Source : The Business Times, October 12, 2007
STB dismissal overturned, en bloc law clarified, but sale still faces uncertainties
The High Court yesterday overturned the Strata Titles Board's (STB) decision in August to dismiss Horizon Towers' collective-sale application - and sent the matter back to the board for its continued deliberation.
This means that, barring any objection, Horizon Towers' application will go back to the STB and will be heard from the point it was dismissed - giving the en bloc sale a chance to succeed.
What could block its path is an appeal filed by any of the minority owners against the High Court's decision yesterday. The three groups of minority owners, however, told BT yesterday that they have yet to decide if they will file an appeal.
'It's something that we'll need to sit down and discuss - we'll need to read through the judgment carefully and weigh all our considerations before deciding how to proceed,' said S K Phang, who represents one of the minorities.
The judgment was also significant for clarifying several aspects of the collective sales law, several players noted.
Justice Choo Han Teck, in his decision to overturn the board's dismissal in August, ruled that the three missing pages in Horizon's application to the STB did not constitute an 'incurable defect' as the board had alleged - as it wasn't a substantial omission that prejudiced the minority owners.
He noted that the STB was notified of the missing pages, and provided with them during the hearing.
'If (the error or omission) does not (cause prejudice to the minority), the board is, in my opinion, empowered to allow an amendment or correction so that the record is clear. If one takes the view that the board has no power to allow an amendment even for a typographical error, then an entire en bloc sale could be stalled by a comma in the wrong place. The law should not have such drastic consequences when there was otherwise no prejudice,' Justice Choo said.
He also emphasised the purposive nature of the law and the need to apply it consistently. 'Fairness requires that the law is applied consistently to everyone in similar circumstances. If the majority succeeds, it is because it is right, not because it is the majority. Likewise, if the minority succeeds, it is because it is right and not because it receives favours granted only to the underdog,' Justice Choo ruled.
His judgment found favour with all parties involved, even the minority owners - who welcomed the clarity to en bloc rules it afforded. 'It clarifies a lot of matters for us practitioners in the en bloc arena and is an authoritative ruling that has closed some gaps in interpretation right now,' Dr Phang said.
Senior Counsel K Shanmugam of Allen & Gledhill, who represents the buyers - Hotel Properties Ltd (HPL) and its partners - also welcomed its guidance: 'We now have a better idea of how the statutes should be interpreted and the guidance would be useful going forward.'
He added that the result was 'exactly the result we wanted, what we argued for' and it was a result which he knew a number of the majority sellers wanted - as they too want the sale to go through.
Lim Seng Hoo, current chairman of the Horizon Towers sales committee, said: 'We are very grateful for the result. It shows we have not breached in the first place the contract with HPL (and its partners) as they have alleged.'
HPL and its partners have sued the majority owners for failing to do everything in their power to submit a proper application to STB. That suit has been temporarily stayed, but HPL is likely to still consider suing the owners for up to $1 billion in damages if the en bloc sale still falls through.
There are still hurdles to overcome. Even if the minorities decide not to appeal, there's no guarantee the en bloc sale will go through. The STB's calendar is believed to be bursting with appointments from other collective-sale applications to be heard.
The board was unable to revert to BT's queries yesterday as to whether it would have a slot for Horizon Towers, but lawyers said it is likely that Horizon Towers' application would be given priority, given its Dec 11 deal completion deadline.
But that's not the only possible stumbling block: the STB will need to pick up from where it left off, that is continue hearing the minority owners' objections to the sale and consider the merits of the sale, before deciding whether to grant the order needed for the completion of the collective sale.
And, as Dr Phang told BT, the minorities still have many objections to the en bloc sale which have not yet been heard. 'We were only in the midst of questioning our first witness when the STB dismissed the entire application; when we go back to the board, it will have to hear our other objections. We have quite a few arrows in our quiver which we still haven't shot,' he said.
Philip Fong of Harry Elias partnership, who also represents several minority owners, added: 'Our contention has been that this collective sale was done in bad faith - and that will remain our contention as we appear before the STB.'
The STB would, however, now need to view the minorities' objections to the sale in the light of the judgment handed down by the High Court yesterday.
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