Enblocing Singapore

How Many CSAs can a CSA CSA?

noreply@blogger.com (Dr Minority) — Tue, 14 Oct 2008 16:41:00 +0000

I received this email from Mr Francis Zhan, retired Chairman from Regent Gardens (RG), which has given me (implied) permission to "keep [my] readers informed" of the development at RG. Let me post his email first (with private information anonymised), and then I'll respond, drawing from the RG judgment by Justice Lee Seiu Kin (available here, or here on scribd).

Dear Dr. Minority,

I read with great interest your blog on en bloc activities in Singapore, and thought I may be able to contribute the latest information on the most controversial en bloc sale in Singapore from the horse's mouth.

I am the last Chairman of Regent Garden Condominium, and have been its Chairman for 16 consecutive years, treasurer and council for the earlier 4 years.

You are probably aware of the situation surrounding our en bloc sale so I will not waste time with history. I will deal with the crux of the issue which is the key issue the majority owners are appealing to the Court of Appeal against the High Court's ruling on 16 May 2008.

Justice Lee S K had ruled that a purchaser may enter into a side contract with payment to the 6 minority owners to secure their agreement to the en bloc sale as nothing in the Sales and Purchase Agreement forbade such an arrangement. And to make his ruling practical, he issued an order that the 6 minority owners be enjoined as parties to the original CSA! (written judgement was released a week ago).

In effect, therefore, there are TWO collective sale agreements -- the main CSA with S$34.0m. to be shared by all 31 owners, plus an additional or sub-CSA with S$X.0m. to be shared by the 6 minority owners. To add insult to the injury, one of the 6 minority owners filed a suit claiming for "financial loss" based on the S$34.0 sale price, ignoring the additional receipts from the share of the S$X.0m.

We cannot understand how the Honourable J. Lee could arrive at such a conclusion without examining the meaning of a Collective Sale, and his judgement therefore produces TWO COLLECTIVE SALE AGREEMENTS. We are not even questioning the manner in which the purchaser obtained the consent of the 6 minority owners (vis a vis the Prevention of Corruption Act), and merely asked for the logic of such an arrangement, if validated by the Courts.

If a property owner can stay as a minority owner and gets two, or even three (as in the above case) cheques as against the majority owner getting only one cheque, who on earth would want to, or dare to, sign the CSA as a majority owner?

Will appreciate if you can keep your readers informed of this latest development, and transmit the information to any other forum on en bloc sales, for the benefit of the community because I don't want to see another property owner taken for a ride.
If you need any documentation on the above sale, do not hesitate to contact me. I can also be reached on my mobile XXXXXXXX.

Francis Zhan,
Retired Chairman,
MCST No. XXXX
Regent Garden Condominium.

I note with interest that Mr Zhan wrote "we" in his email, which I take to imply he represents the majority owners of RG, as it would seem the problem is with the minority owners obtaining additional sums from the sale, through some alleged private agreement with Allgreen (the buyer of RG).

The judgment for RG is very complex and addresses a number of issues. I want to pick on one only which is Mr Zhan's comment that the Judge effectively allowing more than ONE CSA to be executed, in this case, TWO CSAs. I'll draw from the judgment where necessary.

Firstly, the CSA is a very specific document. I cannot emphasise this repeatedly to as many people as possible. It's a contract, with all that a contract implies. As such, any clause that is present or absent in it has implications to the sale. In almost all CSAs I've seen, it's very very comprehensive, especially with regards to the protections of the majority owners and the SC. It sometimes include, in one I've seen, woolly clauses such as what happens when the sale price offered during the tender is less than the reserve price. This merely reflects poor contractual writing, in my opinion, especially considering how air-tight some clauses can be to protect the SC etc. The point is that there is only, and only, ONE CSA in any enbloc sale, and ONE Sale and Purchase Agreement. Mr Zhan's argument of TWO CSAs is therefore a rhetorical, and not a legal, one.

What he's alleging is that there is one CSA and SPA, and for the minority owners, there are private contractual agreements with Allgreen. Not CSAs. This is most obvious when you realise that the CSA binds and encompasses all owners eventually (should sale be approved) but any private agrement binds only the minority owners.

