May 30, 2009
Regent Garden majority owners' appeal rejected
They were upset over buyer's $2m 'side deal' with 6 minority owners
By Joyce Teo
ONE of Singapore's most unusual collective sale disputes, over Regent Garden, has been settled by the Court of Appeal even though the sale has been done and dusted for 12 months.
In a strange twist, a total of 23 out of 25 majority owners of the West Coast Road condo had opposed the sale even though they initially supported it.
One of the reasons: They were upset that buyer Allgreen Properties had paid six minority owners a total of $2 million in a 'side deal' to share among themselves in return for withdrawing their objections to the $34 million sale.
Yesterday, the Court of Appeal dismissed an appeal seeking clarification on this point, saying such payments are not prohibited. '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,' it said in its judgment. 'This, nevertheless, does not mean that the law, as it now stands, prohibits such incentive payments.'
The High Court had ruled in April last year - before the project's May sale completion - that the sale of the 31-unit Regent Garden to Allgreen must go ahead.
The majority owners also wanted to know if the minority owners are entitled to retain the extra payments without sharing the sum with them.
Allgreen issued a statement saying it was an 'unprecedented and curious case' of a collective sale being opposed by the majority who had initially agreed to sell.
Although the majority owners had opted for a fixed $34 million price, they were unhappy that a development charge payable by Allgreen to the authorities turned out to be much lower than expected. The majority owners then sought to renege on their agreement, after finding out about the side deal. Before the High Court, they had complained that because Allgreen had paid extra sums to the minority, the sale price to the majority owners was too low. They refused to complete the deal, until ordered to do so by the High Court.
The Court of Appeal said the sale committee sowed the seeds of its unhappy predicament when, to save $11,000, it made a deliberate decision not to accurately ascertain the development baseline of the property. '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,' said its judgment.
Credo Real Estate managing director Karamjit Singh said the practical lesson is that the sale committee must ensure it has all important information needed before selling a property collectively so as not to under-sell it.
The Regent Gardens case was also unusual in that it went to the Strata Titles Board, which heard the merits of the case and threw it out even though there were no objections.
Allgreen was represented by Senior Counsel Davinder Singh of Drew & Napier while the majority owners were represented by Senior Counsel Molly Lim.
No comments:
Post a Comment