Monday, 22 October 2007

Going to Court: Developer Caught Red-handed for Evading Stamp Duty

I've updated the Enbloc List for those who use it as a reference, and this was published recently - another in the "Going to Court" series. You can read the full article reproduced here, and the judgment by the High Court Judge here (and archived on scribd here).

Estate: Golden Towers and Eu Hock Apartments on Minbu Road
Stage: Sold at $61 million 2005. Developer appealed to High Court over stamp duty.
Source: New Paper 21 Oct 2007
Parties: Commissioner of Stamp Duties vs UOL Development (Novena) Pte Ltd
Collective Sale Lawyer: Wee Ramayah & Partners
Developer Lawyer for Appeal: Tan Lay Kheng & Teo Lay Khoon of Wong Partnership
Judge: Justice Tan Lee Meng
Developer: UOL Development (Novena) Pte Ltd
Reason: Appeal to High Court against decision by Commissioner of Stamp Duties (CSD) who treated enbloc sale as a collective contract rather than 53 independent contracts
Details: When SPA was made between owners of Golden Towers/Eu Hock Apartments, UOL asked the sale lawyers for 53 letters of acceptance from the 53 owners. The 53 contracts were presented to CSD for stamping. CSD argued that the sale should be collective and hence UOL should pay stamp duty based on enbloc price and not per unit basis. Justice Tan pointed out that in the tender, owners agreed to sell the units collectively. Said Justice Tan: 'Apart from the fact that there is no reference to 53 separate contracts in UOL's offer to purchase the properties, UOL didn't assert that there was any written evidence to support its claim that it had purchased the properties on the basis of 53 separate contracts'; ''The plan for 53 separate contracts had no sound commercial basis and was so contrived that it was clearly intended to reduce or avoid tax liabilities'.

Wednesday, 17 October 2007

Statutes Online Updated with New Amendments

Just to let all know - the Statutes Online has now been updated with the new revised Land Titles (Strata) Act (here). I have not had the time to update the Enbloc List since the last update but bear with me - it should get done this weekend.

Print Page

Tuesday, 16 October 2007

Horizon Towers Update - Judgments by Justice Choo Han Teck

For those who don't know this, there are 2 judgments available on the web, pertaining to the Horizon Towers case. Both are by Justice Choo Han Teck and you can read the actual considerations and deliberations that he went through for (a) allowing additional parties to intervene - here (or on scribd archive here) and (b) his decision on approving the appeal here (or on scribd archive here). The first is currently on the Supreme Court's website but the second judgment was removed from the website for a few days and placed back in again. I have reproduced it from Google Cache and stored it on scribd here. [If this is not allowed, please contact me and I shall remove the documents.]

As someone who has acquired the ability to read academic texts (a long arduous and painful journey I can tell you), reading legal documents like the CSA and judgments are headache-inducing for newbies like me. But this is a landmark judgment in today's enbloc craze and I'd suggest that readers take the time to read this post first, and then supplement with the actual judgment in its entirety. It's long so grab a pillow and get comfy.

I want to begin by what I think probably are the most philosophical and poignant passages in the judgment by J Choo, with regards to the nature of law :-

"The nature of law is purposive. Law is always purposive for if man and society were perfect there would be no need for law. We often encounter complications when one principle of law appears irreconcilably incongruous with another. We are also often compelled to seek the middle course between extremes such as immutability and ephemerality; sometimes as an exercise in precision and sometimes out of nervous uncertainty. Nonetheless, the courts are also often urged to reject the compromise in order to be absolutely right rather than to be half wrong. Law is also largely interpretative, and so “absolute” is a very difficult word to employ. Almost everyone has his idea of what the law is or should be, and how it is to be applied. It is not unusual to find that the more uncertain and difficult the hermeneutic exercise becomes, the more one resorts to vague terms such as “justice”. That is why it is not unusual, therefore, to find opposing arguments each claiming to be an argument from justice. Anyone who has studied the chariot race in the Iliad will understand the inherent contradictions in that word. The conflict between fairness, entitlement, and desert all too often stands in the way of a just or ideal solution to disputes.

