The landmark collective sale of Gilstead Court could be derailed after mediation efforts to settle a dispute broke down on Thursday.
The Strata Titles Board (STB) intends to issue a stop order to the collective sale committee and has given the five dissenting owners until Oct 1 to withdraw their objections to the $150.2 million deal. It was the second time that the STB had tried to settle the dispute since Aug 21.
Once the stop order is issued, the sale committee will have to apply to the High Court to get approval for the transaction. The sale hit rocky ground in July when five owners who had voted against the deal objected to clauses in the collective sale agreement that they claim would penalise them financially.
The other 43 owners at the condo in Newton had consented to the sale, meeting the 80 per cent threshold needed for the site to be put up for tender.
The contentious clauses state that sellers who consent to the deal have to contribute $2,000 towards a common fund set up for the sale effort. But owners who had not consented by the sale agreement's closing date have to fork out $4,000. This sum would be withheld from their share of the net sale proceeds and shared equally among the consenting owners.
There are also clauses stipulating that other costs related to STB approval proceedings will be withheld from the five dissenters' share of the net sale proceeds.
The Straits Times understands that the minority owners had offered to sign the collective sale agreement before filing their objections with the STB, but on the condition that the "penalising clauses" were removed.
They also claim that each minority owner will have to pay about $27,000, after accounting for all the extra charges outlined in the collective sale agreement.
The sale of Gilstead Court is the first of its kind as it was brokered entirely by the sale committee - a job normally undertaken by a property agency. Ironically, the committee said its do-it-yourself approach would avoid the rows and court cases that often plague en bloc deals.
Tuan Sing Holdings, the developer that tendered $150.2 million for the site on June 17, has offered to pay up to $100,000 for legal fees and other related costs incurred by the sale committee.
"Our position is that if we can help everyone bridge the gap, then we don't mind doing so," said Tuan Sing's chief financial officer, Mr Chong Chou Yuen. "As long as they can settle it before it reaches the High Court, then the offer will stand. We don't want any unhappiness among the owners." Mr Chong noted that the sale committee has yet to accept Tuan Sing's offer.
Some owners from the majority group are upset that the minority owners seem to have been penalised. "The fact that we are insisting that they pay a penalty is not fair at all.
The fact that the committee can't see that this small amount is so unimportant compared with the deal going through doesn't make sense at all," said a resident from the majority group, who did not want to be named. "The sale committee owes a fiduciary duty to the owners to ensure that the deal goes through." The Straits Times also understands that some majority owners are trying to call for a meeting to resolve the issue.
The seven-member collective sale committee is led by former Supreme Court judge Warren Khoo, who also drafted the sale agreement. Mr Khoo could not be reached for comment by press time.
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