Just when everyone thought mega collective sales worth more than $500 million were a thing of the past, along came Thomson View condominium.
It bucked the trend last September, fetching $590 million for the owners - the fifth biggest en bloc sale ever here.
But what looked like a lucrative sale and a dream come true for home owners there fast turned into a legal and ethical nightmare.
In a landmark judgment last Tuesday, the High Court voided the deal and slammed the behaviour of HSR, the marketing agent which helped the condo's collective sale committee to organise the en bloc process.
The condo occupies a 540,314 sq ft site along Upper Thomson Road with a 99-year-lease, and has 255 units ranging from apartments to townhouses and shop space.
Everything seemed rosy when mainboard-listed developer Wee Hur Development and private equity investment firm Lucrum Capital teamed up last September to buy the site for $590 million - $712 per sq ft per plot ratio.
Each owner stood to pocket gross proceeds of $1.62 million to $3.59 million.
The agents and owners celebrated and industry experts regarded the sale as a potential boost to the market, which had seen mostly only smaller en bloc deals of under $100 million in recent years.
But in January, the first sign of trouble emerged when 13 owners lodged objections.
One key issue was the sale price, which they said was too low, given a government announcement in August last year - just before the sale was sealed - that an MRT station on the Thomson Line would be built near the condo.
Having an MRT station nearby is a prized amenity for any housing project, public or private.
The deal went before the courts for approval in late June.
A key issue - the fatal flaw as it would turn out - was that collective sales committee's marketing agent, HSR, had paid some owners to consent to the sale. And HSR did this without telling the committee or other owners.
At least 80 per cent of owners have to say yes before a collective sale can proceed. It emerged that HSR had offered sweeteners in the form of m o r e t h a n $548,000 in additional payments to four owners to persuade them to agree to the sale.
This included offering a return business class air ticket from Amsterdam or Dusseldorf to Singapore so that one owner's wife could sign the collective sales agreement.
Although the extra payment came from HSR's own pocket, it was deemed out of line because it benefited only some owners.
Justice Andrew Ang did not mince words. He said HSR had "egregiously breached" its duty to avoid a conflict of interest during the sale process by paying some owners to back the deal.
He ruled that the four owners who received the payments could not be counted among the requisite 80 per cent majority needed for the sale to go through.
And that was enough to scuttle the sale.
Marketing agents note that monetary incentives are not common in the en bloc process, although it is believed that there have been occasional cases of payments between owners to ensure that the 80 per cent level is reached, usually in smaller en bloc deals.
The Thomson View judgment came just two weeks after the Court of Appeal upheld a ruling by High Court Justice Belinda Ang in April, halting a $33 million collective sale of Harbour View Gardens in Pasir Panjang.
Again, improper inducements to owners were at the heart of the matter.
The judge had refused to allow the sale to proceed after learning of a $200,000 inducement that the collective sales committee and marketing agent Colliers had offered to a couple to get them to agree to sell their flat.
The Sunday Times understands that Thomson View residents are considering whether to appeal against the decision.
Commenting on the likely impact of the ruling on an already cold en bloc market, Savills Singapore research head Alan Cheong said: "Developers may lose heart in such complex deals, particularly when the development has hundreds of residents to contend with and the cost of acquisition runs into the hundreds of millions."
Others feel developers would be more careful now.
"What went wrong here was the side deal between the agents and sellers," said International Property Advisor chief executive Ku Swee Yong. "Developers won't be less inclined to go for en bloc sales, but they will be more careful with doing their due diligence."
Lawyer Robson Lee said the ruling basically sets down what is appropriate conduct for agents and CSCs.
The ruling also serves as a reminder for all involved in such en bloc deals to be mindful of what is inappropriate conduct, he added.
Mr Lee did not see an impact on market sentiment. "There are wider factors that are more cardinal to demand and supply than an en bloc consent that was not appropriately obtained," he said.
One marketing agent said the ruling makes clear that side payments are now frowned on, even if disclosed, as they distort the sharing of proceeds among owners.
At Thomson View, meanwhile, the dissenters were satisfied with the court's decision but the majority who had been looking forward to an en bloc windfall were left disheartened.
Retiree Jolly Koh, 82, who had plans to downgrade to a Housing Board flat and live on the remaining proceeds, said: "We thought the deal would go through for sure this time. But now it's just such a huge disappointment."
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