Can the developer do that? Mr Zhan disagrees obviously, since it creates the situation that allows for "greedy" minority owners to hold out and ask for more through private agreements. It also causes "an unequal and disproportionate amount to be distributed to all subsidiary proprietors" (Clause 22). Surely that is unfair to the majority involved! It means that everyone should endeavour to be the minority, to get more!

Let's examine that closely.

If everyone waits it out, hoping for more money, then the sale will not go through. This means everyone will not get anything from it. In reality, this always happens. You have some minority owners who steadfastly refuse to sell, and others hoping to wait until the reserve price goes up, before signing. To collapse minority owners to being merely "greedy" is stereotyping and reflects simplistic thought. Enbloc sales are complex, and people will sign the CSA for various reasons, including but not limited to, greed.
It's an "industry practice". Clause 44 of the judgment points to Mr Tan Tiong Cheng of Knight Frank who admits that "the practice of offering additional payments to minority owners to procure their consent to the sale of the relevant property is widely adopted within the industry". This means that at the very least, marketing agents, enbloc lawyers, and serial enblockers are aware of this. Under the new enbloc laws, minority owners now have the possibility of additional compensation if justified. This would be unfair to majority owners, but it's the law. What an owner has to consider, is if s/he will obtain such compensation or not, and hedge their bets.
There's risk involved. Clause 26 shows how a third party notice against minority owners was made to determine, among other things, whether because of the private agreements, the minority owners are therefore liable to majority owners for damages. In other words, if a minority owner accepts the private agreement, s/he may be opening themselves up for potential lawsuits against them. So it's not instant cash in your hands.
Because it's "industry practice", what the SC SHOULD have been done is to provide explicit clauses in the CSA and SPA to prevent such payments to be made (Clause 44). In other words, as mentioned earlier, how comprehensive your CSA is, is crucial. The judge went at length to point out that such provisions are not included in the RG CSA/SPA and hence, Allgreen is within legal means to provide supplementary payments to some owners. It's legal.
The judge also asked the question of whether the additional payments to the minority owners constitute "detriment" to majority owners. Were they disadvantaged because they now have to sell below what others are getting, or below market value? He reasoned thus: "The fact that the majority owners now have to sell the property below its “market value” cannot suffice, since under ordinary contractual principles parties cannot be allowed to escape a properly formed contract simply because it turned out to be a bad bargain after they had ascertained what the development charge was. Nor can the fact that the majority owners end up receiving disproportionately less than the minority owners constitute “detriment”, since [the lawyers for the majority owners] would then be making the proposition that although the majority owners had, at the time of signature, been perfectly willing to sell their units at a particular price, the fact that the minority owners will receive a larger sum in order for the sale to proceed is somehow detrimental to the majority owners even though this will permit the sale to be carried out on exactly the same terms as the majority owners had contracted for in respect of their units." (Clause 48). In other words, when a person signs the CSA, at the expected value and terms, he should not want, or be found wanting, since it's a binding contract.

I return to Mr Zhan's key question: "If a property owner can stay as a minority owner and gets two, or even three (as in the above case) cheques as against the majority owner getting only one cheque, who on earth would want to, or dare to, sign the CSA as a majority owner?" The answer, as always is not simple. You sign the CSA knowing full well it's a contract and a binding one, with all the legal consequences that entails. If you are for the sale, sign it with independent legal advice on the implications of it. If you are not for the sale, review the CSA as it'll bind you later on, should the sale be approved by STB. In the final calculation of things, the CSA applies to everyone, be it majority or minority. But to refrain from signing in the hope of getting more from private agreements, is to hedge your bets - hoping that you'll get such an agreement from the developer (in many cases that does not happen), hoping that you will not get sued, hoping that the sale will go in accordance to the terms of BOTH the CSA/SPA and the private agreements.