That said, fairness requires that the law is applied consistently to everyone in similar circumstances. It gazes upon the horse as it does the horseman. It may be the appellants today who slipped, and tomorrow, the respondents. If the majority succeeds it is because it is right, not because it is the majority. Likewise, if the minority succeeds it is because it is right and not because it receives favours granted only to the underdog. Therefore, in determining the correct interpretation of a law or principle of law, it will be helpful to consider whether an opponent would have objected as strenuously as he did had he been the one in need of the very interpretation he challenges. " (Paras 7 & 8)

".. if man and society were perfect there would be no need for law". For those doing the polls on the right, this sentence carries a lot of relevance. I've always suggested that an IDEAL enbloc could be carried out if people pitch together to work towards a common goal - be it to redevelop or retain/upgrade their estate. In other words, sure, the new amendments to the enbloc law could have been better but if an estate makes that effort to be all-encompassing in fairness and transparency, then there wouldn't be a need to defer to law except for procedural reasons. But enblocs necessarily are about money and profits, and society often crumbles in the face of such financial incentives that compels individuals, not collectives, to act individualistically.

For those who have not read the Iliad, a good summary can be found in this (academic) PDF article here (pages 11 to 14 - gripping stuff). J Choo's point, I'd hazard to guess given his reference to the Iliad, is that the notion of 'justice' is not as clear cut as one would like to believe encased in words of law. Despite both parties (majority representatives and minority representatives) wielding concepts like justice and fairness, J Choo acknowledges that they are "vague" and may stand in the way of a "just or ideal solution to disputes". He points out that fairness must be consistent across all parties - the majority succeeding in the sale is not because they are that 80% and therefore, as some in the condosingapore forum would argue with fervour, justified in the sale. It is because they are right in the eyes of the law. It's not the case of might makes right, but right means right for both majority and minority.

Now the High Court is there only to hear about "points of law" (Para 2). These are (Para 3):

  1. "Whether the law permitted the Board to dismiss the application on the ground that there was a defect in the application without hearing the application on its merits"
  2. "If there were a defect, whether the Board had the power to allow an amendment of the defect"
  3. "Whether the Board was right in law to hold that it was constituted by the application and its existence is extinguished when an application is invalid"
The STB's grounds for dismissing the application (Para 5) was that "there was a defect in the application by reason of the three missing pages and that this defect was incurable because the Board had no power to allow an amendment so as to provide a cure". Subsequently, the board dismissed the application and disbanded.

J Choo first asked, what exactly was this incurable defect that jeopardised the entire application. Both sides pointed out that the consequences of this defect was either "criminal" or "merely a 'technical' or 'clerical error". Rather than deliberating on this, he instead asked - because of this defect, whether "an error or omission had caused prejudice to the minority" (Para 9). He reiterated this point - if the error "had a material effect on the minority's rights" (Para 10), then the STB had to make an appropriate ruling. However, and this is the important part:

"There had been no argument from any counsel as to what harm had in fact been caused. It was said that the application would be relied upon by the minority owners to decide whether to oppose it, but it did not seem to me that the three missing pages in question had any material effect on the decision of the minority in this case" (Para 10).

This has bearing even under the new laws which stipulate that technical non-compliance be ignored unless it prejudices the interests of any owner. Note the difference here - "any owner" as opposed to J Choo's focus on minority owners. The new law therefore allows that errors may have a material effect on both majority and minority owners. However, only minority owners can object which means majority owners that have been prejudiced will need to alert the minority owners. Possible scenarios (off the top of my head) where prejudice may be caused - calculation of % was incorrect and you signed on that basis hence tipping it over to 80% and executing the CSA; notices not put up clearly and you signed because of incorrect information hence tipping it over etc. I'm sure you can think of other examples.

Of course, you won't realise an error was made until in hindsight (which can be months later) and even then, you can't object because you've become a majority owner etc. But the point is that determining and ascertaining the error or non-compliance is insufficient - you need to find out if owners have been affected in any way by the error, and how (eg signed on wrongful or incorrect information). It means, as always, carefully documenting every information that was given to you that may have caused you to make certain decisions. You never know when such information may turn out to be useful especially if it prejudiced your decisions.

As a final note, I think there still is a disparity between (a) the narrowly defined list of valid objections - financial loss, bad faith (as defined by sale price, apportionment, and relationship of purchaser to SP), SPA arrangement, SC refusal to accept STB's order to increase proceeds to minority owners, and (b) prejudicial acts that materially affects the decisions/interests of owners. 'Prejudicial acts' (in the spirit suggested by J Choo) has a far wider meaning and is meant to encompass acts or information-dissemination that may provide incorrect or misrepresentative impetus for owners in their decisions. Blatant misrepresentation or outright lying would count as prejudicial to the interests of owners. But note that these are not valid grounds for objection (as listed in (a)). It's a real pity the list of valid objections is so narrowly construed and remains unaltered by MinLaw.

