Valuation Wrong, So Strata Board Rejects Sale Of Regent Garden

Source : The Straits Times, Jan 31, 2008

In an unusual case, it says $34m price agreed on by owners and developer is well below market value.

AN UNUSUAL battle over the en bloc sale of Regent Garden intensified yesterday when the Strata Titles Board (STB) threw out the sale - ruling the $34 million sale had not been done in good faith.

The showdown over the fate of the 31-unit West Coast Road condominium site is now headed for the High Court.

The case is unusual because all six dissenting minority owners had withdrawn their objections to the sale, which was inked last April.

It is now the majority owners, who signed off on the sale, who are trying to back out of the deal with buyer Allgreen Properties .

The STB said it rejected the deal because it was not done in good faith, as Regent Garden’s valuation - on which the final price was based - was wrong.

It said that Regent Garden’s $34 million sale price was well below its market value.

The deal needed STB’s formal approval as there had originally been objections to the sale.

The dispute also involves alleged extra payments made to minority owners to quell those objections.

The majority owners filed an originating summons in the High Court this month trying to overturn the sale.

They argued that the $34 million sale price was wrong partly because of a wrongly estimated $7.2 million development charge - a charge for redeveloping a site to enhance its value. The charge, payable by developers, turned out to be just $950,000.

The large disparity is not common, and a consultant said it could be due to historical reasons, as the Regent Garden site permits more space to be built than usual.

Unless those involved knew the project’s development history, they would have been unaware of this, he said.

Allgreen has also gone to the High Court to ask for an order requiring the majority owners to complete the sale deal by Feb 28.

The two cases are likely to be heard together on a date that has yet to be fixed, said a sale committee member.

Another high-profile disputed collective sale, at Horizon Towers, as well as smaller cases such as Finland Gardens, are also due to be heard by the High Court.

The STB delivered its decision yesterday in an oral statement at the end of a half-day hearing, and has yet to give the grounds for the decision.

In a statement yesterday, Allgreen said it was surprised at the STB decision to hear the case despite pending court proceedings and the fact that there had been no objectors.

A property industry source who declined to be named said the case is unique as the STB took the effort to hear the merits of the case and threw it out even though there were no objections.

In a case where there are withdrawn objections from minority owners, these owners must sign the collective sale agreement in order to be a party to the deal. If not, the STB still has to rule on it.

However, in past cases, the STB just approved a sale, and did not look into the merits of the case as there was no need to, said the source.

Allgreen said that the STB decision would have no bearing on the case in the High Court.

Its fixed sale price of $34 million was the highest among all bids, it said. Also, it had offered owners the option of a floating sale price subject to the development charge.

But the sale committee had asked for the $34 million fixed price and refused advice to pay for an official figure.

The majority owners’ allegations are ‘nothing more than belated attempts to reopen a concluded bargain and to extract a better price for themselves’, said Allgreen.

‘We will rigorously pursue our case in court.’