You may have seen the good news earlier this month where the Supreme Court decided in favour of minority owners in a disputed en bloc sale, at Horizon Towers. Industry experts are hailing the decision as a landmark judgment that will set clear parameters for en bloc deals.
The full Judgement is available at the url below and for those with the time we strongly recommend that you read it, particularly pages 75-91 on the Duties of the Sales Committee:
Key Points
- Justice Rajah said that the sales committee (SC) did not fulfil its duty because it did not secure the best price obtainable for the property.
- He spelled out the court’s view of an SC’s duties. Among other things, an SC is expected to follow up all expressions of interest and offers, and carry out sufficient investigations and due diligence to determine their genuineness.
- An SC is also tasked with creating competition between interested purchasers and ‘waiting for the most propitious timing for the sale in order to obtain the best price’.
- Justice Rajah also pointed out that a primary objective of the collective sale scheme was to promote the rejuvenation of older estates and the optimal use of prime land to build more quality housing in land-scarce Singapore. But now, ‘the lure of ‘windfall profits’ has been a siren song for many (especially absent landlords and speculators), to the detriment of those who do not want to lose their homes at any price’.
- As the SC is an agent of the subsidiary proprietors collectively, there is no point in which the SC may act solely in the interests of any group of subsidiary proprietors, whether they are consenting or objecting proprietors. When an SC is first appointed, it is with a view to achieving a collective sale for the benifit of all subsidiary proprietors.
- There would naturally be an inbuilt inclination (or bias) on the part of an SC to sell rather than not to sell. The need for the imposition of high standards of accountability and conduct upon the SC vis-a-vis not only the consenting, but also the objecting subsidiary proprietors is therefore even more pressing than in the case of ordinary common law agency.
- An SC cannot rely on a mechanistic or literal compliance with its statutory and contractual obligations to escape indictment for breach of its obligations as fiduciary of the subsidiary proprietors. This will no doubt go beyond paying lip service to the relevant procedural rules under the LTSA and its mandate under the collective sale agreement.
We will not provide an analysis of what this means as it is quite self-explanatory. In a nutshell, for Stayers it is a great judgement from Singapore's highest court. Please do contact us if you have any comments or queries on this matter.