I should also note that in the RG judgment, the judge has pointed out that there is no written agreement between Allgreen and the minority owners (Clauses 66 to 76). The arguments he made are on legal grounds, and point to the definition of what would count as a "further agreement". He found that there was no legal basis for such a "further agreement". I'm not a judge nor even a lawyer, and hence cannot assume to argue against his decision on this matter. That is a matter for the majority owners to make a case.

The morale of this RG tale? Mr Zhan's suggestion that it forwards the anti-enbloc front - that holding out for more money as a minority owner is a good thing - has to be tempered with the legal and financial risks involved. As in any legal case, having damn good lawyers make a difference in whether you can defend yourself or not. I therefore have to disagree that there are multiple CSAs involved in RG's case, have to disagree that minority owners are inherently 'greedy', and have to disagree with the simplistic view that minority owners stand to gain everything by holding out for private side-payments.

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Quiet yet not so quiet

noreply@blogger.com (Dr Minority) — Tue, 14 Oct 2008 16:33:00 +0000

The global recession has pretty much killed anyone from attempting an enbloc, and anyone still trying their luck is seriously revealing to their own estate, and to everyone else, just how selfish they are, simply because they NEED to sell, rather than wait for the RIGHT time to sell.

It's been so long since I last posted, that I forgot my password to my blog and that blogger has changed some of its features lol. Still, there are some very hardworking enbloc bloggers around. Hope 4 Stayer's still chugging along, and the blogger at Tampines Court has taken this lull period to reflect on their own experiences. They have started a series of VERY GOOD blog posts on the various pitfalls of enbloc sales. Do start reading from here, and I believe they'll still continue with their excellent posts ranging from the problems with MCs being in SCs, to EOGMs etc. Please do go read them.

I will in the next post put up an email which interest me but because I was overseas, didn't really have much time to think about it. Be right there :)

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Prime News on Hope Group

noreply@blogger.com (Dr Minority) — Wed, 13 Aug 2008 13:43:00 +0000

This is something we don't see often - when a group of self-volunteered home owners get together to create a website with information to help other owners who are being subjected to the enbloc blight. "Self-volunteer? Sure, like the sales committee!" I hear some cry, but there's a big difference - sales committee 'volunteers' have a big FINANCIAL gain out at the end of their effort, assuming the sale succeeds. Hope volunteers have no such gain except the satisfaction that they have helped to educate the public, and helped owners to protect their basic, fundamental, right to a home. And THAT, my friends, is what volunteerism should be about. Don't see much of that around nowadays, when others are put before self.

This was printed in the Straits Times the day after National Day. I'm reprinting the whole thing, and I have a wee comment at the end, in response to the last person interviewed in the piece.

Hope for owners fighting en bloc; A website with information on the laws and processes in collective sales is aimed at helping minority owners
Straits Times Prime News 11 August 2008
By Lim Wei Chean & Arlina Arshad

THE name of the website - www.hope4stayers.com - says it all. It is a forum for, and set up by, people who are worried about losing their homes in a collective sale.

Its opening words are a call to arms.

'We need to share our experiences to get us through this nightmare,' it reads.

'We hope that our daily lives can be free from the constant worries of losing our homes to those who see home as a mere financial tool for wealth.'

Cosmetics distributor Tan Keng Ann started the site when his neighbours wanted their condominium along Toh Tuck Road sold en bloc last year.

The 60-year-old said there had been a dearth of information online about collective sales.

'We want this to be an educational site, for people to learn more about en bloc sales.'

And so the Hope website was born. (It is an acronym for Home Owners' Protecting Entitlements.)

The site started in February with about five or six members from estates on the chopping block. Today, it has a core group of 25 flat owners scattered in 15 estates that are going through the sale process, some for the second time.

They include Bayshore Park, Green Lodge and Pine Grove, some of which made waves in the media by forming an anti-sales brigade.

The Hope group's objective is to equip stayers, also called minority owners, with information about the en bloc process so they can fight to keep their homes.

The website is expansive. It includes a compilation of the collective sales law, legal tips for minority owners and a list of confirmed, on-going and failed en bloc deals.

One member, who declined to be named, joined after some new faces at her condominium tried to get elected to the management committee.

She said: 'I didn't know what these people were up to.'

