Horizon Towers saga roars back to life with new lawsuit
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(My comments and the CA summary findings article are in the next post).
26Jan2010
Horizon Towers saga roars back to life with new lawsuit
Source: Business Times, Michelle Quah
Suit filed against some members of original sales panel
A fresh lawsuit has just been filed over the failed en bloc sale of Horizon Towers – and a new chapter in the long-running saga is about to begin.
It’s a suit that’s set to be a closely watched one in Singapore, seen as a litmus test for the possible legal action that can be brought to bear against those involved in this, as well as all other, en bloc sales.
A group of Horizon Towers’ minority owners – those who had originally opposed the sale of the Leonie Hill development – are now suing some members of the original sales committee for their handling of the en bloc sale.
According to documents filed with the High Court, these minority owners are looking to reclaim close to $1 million in legal and administrative costs which they say they’ve incurred during the lengthy fight to keep their homes.
The sale of Horizon Towers – first tabled for $500 million to Hotel Properties Ltd (HPL) in January 2007 – has been one of the most dramatic and long-drawn- out en bloc battles in Singapore’s history. The whole affair spanned more than two years and went back and forth between the Strata Titles Board (STB) and the High Court twice before finally being decided in the Court of Appeal.
The Court of Appeal ruled in April last year that the deal could not go through because the development’s sales committee had failed to fulfil its duty on several counts.
And now, three sets of minority owners – represented by Kannan Ramesh of Tan Kok Quan Partnership – have cited that landmark judgment, as a basis on which to seek reimbursement for the hundreds of thousands they have each spent in this battle.
They have served writs on former sales committee chairman Arjun Samtani and member Tan Kah Gee, alleging that they were ‘key players in the process leading up to the commencement, facilitation, management and finalisation of the collective sale process’.
The minorities, in their claim, allege that Mr Samtani and Mr Tan had ‘pushed for a quick sale of the property for their personal benefit’, because both had bought additional units in Horizon Towers, at the start of the collective sale process, and were keen to profit from that.
Their statement of claim frequently cites the Court of Appeal judgment which had accepted, as facts of the case, that:
# Mr Samtani and Mr Tan had bought additional units in the development;
# The sales committee had received an alternative higher offer of $510 million from Vineyard Holdings, one day before HPL verbally indicated it was willing to purchase the development for $500 million; and
# The sales committee agreed to go ahead and sell Horizon Towers to HPL, in spite of a suggestion from one committee member that it seek the approval of the other consenting owners because property prices had shot up, because it was concerned that the deal would fall through if the other owners were consulted.
Justice Rajah, in his judgment, had also ruled that HPL and the estate’s majority owners should share the legal costs for the second High Court hearing, as well as the Court of Appeal hearing – and that the majority owners should bear the costs for the second STB. He also allowed two minority objectors who did not participate in the final appeal to be given 80 per cent of the costs incurred in the second STB and High Court hearings.
The minority owners are now seeking compensation for the sums not covered by Justice Rajah’s judgment. The three sets of owners are seeking between $117,000 to $370,000 in costs – making for a total claim of more than $800,000.
In his defence, filed with the High Court, Mr Samtani states repeatedly that he was not alone in driving the sale process. He said ‘each and every member of the SC (sales committee) played an equally important role’ and that he ‘did not have any special powers’ that could influence the committee’s decisions.
Mr Samtani also claimed that the committee ‘followed up on all expressions of offer’ for Horizon Towers and that it received no offer better than HPL’s at the relevant time. He said that, on the advice of the committee’s lawyers, Drew & Napier, the committee proceeded with the HPL offer.
As for the additional unit he purchased, Mr Samtani said that it ‘was not for investment, instead it was for use by his son’. He claimed he had disclosed the purchase of an additional unit to Drew, and was not advised by Drew that he had to announce it to the other consenting owners.
Mr Tan, who is represented by TSMP Law Corporation, has requested an extension of time to file his defence. Mr Samtani is represented by N Sreenivasan from Straits Law Practice.
http://www.businesstimes.com.sg/mnt/html/btpre/registration/redirect.jsp?dlink=/sub/news/story/0,4574,369734,00.html? -
My following post includes a summary of the Court of appeal Judgment, I think that Mr Samtani's best option now is to look for other scape goats to share costs of the claim given that there were so many breeches in the course of the en-block process (the majority owners, negligent lawyers etc); not to mention the significant directions by current law minister as the then Snr Counsel representing the eager buyers (HPL) as well as the involvement of so many other Snr Counsel from Singapore's legal scene.
