STB - Judiciary or Volunteers?

This article on the Today paper (5 Jan 2008) was quite interesting and insightful in highlighting some of the problems of the STB in terms of its functions and members (article available here). Mr Yadav pointed out that the STB is made up of volunteers and this may create conflicts of interest. He asked "who better than a group of impartial persons to manage this delicate balance other than the judiciary". The perception of the STB in many minority owners' eyes is after all quite negative - out of hundreds of enblocs that have gone through STB, and given the numerous complaints about underhanded methods used by marketing agents and sales committees, only a handful of dismissals was ever made. It brings up the question - is STB there to be a check-and-balance mechanism in ensuring fairness and equity in enbloc sales, or is STB there to facilitate enbloc sales? If the former, why were the hundreds of thousands spent on legal fees by minority owners wasted away raising complaints, issues and concerns about how the sale was handled, only to have all their complaints, issues, concerns pushed aside to approve the sale?

The law points out that good faith must be secured in the sale, yet it narrowly defines the meaning of good faith through sale price, method of distribution and relationship of purchaser to owners. What about if the sale was not conducted in good faith, eg if the agent made misrepresentations to secure CSA signatures, or if the meetings were not conducted appropriately, or if the negotiations between purchaser and SC was not done in a fair manner? These have been raised at STB hearings by various minority owners, but legally they do not constitute good faith.

I'm reminded of a transcript of a general meeting at one enbloc site, where a (now ex-)member of the STB, who is also a lawyer representing the SC, made an appearance to the estate to assuage the worries about both Horizon Towers and the (then) impending legislation. In the meeting, he weaved between his role as the lawyer in charge of sale and his role as an STB member. When asked if there would be any conflict of interest, he brushed it off by saying that in any STB hearing involving the estate, he will not be a member of the STB tribunal. This of course does not say anything about whether he may or may not have shared insider information with other STB members, and because he is paid by the SC/marketing agent, he gave information about the runnings of STB and about the HT case (some information of which were not public knowledge). If this wasn't a failure of conflict of interest I do not know what is - that a STB member can use his (supposedly neutral) position to appeal to owners to sign the CSA, indirectly or otherwise.

I wrote about this potential conflict of interest more than a year ago here. At that time, I looked at the breakdown of panel members. Since the new legislation, STB has increased the number of members from 30 to 39. I include the new breakdown, with the old breakdown in square brackets.

Lawyers 8 [5]
Judges 2 [2]
Academics (Lecturers and Professors) 6 [5]
Engineers 4 [4]
Surveyors 4 [2]
Architects 4 [4]
Property Consultants 6 [8]
Consultants 3
Accountants 2

New entries are consultants (non-specific) and accountants. Out of the 8 law firms represented, 4 stated that they deal with enbloc sales. Again, like in the previous post, in these various categories, I'd consider judges, academics and accountants to be fairly neutral with no corporate conflicts of interest. I'm also discounting other extraneous factors eg a law professor who is a condo raider lol. In other words, I'm only looking at their affiliation (firms) and their career function (a law professor is more likely to be neutral in hearings than a property consultant from Savills for example).

Vested Interest Panelists in STB (or members who may have conflicts): 29
Neutral Panelists in STB: 10 (or 25%)

The 2007 list of members had 7 neutral vs 23 vested (or 23%). Under the 2008 list, it means that in a tribunal of say 4 members, there's a 1 in 4 chance of a member who at least can be said to be a neutral person.

I think Mr Yadav is correct - there's only two safeguards against unscrupulous enbloc sales attempts - the law and STB. STB needs to be more neutral in their membership selection, and the judiciary is one way forward. The law also needs to consider carefully that matters of good faith must encompass far more than just price, distribution and relationship. It must recognise the political nature of enbloc sales as well as the social consequences of enbloc sales in disrupting peoples' lives.

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