Monday, 15 October 2007

Enblocs hit Facebook!

Now this is what I call social networking and social awareness! Who would have thought that people who love their homes would set up networks online :)

Facebook which is a social networking site (amazing site - I discovered 2 long lost friends so far!) has been in the news lately for its addictive ability to suck you right into searching online for friends, colleagues, enemies lol. The principle used is six degrees of separation - find a friend and chances are his friends are friends that you know as well etc.

Amazingly, facebook has also become a site for a small group of people who love their homes - Pearl Bank to be exact - and have used it to network. You can find that group "Block the En Bloc (Pearl Bank Chapter)" here. (Note - you must be registered and logged in to view the Chapter.)

Now let's see who will set up the next enbloc support groups (or "Chapters" I guess!). For that matter, I'm just waiting to see if an 'Enbloc Windfall Huat!' (Huat is a hokkien term for 'striking lucky') group will appear. Likewise, maybe someone should start up a "Say No To Enbloc" group too lolol :)

For new users - it's really easy to set up facebook accounts. The more information you enter, the better its ability to network to other people you know - from primary school to university, from workplace to social clubs. Warning - it's addictive.

Print Page

Sunday, 14 October 2007

If You Can't Poll and You Use IE7...

Many thanks to Mr Vincent for alerting me to this. It has come to my attention that some of you are unable to use the Blogspot Poll (on the right side) - you get errors like "unable to process request" etc. This might occur because you use Internet Explorer 7 (IE7) in particular.

The solution can be found here. For IE7 users, you'll need to add "" into your trusted sites list. From IE7, click on Tools and then select Internet Options. Click on the Security tab and select "Trusted Sites" (Green Tick icon). Click on the Sites button and enter "" and click "Add". Uncheck "Require server verification..." at the bottom and then click Close. Click OK and then close IE7. Try the poll this time and see if that works?

Good luck :)

Print Page

Horizon Towers Update - Old or New

For those who have been in some deep part of our urban jungle, the news of the day had been about the Horizon Towers Appeal being approved. You can read the various articles reproduced here.

Two interesting points I should note:

  • In terms of the lawsuit, what would happen if the appeal was dismissed? The lawyer for HPPL, SC Shanmugam, said that "we would have to consider the option [of continuing with the lawsuit]. HPPL hopes an order would be made for the sale eventually because then the action would be discontinued altogether." So it appears that even if the Judge did find that the STB dismissal was in order, HT owners might be faced with the lawsuit. This is odd, to me as a layperson, as I'd have thought that if the Judge deemed the STB dismissal to be lawful, then that's the final word on the matter - the appeal was processed and judgment made. Case closed. But it appears that increasingly, the lawsuit seems to be independent of any legal judgment (whether from the High Court or from STB for that matter) but purely dependent on the successful completion of the sale. So what happens, if by a miracle, STB actually dismisses the application this time round because it was not done on good faith? Would HPPL proceed with the lawsuit? I'd really hope not.
  • So now the case goes back to STB. But when that happens, will the STB application and proceedings work under the old law or the new law? Some speculators argued that it'd be under the new law, particularly that allowing for any further technicalities to be disregarded so long as it does not prejudice any owners. But you can't have a mixture of the old and the new. If it's under the new law, then all the other regulations - allowing STB to increase proceeds for minority owners with valid objections, return of sinking/management funds, etc - should be equally applicable. This would also mean that to be fair, all HT minority owners should be given an equal opportunity now to re-apply for objections under the new rules (eg those who did renovations recently but would not have been able to object under the old rules).

This remains a gray area, for me at least. There are effectively 2 parts to the Amendments. The first part deals with procedures for securing the execution of the CSA and the tender process, and the second part deals with the application to STB. While the first part would seem nonsensical in HT's context, the second part seems to be more equitable for their case (it'd allow for more STB board members, it'd allow for technical non-compliance to be ignored if no prejudice is noted, etc) but it'd also mean that to be fair, minority owners should be able to submit new or revised objections as well.

Let's see what happens next.

Print Page

Tuesday, 9 October 2007

CNA Edge of Change NOW

Just realised ChannelNewsAsia has a documentary on now 1132pm!

Edge Of Change
Ep 1-En Bloc Phenomenon
Experts share their views on the recent en-bloc rush and property boom.

