to determine "bad faith"

1. the sales price for lot and common property in strata title plan;


2. the method of distributing the proceeds of sales, and


3. the relationship of purchaser to any of subsidiary proprietor

Which means,in law, STB will not have to consider others factors, such as listed above as "bad faith".

That leads a law question what is bad faith? and how to define one?

That also leads a typical sociological question, is law limits "bad faith" in above three factors just? The widespread belief that norms and laws are natural and good masks their political character. Is STB making a political decision or a moral and legal decision?

Now, en bloc sales has become a quite disturbing social phenomenon in Singapore, with a few speculators and profit driven developers might have gained, the majority had been left with bitterness of losing home and losing common bounding among neighbours. Instead of being a blessing, it has become sources of many sorrows and woes.

HORIZON TOWERS SAGA

From The Straits Time by Joyce Teo

High Court Judge Choo Han Teck, in allowing the majority owners' appeal on Thursday morning, said the technical error which aborted the collective sale of their Leonie Hill estate did not prejudice the minority owners, who wanted the STB decision upheld.

"It was the kind of error that could have been corrected in a moment, without inconvenience or prejudice," said Justice Choo


What is cause and social impact of this Horizon Tower En bloc saga from sociological point of view?

For the full judgment by Judge Choo Han Teck, please see:
http://lwb.lawnet.com.sg/legal/lgl/rss/supremecourt/53991.html

High Court Hearing on Horizon Tower

I attended three and half days High Court Appeal hearing on Horizon Tower. It was my first time attending the High court, and as one of parties :=). It however was one of most interesting and learning experiences I ever had.

We had just read the "street level bureaucracy", where it describes "it is practically a cliche to observe that the severe appointments of a courtroom, dominated by a bench behind which a black-robed judge looks down at other courtroom participants, convey the power of the system of laws over the individual. Separate entrances for judges, commands to stand and bow whenever the judge arrives of departs,...contribute to the mysteries of the courtroom". Though our "learned friend" restored several times during the hearing that "the court room is not circus." I found the courtroom with all these mysteries of high level bureaucrats and the interesting exchanges among these black robe lawyers to be far more amusing than a circus.

Horizon Tower En bloc sales has become quite "infamous" recently, the majority owners, have been frequently described as a bunch of "greedy" people "who tried to scupper the sales and breach the contract". When the application to STB being dismissed, the majority owner were facing the $800 million to S$1 billion lawsuit by Hotel Property and Partners. That was just like what Senior Counsel Mr K S Rajah said in the court that "the purchaser was holding a gun at majority owner's head."

The whole hearing involved at least three parties, majority owners, minority owners and purchaser. While a small group of 13 who signed collective sales agreement also to be an intervener participating hearing. There were no less than 30 lawyers who represent for various parties, all of them except purchasers are paid by Horizon Tower residents. The whole argument was surrounded on the point of law whether STB was wrong to dismiss the application based on three missing pages; whether STB has power to allow the amendment or the cure the defects of application.

For majority, while the HPL's lawsuit loom over their heads,of course, they wish the appeal will be granted,
For minority, they wish the High court will stand for the STB's decision so that their home will be preserved, under such a compulsory acquisition.
For the purchase, they not only want the court grant the appeal, they also want to assure the court's direction to bind the majority to the contractual action in order to secure the sales go through.

Therefore, it was not a simple play, but like symphony orchestra, only with different tones.

Mr Chelva Rajah, argued that STB was err to dismiss the application for only three pages left out inadvertently, however, in the course of STB hearing, those documents had been presented to STB with correct copies, therefore, it even needed not to amend; even if needed to amend, then STB was wrong to say that they had no power to allow the amendment, while he argued, STB has the power;

Mr KS Rajah, Mr Ramesh and Mr Michal Huang all argued that the error of missing three pages was not minor error, when application made under the statutory declaration, the all execution pages must be true and right, this was where the technical non compliance came into the place; the STB indeed has no power to allow the amendment, that was the very intent when the Parliament made this piece of legislation to protect the interest of the minority owners. The error was not only significant even can be a crime.

Mr K Shanmugam, had the different agenda with Mr Chelva Rajah, though he also very much wanted that the court would allow the appeal, but he suggested the "third options":- the STB was right to say the application was defective, however, since the defects were so minor that STB should had allowed to amend. He suggested by the past history of majority and its sales committee' performance, the purchaser was the only one who really has the interest to see the sales go through, if the court rules that the application was not defective, the majority owners will use "this court room to wash away their sins", then their contract action against majority owners will be affected; if the court rules the application was defective, therefore disallows the appeal, the purchaser will not have the deal too. Therefore, the third option Mr Shanmugam invented and he "insisted" the court should consider and allow the appeal with directions. Mr Michal Huang objected it by referring to "the purchaser's shopping list".

