POSSIBLE FALLACIES OF THE
FREE WILL OF MAJORITY
IN EN BLOC SALES
The Land Titles (Strata) Act (LTSA), Cap 158, invokes majoritianism for non-landed private property.However, the hype of majoritianism does NOT stand up to scrutiny and is not even valid because:
Majority Consenters are pre-empted by law under LTSA from filing their Objections at Strata TitlesBoards (STB) and High Court levels. Case history: The definitive Horizon Towers en bloc saga where HPLLtd publicly threatened to sue all Majority Consenters for > 2x contract price if they seek legal recourseagainst the sale.
Objections that can be filed by Minority Dissenters at High Court level is constrained and limited towhat was stated at STB level when Minority Dissenters are only given 21 days to file such objections.Consequently, our courts will likely be reduced to Rocket Dockets under LTSA 2010 amendments.When an owner suffers a
“financial loss” based on the kindergarten d
efinition under LTSA (viz, buy $1mn butget back less than $1mn from the en bloc sale net of deductions sanctioned by the Court or specified underLTSA), such statutory hurdle could be overcome by contract (eg, the Majority Consenters agree to allocatemore to the owner
with such “financial loss” to undermine LTSA).
, the statutory definition of “financial loss” defies all economic and accounting principles of the time
-value of money. Secondly, the o
wner with “financial loss”
is now preempted from raising
“financial loss” as a
basis of objection. Thirdly, and most importantly, it undermines at core the communitarian interests thatpurportedly justify majoritianism over private property rights.
, a Majority Consenter willinglyaccepts, and
a Minority Dissenter without “financial loss” is forced to accept
, a smaller pay-outcompared to the owner
with “financial loss” even though all
three of them own exactly the same unit-type. Sow
here is the “collectivism” of LTSA
to justify forcing the Minority Dissenter to sell??? Is it
a collective saleof all the lots and common property in a strata title plan
sale on identical basis for all owners)
OR “a sale
of a collection of the lots and common property
in a strata title plan”
(ie, sale on varying basis for differentowners)?
, even if the Court orders that a Minority Dissenter be paid more because the Court “issatisfied that it would be just and equitable to do so”,
LTSA empowers the Sale Committee to
reject the Court’s
decision which would then result in abortion of the collective sale.
Sale Committee members are volunteers who may not be trained/skilled in law, finance, economicsand/or real estate and yet they are empowered to sign multi-million or billion dollar contracts on behalf of allowners. In digesting this significance, you should bear in mind that in typical cosmopolitan city lifestyle -nobody knows their neighbours any more (most are investor-owners anyway and some are flippers who justbought into the estate).Even when Sale Committee members breach, eg, the conflict of law provisions under the Third Schedule of LTSA, there are no penalties specified under LTSA. Instead, LTSA pointedly provides that even if there isnon-compliance with the First, Second or Third Schedules, STB will proceed with the en bloc sale if STB issatisfied that such non-compliance does not prejudice the interest of any person.
Sale Committee volunteers are advised and guided by experts (viz, marketing agent and lawyer) butboth of them are appointed on no-sale-no-fee basis and their respective industry umbrella organizations havenot uttered a word about the inherent yet brazen moral hazards. There is also no correlationbetween the amount of professional indemnity insurance of the marketing agent/lawyer relative to themagnitude of the en bloc transactions at stake, nor any grading system (in sharp contrast to contractors who aregraded and pre-qualified by quantum of tender awards).
The basis on which the estate is being marketed to potential interested bidders is HIDDEN from ownersBEFORE signing the Collective Sale Agreement. This is despite the fact that the marketing agent will be paidby the owners upon successful sale. The marketing agent prepares two sets of books - so to speak.