My sympathies go to him should he accept sole responsibility for the long fought case. In fact, I believe that as a matter of grace, the court and it's officers, STB should offer some discounts/ rebates as should the lawyers (initial advising lawyers) since it has been proven that (besides the sales committee) the lower courts and STB had erred in their judgements thus prolonging the legal tussle. The law in its enaction and administration still remains in its infancy. (pls see Mr Samtani's defence below)
STB, High court: care to waive your charges?
References:- Oct07, 2007: The horizon towers show: "PUT five senior counsel in one courtroom and you can be sure that sparks will fly." http://www.asiaone.com/Business/My+Money/Property/Story/A1Story20071011-29410.html
- Apr02, 2009: The Appeal Court judgment:- 'Ng Eng Ghee and Others v Mamata Kapildev Dave And Others (Horizon Partners Pte Ltd, intervener) and Another Appeal', [2009] SGCA 14: http://www.hope4stayers.com/temp/Summary%20of%20Case%20-%20CA%20119%20of%202008Y.pdf
- Apr05, 2009: The Appeal Court judgement- "WHERE THE SALES COMMITTEE, THE STB, JUSTICE CHOO HAN TECK OF THE HIGH COURT ERRED": http://business.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20090403-133079.html
- Apr07, 2009: Troubled Towers: A timeline ("Oct2005 - Apr02,2009"): http://business.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20090406-133672.html
- Apr07, 2009: The lawyers: 21/2-year bonanza of billable hours: "Former Senior Counsel and current Law Minister K. Shanmugam also made an appearance, heading the Allen & Gledhill team representing the estate's buyer, the HPL consortium. In fact, Mr Shanmugam's last submission in court was for Horizon Towers - which also means he lost his last court case.": http://www.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20090406-133669.html
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April 3, 2009
The Appeal Court judgement
THE Court of Appeal on Thursday reversed the sale of Horizon Towers, ending a 2 1/2-year battle over the estate's collective sale. Chief Justice Chan Sek Keong and Judges of Appeal Andrew Phang and V. K. Rajah found that the condo's sales committee had breached its duties to unit owners and that the Strata Titles Board (STB) and High Court judge Choo Han Teck had erred in allowing the sale. The original sales committee comprised chairman Arjun Samtani, secretary Wee Hian Siew, and members Tan Kah Gee, Henry Lim, Bharat Mandloi, Claude Reghenzani, Dr Chan Siew Chee, Shahrukh Marfatia and George Eapen. These are the main points of the judgment.
WHERE THE SALES COMMITTEE ERRED
- By not acting with due diligence and transparency in appointing the marketing agent, First Tree Properties, which has two shareholders, neither of whom is a licensed valuer. The appointment was done in haste and 'reflected a lack of conscientiousness';
- By failing to follow up on a higher offer for Horizon Towers made by Vineyard Holdings, a Hong Kong company;
- By not using the Vineyard offer as leverage in negotiations with Hotel Properties Ltd (HPL), the eventual buyer of the estate;
- By not getting advice from an independent property expert prior to the sale;
- By proceeding with the sale to HPL in 'undue haste' in a soaring property market;
- By ignoring conflicts of interest. Two of the sales committee members - Mr Samtani and Mr Tan - had bought additional units in Horizon Towers with the help of 'substantial' bank loans right before they were appointed to the committee. They did not disclose these purchases. First Tree was also eager to seal a deal before its mandate as marketing agent expired;
- By not consulting, or even updating, the majority owners on the sale, despite knowing that the property boom had pushed up the market value of the individual units and significantly eroded their estimated premiums from the collective sale.
WHERE THE STB ERRED
- By refusing to subpoena Mr Arjun Samtani to testify;
- By allowing the sales committee to assert 'legal privilege', that is, to not divulge the advice it had received from its lawyers;
- By not considering whether there was a possible conflict of interest in the sales committee members' purchase of additional units;
- By not asking whether the price was the best one 'reasonably obtainable';
- By concluding that the original sales committee had 'acted in good faith' in selling the property to HPL just because the committee had received and relied on legal advice.
WHERE JUSTICE CHOO HAN TECK OF THE HIGH COURT ERRED
- By taking a 'restricted view' of the duties of a Strata Titles Board in approving a collective sale;
- By deciding that the only issue to rule on was that of price, and that the STB had determined the price was fair.
http://business.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20090403-133079.html -
no money to even buy HDB, read all these rich people shooting each others for what??? better go buy yong tau fu and eat...