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CHIP Eng Seng Corp has decided to scrap some 556 sales contracts with buyers of its units in the Australian residential project Tower Melbourne as a result of a protracted litigation that has stalled the project's demolition works for four years.
The mainboard-listed property and construction group said that it was also exploring viable exit options that includes a sale of the property.
"As the legal proceedings may still take a considerable period of time, it is not possible to ascertain when they can be resolved with finality. In the same vein, the company is unable to ascertain when demolition works on the property can recommence, if at all," said Chip Eng Seng in an announcement.
The property was originally a commercial building and was acquired by the company's wholly owned unit in Australia in September 2011 for redevelopment into a 71-storey tower comprising 581 freehold residential units.
Demolition works had stalled since 2013 due to objections raised by the owner of the adjoining property.
"While it has always been the intention to develop Tower Melbourne into an iconic residential landmark within the city of Melbourne, and notwithstanding the company's vigorous and relentless efforts in contesting the legal proceedings, these proceedings have nevertheless been protracted and have resulted in significant delay in the completion of the project," said the firm.
At this juncture, the appropriate course of action for the company was to exercise its contractual right under the outstanding sales contracts to terminate all such contracts with the purchasers, which will allow them to exit the transaction earlier, it said.
The termination of the contracts involves the return in full of the deposit (comprising 10 per cent of the purchase price of the relevant unit) placed by each purchaser, together with interest (if any) accrued on the deposit.