The following is an email I received from the vice-chairman of the SC. He requested that I post it on my blog. Sorry the format got a bit messed up. I have edited out my proper name only and replaced it with itshometome.
MY OBSERVATIIONS ON ‘itshometome’‘s QUERIES ON DRAFT CSA ( collective suicide agreement)
- 8.1.1 “ ANY MODE OF SALE “ , in my view .would include sale that could be a combination of the three methods specified and not by one specifically - I would think these words can be deleted too – SC will request solicitors to clarify.
- 8.1.1 and 8.1.4 – Clause 8.4 is intended to provide SC a means to test market conditions ahead of 80% and is only a contingency for prudent use.
- 8.1.12 : This clause is mean to provide “separate sale contracts with buyers by each seller” (if so required by buyer) but the terms of sale will be what has been agreed upon as collective sale – it would not lead to any seller getting a better deal
- 9.2 -again a contingency condition subject to SC approval - and not a blanket concession to buyers – SC PROPOSES TO DELETE THIS CLAUSE
- 4.4.7 This clause does not give the buyers the “powers of demolition etc as alleged but only refers to execution of documents that may be needed by buyers-
- 8.1.8 If any seller does not vacate as agreed upon as per CSA, he is naturally responsible for outgoings if any – how can be he exempted ?
- 8.1.8 The law society conditions do not apply where seller does not vacate as agreed to him by completion date
- 12.4 is a logical clause following the failure to complete by completion date- the presumption of the SP does not appear correct
- 11.7 &11.21 the interpretation given by itshometome is not correct in my view . as it refers to survey or any other documents that are “ INCIDENTAL OR NECESSARY” for the purpose of the CSA agreement - it does not say SP should sign any document of abject surrender or abrogation
- 11.21 I do not agree with itshometome's inference or stretch of the meaning and effect of this clause – SC WILL REQUEST LAWYERS TO CLARIFY
- 4.4,11.9 AND 11.21 : Clause 4.4 begins with the CLEAR STATEMENT that the SC has all but only the POWERS , DUTIES AND FUNCTIONS CAST UPON THE SALE COMMITTEE UNDER THE STARTA ACT” and ends with 4.4.12 and 4.4.13 STATING THE FIDUCIARY DUTIES ANDOBLIGATIONS OF THE SC UNDER THE ACT “11.9 refers to “ coopereation “ and 11.21 refers to survey forms or documents having correlation to the purpose of agreement. I DO NOT SEE ANY REASON FOR itshometome’s CLAIM THAT THESE CLAUSES MAKE ANY SIGNATORY A “VASSAL" . SC WILL REQUEST SOLCIITORS TO CLARIFY FURTER IF NEED BE.
- 4.4.10 This clause only states that SC will convene EGMs in accordance with Strata Act.
- In my View this clause needs AMEDMENT since EGM is not necessary to remove any SC member who has not signed CSA as Sale committee itself can do so Solicitors are requested to verify this and amend suitably, if required
- 4.4.2/11.29 These clauses are not an authority for BLANK CHEQUE “in my view but only provide for a contingency if more than one valuation needed . When a majority of SPs constitute an SC , I do believe that they will also trust SC to exercise the necessary discretion based on evolving market situation (This issue has been considered at recent EGM ON 24.09.2011)
- 4.4.2 AND 11.29 : 4.4.2 may be deleted though it does not mean a blank cheque situation . Clause 11.29 covers a very possible scenario and does not mention about appointment of more than one solicitor. In SC’S view RHT law LLP has the required expertise to handle these situations on their own.
- -
- I do not comment as it appears “ free for all “ view and I am unableto ascertain “what free spending activity “ is being referred to .( No clause quoted)
- 9.6 This clause has been discussed and clarified by the Solicitors at the EGM on 24.09.11. In any case , I am requesting the Solicitors to clarify and amend further if necessary
- 4.4.7 I do not agree with the views of itshometome on this clause –after all cooperation with any buyer without prejudice to our right of sale or to terms of sale ( within legal bounds) is not to be objected to.
- 8.1.10 I see no “ illegality “in this clause which is a standard clause .
- 9.4 Yes itshometome's objection deserves consideration and Solicitors will be requested to re-examine this clause
- 9.3 “ No , there is no any HELL SITUATION as it is subject to SELLERS APPROVAL
- 4.4.2/5.2.6 As mentioned earlier clause 4.4.2 may be deleted if so deemed fit. 5.2.6 only refers to appeal to Strata Title Board/High court when required which is a logical process of Collective sale and as per other clauses of CSA.
- The situation of payment in kind is not being envisaged
- Clauses 8.1.11 and 8.3 specifically provide for sale only at Higher of Reserve Price/ Valuation either by tender or private treaty . I do not see merit in this objection.
- 26.As it is possible to lower RP only with sellers consent ,obviously an EGM would be required to be called for within the legal time frame available under strata act.
- 8.1.3 This is a theoretical objection as any Lower price less than RP is subject to Sellers approval and Sellers are not expected to agree to any price -let alone SC endorsing any such price
- 8.1.3 (B) I do not see the validity of this observation of itshometome – apparently the withdrawing seller is ultimately bound by the eventual outcome if 80% consent is there (barring him)
- clause 8.1.14 I see no harm in sharing this data.
- Clause 16.3 This was clarified by solicitors at the EGM on 24.9.2011
- 11.10.11.9 11.21 . Frankly I am unable to understand the deduction arrived at by itshometome from these clauses - these have been clarified earlier
- 11- Well, any legal agreement has to have some covenants / clauses depending on the complexity of transaction and legal provisions - I would prefer to be guided by my solicitors on these covenants unless I find any thing obviously prejudicial to my interests as c collective seller .