Print Page

Poll Results and Updates

Several updates this week:-

Poll Results

First, the poll results are in. 49.7% disagreed to enbloc their homes (No), 22.7% might (Maybe), and 27.6% will enbloc their homes. The poll was set up in such a way that of the 9 possible options, they would cluster into 3 Yes, 3 Maybes, and 3 Nos. What is interesting is that almost 50% of the 163 who participated in the poll are (to use bad stereotypes) 'pro-sales' (Yes) or 'pragmatists' (Maybe). When the blog was set out, I anticipated that the majority of the readers would be those who were against enbloc sales or were minority owners (that is, after all, the intention of the blog). So it's pleasantly surprising to see that I 'seemed' to have a balanced viewership.

When the results are rank ordered, the top 3 reasons (comprising 70%) are: 38% said their homes are priceless. 17.8% said they would sign if the price is right, 14.1% said their homes are old, hence they'd sell. Bottom 3 reasons are: If no choice (1.8%), if can find replacement (3.1%), and a tie between my only home (3.7%) and I need cash (3.7%). What this indicates to me:

  • People do view their homes (which according to government statistics are about 25.9 yrs old) as old. However, assuming the national average of 25.9 yrs, that means the building would have gone through only 5 'health inspections' which isn't a lot. It also begs the question - are Singaporean buildings really not built to last if they are considered old at 25.9 yrs old, or is it the case that estate management councils are not equipped to manage buildings on a long term basis?
  • The majority do believe that their homes are priceless and I'm heartened by that. It means that there are people out there who value their homes beyond their financial value.
  • People do believe strongly that they have a choice when it comes to enbloc sales. That being the case, it is imperative for people who wish to keep their homes not to sit on the sidelines and say to themselves "enbloc will not happen" and hope it won't happen. Owners who wish to keep their homes should endeavour to be pro-active, especially in getting a group of likeminded people together, much as a sales committee will do the same in their attempt to sell. A strong community can be formed within the estate through a common purpose of cherishing it.
Would you enbloc your home?

Yes It's an investment purchase 16 9.82%
Yes I need the cash 6 3.68%
Yes Place is old 23 14.11%
Maybe If price is right 29 17.79%
Maybe If can find replacement 5 3.07%
Maybe If no choice 3 1.84%
No It's my only home 6 3.68%
No Can't get replacement 13 7.98%
No My home is priceless 62 38.04%

163 100.00%

I will be starting a new poll soon, based on the new amendments that kicked in. Do feel free to participate again :)

Method of Apportionment

Nominated MP Siew Kum Hong wrote a clear explanation of his speech during Parliament and his feelings about the new amendments, which while improving on procedural aspects of the sale, may create a "loophole that permits what I would call a daisy-chain of reciprocal back-scratching to satisfy the law, without actually protecting anyone's interests". You can read the full speech, Prof Jayakumar's response, and his explanation on his blog here. Kudos to him for standing up to raise what is arguably one of the central points of contention in any enbloc sale - the method of apportionment.

News Update

Finally, a report in the Straits Times (reproduced here) on the mad dash to get that 80% before the law kicks in. And an update on the Horizon Towers (with caricatures!) here. I have as usual kept the En-bloc list as updated as I can.

Thursday, 4 October 2007

Amendment to En Bloc Sale Legislation Take Effect On 4th October 2007

Direct from the Ministry (here):-

  1. The Ministry of Law has announced that the Land Titles (Strata) (Amendment) Act, enacted by Parliament on 20 September 2007, will take effect from 4 October 2007.
  2. The provisions of the new Act will apply to developments where the required 80% or 90% majority consent of owners (based on share value) has not been obtained as at the date of commencement of the Amendment Act, i.e. 4 October 2007. These developments will have to comply with the new requirements set out in the Amendment Act. Developments where the required 80% or 90% majority of owners (based on share value) have signed the Collective Sale Agreement will not need to comply with the new requirements. Developments that are 10 years or more require 80% majority consent while those below 10 years require 90% majority consent.
[Update - Didn't notice that today's International Bloggers' Day for Burma as well so go here and support!]

Wednesday, 3 October 2007

Horizon Towers Update - Appeal Hearing

It's been a while since the last update on Horizon Towers. A lot has happened and it's all over the news (almost daily) by now, but for the benefit of the overseas readers and those who have not kept up, here's a quick summary below (in chronological order). I'll be providing links to condosingapore's forum which has a dedicated HT Saga sub-forum, but a warning first - there are 'trolls' on the forum who seek only to incite readers through their inflammatory comments, so ignore their postings and don't 'feed' them (ie don't respond back to them). Click on the date to jump to the condosingapore's reproduced articles.

