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Goodluck Garden en bloc sale goes to court
THE owners of Goodluck Garden condominium will soon head to court to settle the fate of its collective sale after the Strata Titles Board (STB) issued a stop order on Wednesday afternoon.
Objections by seven minority owners were not withdrawn following what Business Times understands was two rounds of mediation by STB, with the first taking place on June 1 and the second on June 19.
This means that the board will be unable to approve the en bloc application and the collective sale committee (CSC) will have 14 days to apply to the High Court to seek approval for the sale - BT understands it will do so, and a hearing of the application to the High Court could happen in early September this year.
Objectors to the sale made their grievances known in a blog post on Wednesday afternoon. They claimed the CSC and marketing agent Knight Frank told residents there would be a development charge (DC) for the site, but it later turned out near the end of the tender period that there would be no DC.
"If the owners had known that there was no DC, it is likely that the owners would have wanted a higher reserve price," the post said.
It also argued that the CSC should have stopped the tender process to seek a fresh mandate on the reserve price, held a re-tender, or extended the tender period.
Knight Frank told The Business Times it was unable to comment.
Present at the STB hearing on Wednesday was the collective sale chairman of Goodluck Garden, who declined to be named and said the matter was up to the High Court to decide. Also present were separate lawyers for the dissenters and CSC, and a Knight Frank representative.
The 210-unit freehold residential development along Toh Tuck Road was sold to Qingjian Group in early March for S$610 million, above the reserve price of S$550 million when the tender launched. This was also a 12.5 per cent premium over what BT understands to be a S$542 million valuation at the close of tender.
It is the fifth largest collective sale this year and Goodluck Garden's first collective sale attempt. As at the close of tender on March 7, owners making up 81.93 per cent of the total strata area and 81.35 per cent of the total share value had consented to the collective sale.
Perennial Real Estate Holdings also announced a 40-60 joint venture in April with Qingjian to redevelop the site.
In an en bloc sale, after a buyer is found, an application can be made to the STB which will decide if the sale can go through, but dissenting owners can still raise their objections.
The STB mediates matters in dispute for a maximum of 60 days. If the dispute cannot be resolved and objections are not withdrawn, the stop order is meant to discontinue mediation, and the matter is turned over to the High Court.
Rajah & Tann represents the CSC, while TSMP Law Corporation represents the objectors.
According to the sale and purchase agreement with Qingjian, the CSC must apply to the High Court to overturn the stop order and obtain a sale order within five months from the date of the stop order.
In the event the timeline is breached, Qingjian has the option to extend it, or abort the sale, BT has learned. In the event that there is no sale order, Qingjian would take back its deposit, BT understands.
The Goodluck Garden case comes after another en bloc sale dispute involving Qingjian Group. Qingjian Realty bought the former 358-unit Shunfu Ville in its first collective sale purchase for S$638 million in May 2016, but five unit owners objected to the sale.
The High Court gave the sale the green light in January 2017, and an appeal by objectors was dismissed in May 2017. Owners only vacated early this year and the launch of the new development JadeScape is expected to come this year. Qingjian could not be reached for comment.
Other past high-profile en bloc disputes include that of Horizon Towers, Thomson View and Gilstead Court.
Executive director of ZACD Group Nicholas Mak said: "On a big picture level, this won't dampen developers' appetite."
But it does mean a "wake-up call" for developers, property agents and CSCs that the path to getting proceeds after a buyer is found is not always straightforward. Ku Swee Yong, the chief executive of International Property Advisor, said developers may become "more cautious in their due diligence of the en bloc sites offered to them for consideration."