Shunfu High Court Written Decision

Okay, it is out - the written decision to the Originating Summons No 1014 of 2016

I think this decision might be overturned at the Court of Appeal; it has the feel of a square peg in a round hole about it.

Important dates:

The Decision

28          The LTSA only requires that the requisite consent for the original collective sale agreement be obtained within 12 months of the date of the first signature to that agreement. Variation of that agreement can permissibly take place in the run up to the application to the STB, which is given an additional 12 months. There is in effect a 24 month period for the collective sale process as a whole to be played out. Accordingly, there was in the present case compliance with the provisions of the LTSA in respect of the statutory timelines and thresholds. 

Limits on Variation

47             I would note, however, that there may be limits as to what can be varied or amended, and what details may be specified in the variation. The ability to vary does not mean that there is carte blanche for matters to be left vague or indefinite, and postponed for specification later.   
51     It may be that there are other limitations or controls on the variation of a collective sale agreement, and some of these may need to be considered on a case by case basis.  

(1) Private Treaty Sale

58               I disagreed with the Defendants that there was anything procedurally improper or unfair about the fact that the eventual sale of the Property was conducted by private treaty. In particular, there was no requirement that, subsequent to a failed public tender, another public tender must be sought at a lower price before a private treaty sale could be concluded at that lower price. In the circumstances of this case, given the two failed public tenders preceding the private treaty sale, and the fact that requisite approval of the subsidiary proprietors had been obtained for the private treaty price (i.e. execution of the 2nd SA providing for $638 million), I do not agree that the Sale Committee failed to explore its sale options and seek the best possible sale price.

I respectfully disagree with this Judgement in part for the following reasons:

This decision hasn't broken any new ground, it just rubber-stamps a loophole in the 80% timeline.

The SC can now legitimately spend up to 24 months securing the 80% to their desired RP. The initial 80% on a dream RP  serves as a springboard to a second 12 months of signature procurement on a lower RP. This procurement can continue right up until the last minute before application to STB , even after failed public tenders and conditional sales agreements have been entered into, I presume.  

So much for LTSA limits - they are so poorly defined that they may as well be eLasTicSA .  

I would argue that the original intention of LTSA was to limit the 80% to12 months, not 24. 

Depending on the terms on the CSA, the owners may or may not lock themselves into subsequent RPs without further authorisation. 

So, I see it like this:- public tenders on the back of a dream RP are like throwing a weighted dice that are guaranteed to turn up snake-eyes.  The SC can use that initial 80% to continually prove the dream RPs worthlessness, comply with the annoying public tender requirement  and feign 'good faith' into the bargain. 

At the end of the day, 80% of owners still must agree to the 'whatever' RP. 

When you put the cart (public tenders / private deals) before the horse (Final RP) then shenanigans rule the day.

No wonder our MA is back on board - probably banking on a Shunfuvillesque scenario. 

TC HEIGHT RESTRICTION

Tampines Court has a height restriction of 49 AMSL - in other words a new development can build up to about 16 floors - not the usual 36 for a plot ratio of 2.8

This is a restriction from the CAAS (Civil Aviation Authority of Singapore)

What awaits us Part 2

It is my guess that only those following the sale committee's Facebook page would have known about the drama of the marketing agent quitting and returning to the collective sale. No minutes of any meeting regarding the matter was ever put on the Notice Board for general viewing - so the SC raising the RP must just seem like a welcome surprise.

What I found out today.

This is the part I hate: I wandered down to the signing session to ask a few questions of the MA, SC and Lawyer. (They were in the void deck, just outside the conference room. They preferred that to the Activity room))

Mysterious Missing Minutes and Goings-On

The last minuted meeting held by the Sale Committee was on 05 Nov 2016.

