Mar 14, 2009

Parliamentary Debates/Speeches by Min of Law on LTSA

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"The Minister of State for Law said:
" I had informed this House on 19th November last year that Government would be amending the law to make it easier for en-bloc sales to take place. The current position is that a single owner, for whatever reason, can oppose and thwart the sale. Government has received many appeals and feedback from frustrated owners whose desires to sell their flats or condominiums en-bloc have been so thwarted. As a result, these buildings cannot take advantage of enhanced plot ratios to realise their full development potential, which would have created many more housing units in prime 999-year leasehold or freehold areas for Singaporeans. A secondary benefit is that these developments, especially the older ones, could have been rejuvenated through the en-bloc process.
I said that the law would be amended to remove the need for unanimous consent"
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Secondly, there will be adequate safeguards to protect the interests of minority owners. These safeguards are in the procedures as well as the substantive powers of the Strata Titles Board.
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Let me now elaborate on the role of the Board, in particular how it acts as a safeguard.
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If mediation fails, the sale will nevertheless proceed as long as the transaction is bone fide and at arm's length, unless there are exceptional circumstances to warrant the Board assuming a more pro-active role; for example, the sale proceeds are lower than the purchase price he had paid for the unit, or are insufficient to redeem the outstanding mortgage or charge on the unit. This is based on the assumption that none of the owners in an en bloc sale should lose out financially.
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2 Sir, the main purpose of this Bill, which amends the Land Titles (Strata) Act, is to provide additional safeguards and greater transparency for all owners involved in en bloc sales, i.e. both majority and minority owners. The proposed amendments address the concerns of owners over the lack of clarity, transparency and safeguards in the current process of an en bloc sale. They also ensure that the interests of all owners are taken into consideration more adequately. While the amendments are intended to achieve those objectives, we have also borne in mind that the amended law does not make it unduly onerous to bring about an en bloc sale.
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21 The proposed changes will not apply to developments where the required 80% or 90% majority of owners, based on share value, have signed the CSA as at the date of the commencement of the amendment Act. They will not need to comply with the new requirements set out in the amendment Act.
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23 I would like to reiterate that the amendments to the en bloc sale legislation maintain a careful balance. They provide additional safeguards and ensure greater transparency for all owners, but at the same time, have been drafted in such a way as not to make it unduly onerous to bring about an en bloc sale.
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(emphasis are my own)
Regent Court High Court decision March 2009
21 At the Second Reading of the Bill containing the provisions for collective sales at Singapore Parliamentary Debates, Official Report (31 July 1998), vol 69 at cols 601-607, the Minister of State for Law said:

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I had informed this House......
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It was clear from this speech and others made in Parliament that the main purpose of the provisions relating to collective sale in the Act was to make it easier for collective sales to go through in order to promote better utilisation of scarce land resources in Singapore and also urban redevelopment.
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25 Whilst it is plain from the above speech that Parliament was concerned that an owner in an en-bloc sale should not lose out financially by reason of that sale, that does not mean that only a literal approach to s 84A(7) would achieve that purpose. "
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Mar 11, 2009

REGENT COURT - High Court ruling on Financial loss

Regent Court ruling explained
The objectors said their share of the sale proceeds would amount to $932,000; they had bought their flat for $993,000.
But ....... the buyer, Regent Development, had undertaken to settle the gross difference of $93,935.75 once the sale went through.
The STB did not consider this payment and took account of only the objectors’ purchase price and the en bloc sale price.
Straits Times - 11 Mar 2009
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My legal purist friend will not be happy with this ruling. The LTSA specifiaclly states that the Board can reject a sale when an owner suffers financial loss (as defined by their own very narrow criteria). This has been reiteraterd again and again in parliamentary speeches right from the beginning and has always merited special mention and attention - even to the point of having it's own SCHEDULE dedicated to it! It is the cornerstone of minority rights and protection!
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The High Court has now decided in its wisdom that the loss can be ameliorated by a third party payment.
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Perhaps the LTSA rules should be amended yet again to reflect this new reading: Fourth sechedule to include item no 5 in it's list of allowable deductables to ascertain financial loss.
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Mohamed Amin bin Mohamed Taib and Others v Lim Choon Thye and Others[2009] SGHC 48
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Ok, I have read the High Court decision and again the 'purposive interpretation' rather than the literal meaning of the Statutory requirement is yet again propounded. The words "Sales proceeds" also take on a new meaning.
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The defendents argued: 17 "that the plaintiffs’ argument that the Board may “supplant or vary” the statutory formula in computing financial loss by taking into consideration the undertaking given by the Purchaser was untenable. They noted that Parliament had specifically provided for an increase to be made from the proceeds of sale to an objector who suffered financial loss. By s 84A(7)(a), the Board was empowered to increase the objector’s share of the sale proceeds with the consent of the collective sale committee. By s 84A(7)(b), Parliament had set a limit to such an increase viz 0.25% of the proceeds of sale for each lot or $2,000 for each lot whichever is the higher. Parliament was at pains to make sure that each owner received a proportionate share of the proceeds of sale and it was not willing to allow any one or more owners to hold the owners to ransom. The plaintiffs were attempting to circumvent this provision by obtaining the undertaking and supplemental agreement. In effect they were trying to compel the ninth and tenth defendants to accept the Undertaking to which these defendants were not parties to and give up their statutory right not to be compelled to sell. This should not be allowed and the appeal should be dismissed."
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The Judgment:
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19 In recent years, the literal rule has been regarded as completely out-dated."
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55 At the end of the day, each objection must be examined on its own facts and the particular requirement breached set against the overall purpose of the legislation. One should then consider whether a strict construction and the invalidation of the Board’s order is what Parliament would have intended, taking into account any prejudice to the rights of parties and the public interest (if any).
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27 I accepted the above submission. I considered that the legislature would not have intended the adverse consequences to future en-bloc sales that would arise from a strict construction of “proceeds of sale”. I also agreed that the interpretation propounded by the plaintiff was not a strained interpretation of the Act. There was no reason why “proceeds of sale” should be limited to simply looking at the “purchase price” set out in the sale and purchase agreement."
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28 Adopting such an interpretation means that the Board would be entitled to consider not only the sale and purchase agreement but also the Undertaking and the supplemental agreement in deciding whether or not the ninth and tenth defendants had suffered “financial loss” under the Act. . In my view, the Board was, accordingly, wrong in law to decide that it could not look at these additional documents simply because they were extrinsic to the sale and purchase agreement.
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29 There was an argument that the Board could not consider the undertaking because this document was not enforceable by the ninth and tenth defendants. That argument was misplaced. Under s 84A(11) of the Act, the Board has the power to make any order and to give any direction “as may be necessary or expedient” to give effect to an order made under s 84A(7) for the collective sale of the development. This section empowers the Board to facilitate the en-bloc sale in any way necessary and therefore the Board would have had the power, had it wished to exercise it, to allow the sale to go through subject to the purchaser (which had already indicated its willingness to compensate the ninth and tenth defendants) entering into a binding agreement with the ninth and tenth defendants to make good the financial loss sustained by them. It could also order the purchaser to pay the compensation moneys to someone to hold as stakeholders pending the completion of the sale and purchase so that there would be no worry about default on the part of the purchaser."
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