Horizon Towers Update: A Trust that Failed

On Friday night, HPL (the buyers) filed an affidavit with the High Court, suing the majority sellers including the SC members. You can read that article here. In particular, the affidavit alleged that some members of the SC "tried to defeat the collective sale by encouraging the other majority sellers to go back on the agreement".

The majority owners met on Friday night from 8pm to close to midnight as well, to decide the next moves. You can read the reports from Business Times, Straits Times and CNA here. In essence, the SC disbanded/quit at the end of the night, leaving the majority owners completely directionless. The SC was disbanded because the CSA stated that a minimum of 5 was needed in the committee and that quorum was not met (with only 3 left).

Some points to be made so far:-

1. Check your own CSA. Almost every one will have a minimum number of owners needed to be in the SC. This is typically 3 (which is the number needed to represent owners for the STB application) but it can vary depending on the PSC that drafted the CSA. Indirectly, as this case showed, it also allows a SC to be disbanded leaving owners without leadership.
2. The affidavit cites, among other things, the fact that some SC members have (presumably on their own motives) encouraged sellers to rescind the CSA. Yet every majority owner is sued by HPL. The actions of a few SC members have given the fuel needed by HPL to show that the owners (and SC) were not doing their best to secure the sale. What it also points to, is the unquestioning faith many owners place on their SC members to do the best for all owners. People forget that (and not just in HT but in many estates) some SC/PSC members (a) are not even residents (b) are not duly elected (c) are individuals out to make a profit (d) are not necessarily suddenly going to develop strong ethical responsibility to all owners when thrown into the lawsuit fire (neither are they obliged to). After all, as the HT reports showed, those who want to step into the SC insist on "blanket immunity from legal proceedings". It's typically the first thing all PSC members will ask for - indemnity and exclusion from liability. It's in most CSAs.
   
3. The new amendments might resolve some of these problems since it shifts responsibility from SC to owners to ensure everything is as transparent and fair as possible, including the need to revert to owners for the election of SC, agent, lawyer, approval of sale etc through formal general meetings. But some estates are trying to avoid going through such 'hassles'. Will the HT case haunt them in the near future? Isn't it safer to let the new amendments to the LT(S)A kick in and work within the new framework, rather than rush through things and risk legal repercussions?
   

The tv show X-Files theme is applicable here: TRUST NO ONE. Can you put the fate of your home (and more) in the hands of a group of self-motivated people (some of whom don't stay in your estate) who gathered together to sell an estate, with standard CSA clauses to protect them, while often giving them rights to do many things without asking owners for consent under the current law?

At the end of the day, the HT case shows just how complex and intricate the legal transaction of a collective sale and its consequences are, and how many people are unaware of this. And while outsiders may speculate about what could've been avoided, what might have gone wrong, how the majority owners and SC might remedy, who to blame, etc, I'm absolutely certain each of these outsiders, myself included, do not want themselves to be a HT owner at this very moment.

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Tags: horizon towers, collective sale, collective sales, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, singapore