She learnt soon after when a collective sales order was tabled.

For those who opposed the sale, information about the en bloc law was key, she said. They were facing an uphill battle against a majority of owners who had professional consultants to guide them through the legal minefield.

One minority owner in Rainbow Gardens along Toh Tuck Road wishes he had known earlier how to navigate the en bloc landscape.

The resident, who declined to be named, protested against the sale even though it had the requisite 80 per cent support to go through.

His appeal to the Strata Title Board, a government authority that rules on en bloc sales, was turned down. He took the case to the High Court but, the sale went through before it was heard.

Disappointed, the man said he is considering writing about his ordeal for the Hope website.

He said: 'My advice to minority owners is pray hard you don't get the 80 per cent.'

Meanwhile, the Hope group is cobbling together a list of proposals for the Law Ministry to consider.

A ministry spokesman said it will 'continue to monitor the effect of the changes in practice, and review the feedback to see if further amendments to the en bloc rules are necessary'.

Not everyone is supportive of the Hope website, though.

Mr Issac Chin, an investor who sits on the sales committee of Pearl Bank Apartments at Outram Park, which is trying to go en bloc, does not see the need for such a group.

He said the law is clear: if 80 per cent of the owners want to sell, the sale will go through.

Mr Chin is absolutely correct - the law is indeed 'clear' on the matter of what criteria should a sale counts as valid. However, as many who have been through enblocs and suffered for it know, the law is also very UNCLEAR and SILENT about many things:

The law is SILENT about the fact that home is a basic fundamental right, and it should not be the case that other owners can take that right away from you. It's like if 80% of your community vote that you must convert to a particular religion, you must comply, whether you like it or not. I'm sure noone will stand up for that, right?
The law is UNCLEAR about how to handle harassment from aggressive people, be it majority or minority. They are able to act with impunity because they are fully aware that their actions will not count as any form of bad faith under the enbloc law. This shouldn't be the case at all.
The law is UNCLEAR on what should count as good faith, especially considering that numerous arguments have been made in front of STB about many incidents that should constitute bad faith, but were thrown out simply because the law was too restrictive in its meaning of 'good faith'.
The law is UNCLEAR about itself. We've seen legal titans battle it out in court, we've seen judges issue judgments that seem to sometimes contradict the meaning of the law, and other times advocate the enbloc law to a fanatical degree. If such legal minds that make up our legal profession can spend hundreds of thousands of dollars slugging it out in court, often at our expense, does it not say something about the law itself? Worse, where does that put us civilians who have little to no knowledge of legal matters?

As Mr Chin showed, he chose a particular interpretation of the enbloc law - that of a single point of 80%. Hope stayers will clearly highlight that there are numerous other parts of the law that is highly ambiguous, questionable and even so legally knotted that it really should at the very least be re-examined.

Enblocing Singapore

How Many CSAs can a CSA CSA?

Quiet yet not so quiet

Prime News on Hope Group

The Very Real Terrorism of Enblocs

Let's Enbloc Organs!

"Is there such a thing as a happy enbloc?" Jessica Cheam's article online

The Singapore Constitution and the Enbloc Law Pt 1

Enbloc Wars: A New HOPE - www.hope4stayers.com

Being a Responsible Home Owner

Every Building Tells a (Hi)story

"It is ugly. And it brings out the worst in Singaporeans"

The Dump After Completion (Image Heavy Warning)

One Committee to Rule Them All: Management Committees and Sales Committees

A Personal Thought

A Hero in our Midst: Ken Lee

Shifting Accountability - Poor Ken Lee of Airview Tower

Suggestion of Short Term Lease to be Included in SPA

Three Perspectives on Land Acquisition

To Enbloc or Not to Enbloc, That is the Question for 2008

A review so soon? Possible MinLaw Review of Amended Enbloc Law

Being Bullied: What to do in Out-of-Control EOGMs.

A Downgrader's Nightmare

How Minute Should the Minutes of the Meetings Be?

1996AD (Not exactly 10,000BC) - Origins of Enbloc Nightmare?

Another Plea to Save Another Estate - Clementi Park