Since that meeting, we have been informed through the SC Facebook page that:

• The Marketing Agent gave notice of their intent to resign on 21 Nov 2016.  
• The SC held a meeting with Huttons on 24th Nov 2016
• Huttons officially resigned on the 30th Nov 2016
• An undated, unsigned and modified letter of resignation was posted on FB
• The SC said they would write to other property consultants to act for TC
• Other SC discussions were held- again without any minutes being issued
• The Chairman wrote a begging letter to Huttons on 8th Dec 2016
• An undated and unsigned  reply by Huttons in the affirmative.
• Facebook announcement of signing sessions... without any apparent meetings beforehand

All of this is so irregular. 

Ooops

The Sale Committee have committed 2 more errors against the BMSM and Bye-Laws:-

1. Posting the Statutory Notices on the walls instead of on the Notice Boards. I have requested the managing agent to remove them as posting on walls is not permitted in the estate. The 'notice board was full' is a lame excuse because once you remove the old Notices, voila, you have room for the new. Perhaps they are just too lazy to ket the keys from the office.
2. The upcoming signing sessions are scheduled to be held in the Conference Room. Sorry no. The conference room is part of the office and is not open to SPs. The SC can hold their meetings there but signing sessions are out.  The proper venue is the Activity cum Function Room or the void deck if unavailable.

I have emailed my concerns to the Managing Agent who seemingly was not aware that the conference room had been earmarked.

Back in the saddle

Well, here's a turn-up for the books - the marketing agent has decided to continue it's involvement with the collective sale of Tampines Court after all.

The Chairman of the SC sent a begging letter to Huttons and after 'discussion with the various stakeholders on their continued involvement' they replied in the positive. Who might those stakeholders be, I wonder? Are they merely referring to themselves or someone else?

Perhaps, after thinking about it long and hard, they realised it might not be good for their enbloc credentials to be known as quitters in the field, liable to give up half way through. Who would want to hire such a firm? No, better to slug it out half-heartedly to the end.

Anyway, the pain continues. The news will bring cheer to some and a groan of despair to others.

Curtains call

Since we have had no news since 30th Nov concerning the plight of the collective sale attempt, I am assuming it is curtains for enbloc round 3.

How does it end legally, you may ask. Well, according to the LTSA Third Schedule :

Resignation of Marketing Agent

So, it has finally happened. The MA has handed in it's notice. I had an inkling this would happen at the last SC meeting - they were not happy campers at the prospect of a higher RP and were palpably despondent.

So, what is going to happen next? The sale committee should just disband and let the clock reset for another try in 2 years. To continue is madness but they seem to think they can attract another MA to take over at the higher RP. A sheer waste of time an energy - and MCST money. 

What about the lawyers? Didn't they come bundled with Huttons? Will they also resign?

My advice to the SC:

Guys, just bow out with a respectful letter to the 46% of owners, thanking them for their support.

Anonymous said:

I was surprised to discover in MA's resignation letter that Mr Vasan had offered to pay for a valuation report, and Hutton's endorsement of this proposal. This pertinent info was omitted in the minutes.
Hutton's proposal for SC to convene a General Meeting was also not reported.
Has Secretary faithfully reported all that's transpired in CSC Meetings? Has this SC been totally transparent with us?
If this SC wants to continue with this Enbloc please address this issue, Mr Secretary.
Without trust, you will not get the necessary mandate from remaining SPs.


From FB

Minutes of the 16th SC Meeting

First off:

I DID NOT SEE THE OFFICIAL RLV OF THE MARKETING AGENT

I only saw a hand-out by the former SC member Mr, Vasan who was not present at the meeting and who had resigned the day before: 'He (the MA) also presented the RLV table that was presented by Mr Vasan during the 15th CSC"

'They (MA & myself) agreed that all of the factors used in their calculation were basically similar, except one, which had already been discussed during the 15th CSC meeting.'

This is quite true - but the exception was quite a major one.

What awaits us Part 1

I am following another estate (Shunfu Ville) and the goings-on in that collective sale could be duplicated in our estate the way things are going.

