Horizon Towers Sellers Sued For Botched Collective Sale

Source : The Straits Times, 24 Aug 2007

$500m deal scuppered by simple technical error of missing signatures on the sale application

A LEGAL battle looms for the sellers of Horizon Towers units, after it was disclosed yesterday that a simple technical error on sale documents had derailed the estate’s collective sale.

The intended buyers - Hotel Properties (HPL) and its two partners - are taking the 173 majority owners to the High Court over their failure to go through with the $500 million sale.

Their move comes after the Strata Titles Board (STB) released the grounds for its Aug 3 oral decision to halt the sale application of the Leonie Hill property. The sellers had requested the clarification.

The STB said documents carrying the signatures of three majority owners - who are sellers - were not included in the sale application.

The original committee members representing the sellers had made a statutory declaration that the signed documents were included, without realising that they were not.

And the STB - which only convenes to hear a case once documents are declared to be correct and in order - could not allow any changes to be made to the application.

The STB said there were concerns over whether it had the power to allow an amendment.

But under the law, once a sale application is found to be defective, the board’s role ceases.

The STB’s clarification, coincidentally, was followed by a statement from HPL, which said that proceedings have been started in the High Court against the sellers.

HPL and its partners Morgan Stanley Real Estate-managed funds and Qatar Investment Authority said the sellers are in breach of the sales contract and are ordering them to ‘do everything in their power’ to obtain a collective sale order from the STB.
That will result in the sellers having to refile the sale documents, which also means that they must sell their 99-year leasehold estate at the $500 million price inked in February.

This rankles with many owners - those who backed the sale and some who did not - as property prices have rocketed since then. The Grangeford estate nearby has sold for more than double the Horizon Towers price, on a per sq ft basis.

If they do not go ahead with the sale, HPL and partners said they will sue for damages for breach of contract.

But even if a sale order is obtained, the HPL consortium said they can still sue for other damages.

Any damages will be assessed by the court but the buyers - represented by Allen & Gledhill - have earlier put lost profits at $800 million to $1 billion.

The 173 majority owners of Horizon Towers, including the sales committee, will be liable.

The majority owners were originally represented by Drew & Napier, and subsequently replaced by Tan Rajah & Cheah.

Yesterday’s developments - just the latest in a saga stretching back to the contentious sale in February - puts the ball back into the sellers’ court.

Because the STB’s oral decision was made solely because the documents were defective, and not on the merits of the case, it said the sellers can refile a fresh set of documents.

The case has been made even more complicated by the fact that the sellers had an Aug 11 sale deadline written into their contract with the buyers.

When the STB killed off the sale on Aug 3, it left the owners just eight days to devise a strategy.

HPL and partners asked the sellers to extend the deadline by four months from Aug 11 and file a new sale application or appeal to the High Court to reconsider STB’s decision.

The sellers rejected this option.