While we are waiting for the final ruling of the court, expected in next week, we can see this enbloc sales is really a sociological study subject, the ruling of Horizon Tower will set the precedence for many other en bloc sales, it will have confounding impact on social, legal and economic system in Singapore. The various secondary social groups behaviours are also fascinating. In the view of this en bloc event, I incline to agree with Durkheim, it is not only the individual forms the society, but most importantly, the social factors,and social system, society as a whole, created by men, but beyond control of men, shapes individual's life.

SINGAPORE’S EN BLOC MESS

In the 1970’s and early 1980’s, Singapore’s building construction fever resulted in many heritage buildings including almost the entire China town, being bulldozed away to make room for modern, tall skyscrapers. Today’s en bloc fever has the setting for a remake.

We however should not just refer to solidly constructed buildings, giving way to taller skyscrapers, changing our accustomed landscape. Far worse is the legal mess popping out in en bloc sales, hogging the front pages of many newspapers. This in turn stems from the Building Maintenance and Strata Management Act that governs en bloc sales, which new changes coming into effect on 1 October 2007 are unlikely to solve. The fundamental problem is that a law originally aimed at ensuring the proper maintenance of apartment buildings has become the Code for takeover purchases of buildings for enforcing the sale upon reluctant minority owners.

In the case of equities, the law protects minority shareholders from forced selling, up to the point where a takeover offer receives 90% acceptance. For our homes, which are of far greater importance, a mere 80% acceptance if the property is older than 20 years would suffice for a forced takeover.

For equities, the offeror has to purchase all of the shares tendered in acceptance. In en bloc sales, the purchaser can walk away if the majority of owners fail to deliver an order from the Strata Title Board (“STB”) to enforce the sale upon the minority owners.

For en bloc sales, the minority owners are only allowed to rely on their historical purchase cost or valuations done at the time of the sales and purchase contract. No consideration is given for his convictions of future market appreciation.

Horizon Towers, now the subject of a bitter legal suit launched by Horizon Properties Pte Ltd against the majority owners. The Sale and Purchase contract terms set a 6 months period for obtaining the STB order, expiring on 11 August 2007, with an option to extend thereafter vesting in the Sellers, which is not a usual case. Due to many different factors, not least of which a heavily occupied STB, setting at one point a September 2007 date for hearing, the process was not as smooth as could be. Eventually, the application was dismissed on technical grounds.

The messy outcome of this is that HPPL had, even prior to 11 August 2007, threatened to sue, based on changes in market prices, which have gone up substantially in just a short period. Here is the most crucial anomaly of using the Building Maintenance and Strata Management Act to govern en bloc sales. The minority owners cannot rely on changes in market prices during the entire STB application process, but the Purchaser has this right!

As far as the statutes are concerned, which Parliament ostensibly passed in order to protect the minority shareholders, case law shows that in many cases where the STB had ruled in protection of minority owners, reliance was mostly upon administrative errors and not on the substantial current property values.

The above fundamental anomalies show that a separate Code on en bloc sales has to be drawn up, if this mess is ever to be prevented.

Sociological understanding for Singapore En bloc Sales

En bloc sales, one of unique features of Singapore, has developed from "fever" to "madness". Since early this year, the property market in Singapore took the surprising upswing, especially in 9, 10, 11 districts, which contributed the feverish en bloc market sales. The profit hunger developers have rushed into this niche markets. While some were happy with "book" profit in selling their property in collective sales, many had found the money they got from sales could not even replace the quality of living they once had, namely, they would not be able to stay at similar space or prestige location.

However, the social impacts of these en-bloc sales are far more than dollar sense. The potential economic benefits from these en bloc sales are severely marginalised by its negative social impacts. Just looking at many litigation due to en bloc sales. The well known cases like Horizon Tower and Phoenix Court, by the description of high court Judge were "real big mess"

The senior political writer Lydia Lim from The Straits Time on Sept 21 wrote,".. many old folks forced to leave their home for decades, and of people separated from their neighbours they counts counted on for companionship and support..., current en bloc sales fever seemed largely fuelled by a small groups' "greed" She observed "The irony of having, on the one hand, community development councils to build social bonds, and on the other hand, allowing the fast destruction of communities without really valid reasons."

The modern society has shifted from mechanical organisation to organic organisation, which already has little bonding to promoting social solidarity and integration. For wanting some "valid reasons", the neighbours turned to be enemies, the home turned to be "instruments of greed", in the end, who has benefited? not the owners of the property, not social coherence and social bonding, not even social advancement, except for teams of "top lawyers" earning "top dollars". That might be one of ways that Singapore has become the most advanced litigation system in the region.

Dear friends, could do you give your input, is there the en bloc madness as Weber suggested "rational" or as Marx suggested "class struggles" or Durkheim's new mode of social integration"?