Buyers Sue Horizon Towers Sellers For $800m To $1b

Source : The Business Times, August 7, 2007

The Horizon Towers saga has taken a new twist, with the thwarted buyers of the Leonie Hill property moving to claim up to $1 billion from the sellers.

Horizon Towers: The buyers of the property served notice on the sellers that they are in breach of contract

After the Strata Titles Board (STB) threw out an application for a collective sale order on Friday last week, the buyers of the Leonie Hill development served notice on the sellers yesterday that they are in breach of contract.

Technically, each of the owners of the 173 units who signed off on the deal to sell Horizon Towers en bloc in February is now personally liable for up to $5.78 million.

The move also puts the position of the minorities - the owners of the 37 units who opposed the en bloc sale - in doubt. While they are not being sued, the development means they are now no longer assured of keeping their homes.

Things appeared to be going their way when STB ruled on Friday that the collective sale could not go through because certain legal requirements had not been complied with.

It is believed that insufficient notices were posted and some documents were not filed.

STB's decision effectively killed the en bloc sale as it stood because it meant the issue could not be resolved to meet the Aug 11 sale deadline.

Minorities cheered the outcome - but now the tide could be turning the other way.

Allen & Gledhill (A&G), acting for the buyers - Hotel Properties Limited (HPL), Morgan Stanley Real Estate and Qatar Investment Authority - has sent a letter to Tan Rajah & Cheah, representing the sellers.

A&G alleges the sellers are 'in clear breach of their obligation...to file a proper application to the STB which complied with the requirements of the Act'.

It wants the sellers to extend the deadline for the completion of the sale by four months and file a fresh application to STB for a collective sale order, or appeal to the High Court to reconsider STB's decision.

'Our client's current estimation is that its loss, if the contract is terminated, is in the region of $800 million to $1 billion,' A&G said.

The buyers agreed to pay $500 million for Horizon Towers' two 99-year leasehold blocks.

The sellers now have until tomorrow to respond.

Some 84 per cent of Horizon Towers owners backed the collective sale - more than the 80 per cent requirement - but STB's approval was still needed for the deal to go through.