- 11.8 We can request the solicitors to amend this clause to exempt seller(S) disclosure to their own solicitors
- 6, 11 .29 and 14.1 I would leave the Solicitors to explain the rationale of these clauses to SPs but I do note that STRATA ACT provides for indemnity for SC members acting in a bonafide manner .
- 11.27 I would imagine that this clause is required given the nature of the CSA and in any case the key word here is “ in accordance with this agreement “ AND “lawfully” SC will request solicitors to amplify.
- 11.7.11.8 .11.9 11.10 ,11.21 11.27 - I do not concur with the inference/Conclusion drawn by itshometome from reading these clauses some of which have been dealt with individually earlier . SC will request solicitors to clarify.
- Yes it is important observation and I will leave it to be discussed with SPs/Solicitors at the next SC meeting
As regards the VIEWS/OPINIONS expressed by itshometome on:
a) Incomplete CSA ( This a valid point and already discussed at last EGM)
The next EGM should have the complete CSA.
b) Units VERSUS All lots of common property – The observations are well taken, but it is to be noted that clauses 1 and 2 make it clear as what is being sold and the
“ unit or units “ have to be read in the context of these clauses
“ unit or units “ have to be read in the context of these clauses
c) Mode of Sale- The fears of itshometome that “any other mode of sale” paves the way for sale AKA round I do not seem to be justified though the solicitors are being requested to clarify as to the legal import/practical implication of these words
d) Promises and loss of Liberty : itshometome’s fears / considers compromise of individual sellers interest in clauses 11.7. 11.9 11.20 AND 11.21 do not appear justified (in my view) if one reads these clauses fully and in the whole context of the CSA. Of Course, the words” Vote for “ can be amended to “Vote on” .Clause 11.7 refers only to documents
“Incidental “ or required for the “ purpose of this agreement and not for any or all document s
Does clause 11.21 deprive Seller(S) of all rights and is it really “A Knuckeduster clause”.
I Do no think so but I will leave it to Solicitors to clarify .
e) Sellers approval : The Gist of ‘itshometome’’s extensive arguments on this subject (clauses 8.13, 8.2.1, 8.2.2 ,9.1 ,9.3AND 12.2 ) is that “ SELLERS APPROVAL MUST BE OBTAINED BEFOR SIGNING SALE AND PURCHASE AGREEMENT “
The Point is STRATA ACT does not require it and Third Schedule clause 4 quoted by her says” interalia “ that the meeting of subsidiary proprietors must be convened AFTER THE CLOSE OF TENDER /AUCTION OR SALE COMMITTEE ENTERED INTO A PRIVATE CONTRACT ,
TO PROVIDE INFROMATION ON OFFERS RECEIVED/INFORMATION ON SALE AND PURCHASE AGREEMENT ‘S TERMS AND CONDITIONS
This section envisages a Sale and Purchase contract prior to convening the meeting .
It is not therefore clear how itshometome claims that this is the perfect point for sellers affirm UNLESS the sellers/SC agree to do so in advance in CSA.
In my opinion the suggestion of itshometome may be impractical though the merits of the suggestion are unquestionable . This needs to be discussed with Solicitors /SP s.
f) The Omnipotent Sale Committee (4.4to 4.4.13, 9.6,5.2.6 and 8.1.11)
IT MAY NOT BE PROPER ON MY PART TO COMMENT ON itshometome's OBSERVATIONS ON THESE CLAUSES AS I AM A MEMBER OF THE SALE COMMITTEE BUT I CAN ASSURE THAT THIS DRAFT IS PREAPRED BY THE SOLICITORS ON THEIR OWN AND IS NOT ON DICTATES OF ANY ONE .BE IT SC OR MARKETING AGENT.
Clauses 4.4 and 9.6 were briefly discussed at the last EGM and I would deem it best to discuss these clauses with the Solicitors in the SC meeting convened for discussing CSA.
g) Lowering of RP 8.1.3
I do not concur with the view that this clause enables SC to sign “illegal agreements with “topups” for some units . Of course it is agreed that we need to have a fair and transparent mechanism for signing any supplemental agreement with stated purposes with sellers approval ,where necessary .
SC will seek Solicitors opinion on this clause .
h) 2.11 .2.12 and 8.1.14 ( Funny clauses)
It may not be fair to brand these clauses as “ Funny “. The words “otherwise where they enter “ may refer to a situation where they wish to sign ON THEIR OWN VOLITION while STB/HC proceedings are on . Solicitors will be requested to elaborate .
Clause 8.1.4 : Why it should be presumed that the lawyers will be “tardy “ here ? one can Ask “ why not in all situations” – Does one really think any lawyer will be so negligent?
i) DREADFUL SALE TERM CONTINGENCIES -9.1 to 9.6
While I do not think all these clauses require removal , there is a case , for relook at clauses 9.2 and 9.4 ( as has been commented earlier )
The Solicitors will be requested to look into these clauses again .
Pl.note clause 9.3 requires sellers approval.
j) Dreadful Covenants and Agreements.11.5 AND 11.6
My comment is : Should not we have deterrent clauses and conditions to avoid willful default or negligence in any collective sale ? Even in individual purchase and sale , indemnities and recovery of costs of enforcement are provided.
The solicitors will be requested to clarify further.
k) Missing data- Well noted and will be incorporated in Final draft CSA .
VASAN
Note : Though I am a member of the Sale Committee , my above reply /observations to the various queries/observations of itshometome are my own and are not necessarily the formal views/response of SC . My views or replies are based on my understanding of law and errors and omissions in interpretations of legal provisions are excepted.
In my opinion, this sale committee member is the only member worth his salt. A lot has fallen on his shoulders. A sale committee decides by a simple majority, so I lament the fact that it will be the dead wood who will make the ultimate decisions.
ReplyDelete