11 Sep - Majority sellers trying to find volunteers to form new SC. Sellers ignored 11 Sep deadline by buyer to extend the sale completion date.
19 Sep - A group of majority sellers wrote to HPL saying they are willing to sell their units to the consortium at original sale price.
20 Sep - Ong Beng Seng, HPL chief, met with group of sellers to talk about extension. He urged the group to convince other sellers to have integrity, honour the contract and set a good example for their children.
21 Sep - New SC formed. HT has 210 units, 135 sellers out of 177 majority sellers attended meeting to vote on extension of sale deadline. Only 1 unit did not vote in favour. 80 owners represented by Wong & Leow engaged a public relations consultant.
25 Sep - With extension of sale deadline, HPL agreed to adjourn legal proceedings against sellers. Deadline pushed back by 4 mths to 11 Dec.
28 Sep - HPL adjourns High Court hearing of the lawsuit. Sellers begin High Court appeal hearing to overturn STB ruling. Consortium files affidavit to participate in appeal hearing. If appeal succeeds, STB may have to reassess HT deal.
29 Sep - 4 Senior Counsels, 6 law firms turned up at start of appeal hearing, with 2 groups wanting to be included in hearing so they can have their say - (1) Group of 13 sellers including pop star Ho Yeow Sun and husband Kong Hee represented by Rajah & Tann; (2) The Consortium represented by K Shanmugam.
2 Oct - Justice Choo Han Teck allowed the additional groups to participate in appeal hearing. Dragon Court sale in 2003 brought up as it related to issue of missing disclosure. In the hearing, SC Shanmugam challenged the other lawyers to argue before Justice Choo the validity of the contract between HPPL and the owners. He "hopes to preempt what he believes would be the owners' game plan — to "get rid" of HPPL and succeed in the appeal as well" (Today Online). The rest of the Today article highlights the ongoing legal debates between the SCs. What was interesting was the "investigative work" from the HPL lawyers, especially in obtaining information distributed or shared among owners. I can only assume a whistle blower among the majority owners, and as they say, "all's fair in love, war and enbloc".

The parties involved so far -
  • Hotel Properties, Qatar Investment Authority, funds managed by Morgan Stanley Real Estate. Represented by Allen & Gledhill, Senior Counsel K Shanmugam
Majority Sellers:
  • Directed by new SC. Represented by Tan, Rajah & Cheah, Senior Counsel Chelva Rajah
  • 13 Sellers, including 3 members of original SC. Represented by Rajah & Tann, Senior Counsel Andre Yeap
Minority Owners:
  • 1 group of 3 represented by Tan Kok Quan - Mr Ramesh Kannan
  • 1 group of 4 represented by Harry Elias Partnership - Senior Counsel K.S. Rajah and Mr Philip Fong.
  • 1 owner represented by Phang & Co, with instructions given to Senior Counsel Michael Hwang.

Messing the Estate - Management 'Allowing' Ads

A poster on condosingapore's forum laments that his estate, which is currently undergoing enbloc, has become cluttered and badly maintained due to the increasing number of advertisements on the walls, along the corridors, on mailboxes, in the lifts, etc. When he asked the security guard, the guard said that the management council had given instructions to allow the advertisers to put them up.

This is not the first time it has happened, and chances are if you check the SC list, you'll find members of the MC in there, which would point to the main reason this is allowed - to make the estate look less appealing to owners, residents and tenants so that they are more likely to sign the CSA. Even if the enbloc is completed, advertisers should not be allowed to enter and place things up. More importantly, the management council has a duty to all owners. Through the council, the management corporation has a duty to "(a) to control, manage and administer the common property for the benefit of all the subsidiary proprietors constituting the management corporation" (Building Maintenance and Strata Management Act 29.1.a). I seriously doubt any SP would say that the ads are beneficial to them.

So what can you do?
  1. Obtain a copy of the by-laws for your estate from the managing agent (if it's not already on your notice boards in the estate). In it should have clauses on vandalism or inappropriate advertisements in the estates.
  2. Write to the management council pointing out that there are unknown peoples putting up ads and are therefore vandalising the property. If such notices are not removed, you can file a complaint to STB (using the form here) to lodge a report against the management council for failing to perform their function.
  3. I think the threat of this is sufficient for them to take down such ads and ensure the estate is clean. The guard can serve as witness (in a written statement) although I don't think that's even necessary since you're not attributing blame but merely pointing out that the MC is not performing their function in accordance with the by-law.
Relevant sections of the Building Maintenance and Strata Management Act:
29 Duties and powers of management corporation in respect of property
32 By-laws for common property
101 General powers to make order to settle disputes