Their initial RPº garnered 65% signatures before stalling. They churned out a Supplemental CSA with a higher RP1 and managed to get the extra 15% needed to reach 80% the DAY BEFORE the expiry date. How magical.

They went for a public tender on the strength of the 80% and received no bids.

They then churned out a second Supplemental agreement to lower the reserve price to RP2 and garnered only 35% support. Not happy with this they went for a third Supplemental agreement with a higher RP3 (but lower than the initial RPº). This final RP3 only garnered 55% signatures.

They went for a Public Tender again ... on the strength of the first 80% (RP1) ... and received no bids.
I think they went for a second Public Tender .... and again received no bids.

One more fact: the valuation at close of tender was substantially lower than even the lowest RP2. When the marketing agent is the one calling the shots with regard to recommending/selecting an 'independent'  Valuer - then this will always be the case.

After the failed public tender, a Developer came in with a private bid which equaled the RP3. This offer came with do-or-die conditions attached. The SC held an EOGM to discuss this offer and used the RP3 55% as a stepping stone and managed to persuade a further 25% to sign.

So the SPA was signed and an application made to the STB just days within the 1 year time period. (Though I would argue that the RP2 is a new contract and starts a new 1 yr from date of ... see post here).

Anyway the extra time was not needed as the application was in time from date of first signature of RPº.

This is very worrying.
1) A higher RP is used to bait SPs into signing and this is used to make multiple attempts at a public tender, even after lower supplemental agreements have been entered into.

2) The Developer is obviously privy to the RP as he made an offer equal to the second lowest RP3.

3) No public tender was held to determine if this was the best price for the estate - the tender was for the higher RP1, and so who knows, there could have been other bids if the tender price was set lower.

In other words, the market was tested at that level, and the SC failed to ascertain if this was the BEST price achievable.

Food for Thought

So, do you still think the setting of the reserve price is is as easy as ABC? That all you have to do is take a low individual unit sale and plonk a 50% on to that and voila - the RP is born? Old men and those keen to sell-at-any-price are happy with this simple methodology, but here is a paper from the National University of Singapore which should make your toes curl.

This 2004 NUS/IRAS paper on Option Pricing Framework is still applicable even after the Residential Property Amendments of 2010 -  IF the developer Buyers are fully Singaporean and therefore do not have to redevelop and sell the site within a strict 5 year timeframe. 

Collective Sale flying on Autopilot.

The ex-Vice Chairman, Mr. Vasan, has tendered his resignation from the Sale Committee. 

This is not good news for the collective sale as he was the only SC member with a firm grasp of both the LTSA rules and the importance of doing due diligence on the RLV. There is now no one at the wheel and the collective sale is effectively on auto-pilot. 

Tampines Court owes him a debt of gratitude for getting this far. Perhaps he'll share with us his reasons for resigning, perhaps not. We shall see.

Hold your Horses

I attended the SC meeting today (5 Nov 2016) and had a chat with those present.

I didn't get to see the RLV (I forgot to ask! Typical!) but things went cordially enough and for me, that is quite a change.

Vasan was not there, in fact no one was there except 4 SC members and around 6 to 7 marketing agents.

I am reluctant to say more about the meeting as on reflection, the sale of 560 homes in the hands of these 4 SC members is a scary thing.   I was under the impression that the RP had been raised but apparently not. The FB page announcing the increase was premature and the MA has not agreed to anything yet.  They are holding off on signing until the matter is finalised. I did not stay for the whole of the meeting so cannot attest to what transpired after.

So, hold your horses on the revised RP..... it is still being discussed and nothing has been confirmed.

The RP stands at $1.32m until further notice.

I may be entirely wrong, but if push comes to shove, I sensed that the MA just might quit .

Tampines Court Sales Chart (2002-May 2017)

Updated 29 May 2017

In May 2013, a unit sold for $1.25M. This is the TC record. 

An enbloc price should be considerably higher than the highest individual transacted price because  land is priced differently to units. Apples & oranges.

