Saturday, April 4, 2009

Horizon Towers Saga - The Appeal Court Judgment

Source : The Straits Times, April 3, 2009

The Court of Appeal yesterday reversed the sale of Horizon Towers, ending a 2 1/2-year battle over the estate's collective sale. Chief Justice Chan Sek Keong and Judges of Appeal Andrew Phang and V. K. Rajah found that the condo's sales committee had breached its duties to unit owners and that the Strata Titles Board (STB) and High Court judge Choo Han Teck had erred in allowing the sale. The original sales committee comprised chairman Arjun Samtani, secretary Wee Hian Siew, and members Tan Kah Gee, Henry Lim, Bharat Mandloi, Claude Reghenzani, Dr Chan Siew Chee, Shahrukh Marfatia and George Eapen. These are the main points of the judgment.


# By not acting with due diligence and transparency in appointing the marketing agent, First Tree Properties, which has two shareholders, neither of whom is a licensed valuer. The appointment was done in haste and 'reflected a lack of conscientiousness';

# By failing to follow up on a higher offer for Horizon Towers made by Vineyard Holdings, a Hong Kong company;

# By not using the Vineyard offer as leverage in negotiations with Hotel Properties Ltd (HPL), the eventual buyer of the estate;

# By not getting advice from an independent property expert prior to the sale;

# By proceeding with the sale to HPL in 'undue haste' in a soaring property market;

# By ignoring conflicts of interest. Two of the sales committee members - Mr Samtani and Mr Tan - had bought additional units in Horizon Towers with the help of 'substantial' bank loans right before they were appointed to the committee. They did not disclose these purchases. First Tree was also eager to seal a deal before its mandate as marketing agent expired;

# By not consulting, or even updating, the majority owners on the sale, despite knowing that the property boom had pushed up the market value of the individual units and significantly eroded their estimated premiums from the collective sale.


# By refusing to subpoena Mr Arjun Samtani to testify;

# By allowing the sales committee to assert 'legal privilege', that is, to not divulge the advice it had received from its lawyers;

# By not considering whether there was a possible conflict of interest in the sales committee members' purchase of additional units;

# By not asking whether the price was the best one 'reasonably obtainable';

# By concluding that the original sales committee had 'acted in good faith' in selling the property to HPL just because the committee had received and relied on legal advice.


# By taking a 'restricted view' of the duties of a Strata Titles Board in approving a collective sale;

# By deciding that the only issue to rule on was that of price, and that the STB had determined the price was fair.

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