Courts go beyond box-ticking to stress fairness and process integrity in en bloc sales: Norman Ho

Courts are going beyond procedural box-ticking in collective sales, with recent cases underscoring the importance of fairness and transparency, said Norman Ho, senior partner at Rajah & Tann Singapore.

Speaking at the 32nd Pan Pacific Congress of Real Estate Appraisers, Valuers and Counsellors on Wednesday (Oct 1), he shared insights on the en bloc sale landscape from recent Strata Titles Boards (STB) and court decisions.

The veteran corporate real estate lawyer noted that judges now scrutinise not just the fulfilment of statutory requirements, but also how decisions are made, whether owners are treated fairly, and whether the process respects the spirit of the law.

The collective sale framework has evolved from a rigid process into a more balanced system that supports redevelopment while protecting individual owners’ rights.

In the beginning, such sales could proceed only with the unanimous consent of all owners – a threshold that made collective sales difficult to execute due to the “common occurrence of dissenting or ‘hold-out’ owners”, he said.

En bloc sales of developments older than 10 years can now proceed with 80 per cent owners’ consent (by share value and strata area). For properties under 10 years old, 90 per cent consent is needed.

A wave of en bloc sales in the early 2000s revealed concerns over fairness, transparency and procedural integrity, particularly among minority owners, said Ho. In response, safeguards were introduced.

These included a five-day cooling-off period following the signing of the collective sale agreement, powers for STB to reject proposed sales not conducted in good faith, and improved procedural and legal protections to promote equity among stakeholders.

Further refinements were introduced in 2010, such as a mandatory two-year waiting period between unsuccessful en bloc sale attempts, as well as the formation of collective sale committees.

“Together, these legislative and judicial developments reflect an ongoing effort to balance the need for urban redevelopment with the protection of individual property rights – particularly those of minority owners – within the en bloc sale process,” said Ho.

He pointed to the legislative regime surrounding collective sales, covering areas such as authorised representatives acting jointly, contractual flexibility in collective sale agreements, the method of apportionment, and incentive payments.

This emphasis on fairness was underscored in the 2013 Thomson View case. The marketing agent HSR International Realtors was found to have breached its fiduciary duties by offering incentive payments to four objecting subsidiary proprietors, thus placing itself in a position of conflict. The agent also breached its duty of transparency by failing to disclose these payments to the collective sales committee or other subsidiary proprietors.

Ho said: “As collective sales continue to shape Singapore’s urban landscape, it’s important for all parties – owners, committees and agents – to approach the process with care, integrity and a clear understanding of their legal duties.”

The 32nd Pan Pacific Congress is organised by the Singapore Institute of Surveyors and Valuers. This year’s symposium, running from Sep 29 to Oct 2 at Concorde Hotel, hosts delegates from various countries including Japan, South Korea and Malaysia.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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