Florence Regency starting a Collective Sale badly

Florence Regency (formally N7 Hougang Ave 2) was privatised in Jan 2014. It is an ex-HUDC estate with 336 units and they have a collective-sale-from-hell going on there at the moment. 

Their annual AGM was held yesterday and suspended half way through to switch to the first Collective Sale EOGM for the purpose of electing a sale committee. They decided to do this in June, even though at that time they did not have the requisite 20%.

Perhaps they had the requisite 20% by Oct BUT they have flouted the rules and undermined the safety measures set out in the LTSA.

The Second Schedule is dedicated to holding enbloc meetings - it  is a legal document and cannot be ignored. The 20% requisition is a must and the meeting cannot start with less than the 30% Quorum reached within a strict 1 hour.  This 30% is HIGHER than the quorum of a regular AGM, which is set at 20%, the importance of which cannot be underestimated. The Collective Sale EOGMs have a HIGHER hurdle to pass. Even if 20% is not reached at a regular AGM, the meeting can proceed regardless. With a Collective Sale EOGM, the meeting cannot proceed without the 30% present or by proxy and and the collective sale attempt is over.

Was the Quorum reached? Was it even checked? You cannot piggyback on the quorum of the AGM - you cannot assume that those at the AGM are going to stay for the EOGM - the two meetings cannot be morphed into one because it weakens the safeguards against abuse.
So, was the quorum ascertained separately?

The Second Schedule cannot be sidelined as if it didn't matter - it seems that this EOGM may in fact be totally invalid.

The incoming MC (of which I believe consist of old and new members) should put an end to this farce and refuse to recognise the newly elected SC. No further EOGMs should be held in their name and the MA should be made to pay for the erroneously held EOGM... before sacking them.

What a mess.

SC Meeting No.15

*Updated 5 Nov

RP revised to motivate SPs to sign.
Completely divorced from the value of the land.

Most SPs were not concerned about the technical details of how the RP was calculated, rather they cared only for the amount that they would get by the collective sale.  

The few SPs who have expressed interest in reviewing the technical details have only been offered a visual glance and so only the sale committee can do 'due diligence' on the figures. I am not confident in the SCs ability do do so when one of the exco members does not even have a grasp of the correct age of the estate. Decisions as to the accuracy of the calculations seem to be taken on first sight - with no independent verification done by the members themselves - during the meetings. With all due respect, calculations need spreadsheet analysis not eyeball evaluation. 

The Sale Committee members are first and foremost SPs in the estate. Since they have access to the RLV then we all should have the same. We are all equal and favourtism cannot be shown to anyone- not even the sale committee. We all should have the RLV in our email boxes if so expressed.

We will be paying this MA over $7 Million, they are under our collective employ, I don't want to pay for this shabby service.

Can't handle the heat

The SC has deleted dozens comments on their FB page as things got too hot for them there, all those SPs pointing out their mistakes was quite distressing for them. They also deleted their own SC member comments as one in particular was damaging their reputation. He didn't even know the correct age of the estate. Anyway, I shall miss him if he has been banned from making further comments on FB. The medium is too volatile for loose canons like himself.

Not only have they deleted the negative comments, they have also deleted

• A ton of posts and comments
• Mr Vasan's letter/SC Response and all the ensuing brouhaha 

Shunfu Ville Going to High Court

Update: 23 Oct 2016

I heard on the grapevine that one of the objections at least has some merit. Apparently, the LTSA mandated 1 yr from 80% in which to sell the estate had expired without a sale. There was a break (I don't know how long) before a supplementary agreement between a different 80% was signed. So was the collective sale dead and can it be resurrected after the time limit has lapsed? Now it is getting interesting.

http://str.sg/4xRd

Bloopers

So, it has come to this. The Sale Committee must come under closer examination in the light of recent irrational remarks on their FB page. They are making all kinds of statements that have no basis in reality or fact.