Friday, July 18, 2008

Another Door Closes On Horizon Minorities

Source : The Business Times, July 18, 2008

High Court dismisses appeal, says there's no proof that sale was in bad faith

Minority owners seeking to stop the en bloc sale of Horizon Towers have been defeated yet again. Singapore's High Court yesterday dismissed their appeal, on the grounds that they failed to prove the sale was done in bad faith and prejudiced their rights.

This decision, coming on the heels of the High Court's dismissal of an appeal against the sale of Gillman Heights Condominium, marks the second major defeat for minorities here.

The minority owners of Horizon Towers whom BT spoke to said they were still considering their options at this time. But they will soon be meeting to decide if they will take the matter to the Court of Appeal, or start a civil suit to claim for any financial loss - which will be their final recourse.

If they decide not to appeal further, the $500 million sale of the Leonie Hill development to a consortium led by Hotel Properties Ltd (HPL) will go through. It will also mean that the closely watched saga - which has been playing out in the public eye for more than a year - will finally come to a close.

HPL group executive director Chris Lim told BT: 'We are pleased with the High Court judgment and hope to move forward with the deal as it's been one-and-a-half years since the sale agreement was inked.'

Justice Choo Han Teck, who presided over the minorities' appeal, said in his judgment yesterday that the minorities had failed to show that the Strata Titles Board (STB) erred in law in its decision to approve the en bloc sale in December.

The High Court only has powers to consider questions of law on appeal.

The minorities had argued that the sale had been conducted in bad faith. They claimed a better sale price might have been achieved if the sales committee had pursued a second offer from a party called Vineyard, which had reportedly offered $510 million. The minorities claimed the sales committee did not pursue the offer - and even concealed it - because the development's sales agent, First Tree, was getting a higher sales commission from the HPL consortium.

But Justice Choo said the minorities failed to prove bad faith, as their argument was essentially concerned with whether the eventual sale price was fair - which is 'a question of fact' for the STB to decide, and not a question of law for the court to deliberate on.

Justice Choo said, if the minorities feel the sales committee had deliberately or negligently not pursued the Vineyard offer, they can pursue a civil claim for the purported financial loss.

He also ruled that the minorities had failed to prove there was a lack of good faith in the way the sales proceeds were to be distributed amongst the various owners. The minorities argued the apportionment method used was unfair because it resulted in penthouse owners getting about 16 per cent less on a per- square-metre basis, compared to non-penthouse owners.

Justice Choo said there can't be a lack of good faith in the selection of the apportionment method just because it was the only one considered or it led to some owners getting more than others. He noted that the STB had considered the evidence of several experts and it seemed no one method would satisfy everyone.

He added that, even if the STB had deemed the chosen method inappropriate, it would be an error of fact and not an error of law.

He also dismissed the minorities' arguments that the en bloc sale was unconstitutional, and that the sale agreement had lapsed by the time the STB approved the sale.

Justice Choo also noted the 'intrigue' that has surrounded the en bloc sale of Horizon Towers. There have been numerous accusations on the conduct of the various parties involved - ranging from whether the sales committee should have worked harder to get a better sale price, to whether the minorities were only against the sale because the price was too low.

'The STB was not bound to examine the rights and preferences of each individual subsidiary proprietor and it was not the forum to inquire into the conduct of individual members of the SC (sales committee), or even the SC as a whole,' Justice Choo said. 'If the STB were to embark on the kind of inquiry and make the findings the appellants say it ought to have done, the STB would never get its job done within the time limited.'

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