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Horizon Towers lawsuits headed for trial

Posted on 25 Feb 2010 | Comments Off

High Court dismisses striking out action by 2 former sales committee members

Horizon Towers: The minorities say they were made to defend their homes against an en bloc process actuated by a lack of good faith on the part of the sales committee, and had to spend much for their effort

The latest legal tussle involving Horizon Towers looks set to go into full swing, with the High Court having dismissed the action by the two defendants to strike out the lawsuits filed against them.

This means the court will hear the claims brought by three sets of minority owners against the two former sales committee members – unless the defendants succeed in appealing against yesterday’s decision.

BT understands that the first defendant – former sales committee chairman, Arjun Samtani – will appeal the High Court decision, while the second defendant, Tan Kah Gee, is still deliberating if he should appeal.

The High Court yesterday also ordered both Mr Samtani and Mr Tan to jointly bear the costs of the striking-out application and the court hearing – amounting to a total of $6,000.

The minority owners are suing the two former sales committee members to reclaim close to $1 million in legal and administrative costs which they say they incurred during the lengthy fight to keep their homes.

The en bloc sale of Horizon Towers was a saga that dragged out for more than two years, and involved several High Court and Strata Titles Board hearings. The Court of Appeal eventually decided in April last year that the deal could not go through because the development’s sales committee had failed in its duty.

The Court of Appeal had ordered the bulk of costs to be borne by the development’s potential buyer, Hotel Properties Ltd (HPL), and its majority owners.

But three sets of minority owners, represented by Kannan Ramesh of Tan Kok Quan Partnership, are now seeking compensation for the sums not covered by the Court of Appeal judgment. The three sets of owners are seeking between $117,000 and $370,000 in costs – making for a total claim of more than $800,000.

The minorities say they were made to defend their homes against an en bloc process actuated by a lack of good faith on the part of the sales committee, and had to spend much for their effort.

They said Mr Samtani and Mr Tan were ‘key players in the process leading up to the commencement, facilitation, management and finalisation of the collective sale process’.

In his defence, Mr Samtani – represented by N Sreenivasan of Straits Law Practice — said he was not alone in driving the sale process. He said ‘each and every member of the SC (sales committee) played an equally important role’ and that he ‘did not have any special powers’ that could influence the committee’s decisions.

Mr Samtani also claimed that the committee ‘followed up on all expressions of offer’ for Horizon Towers and that it received no offer better than HPL’s at the relevant time. He said the committee was advised by its lawyers to proceed with the HPL offer.

Mr Tan, represented by Senior Counsel Tan Cheng Han and Ian Lim of TSMP Law Corporation, said he was ‘not a key player’ and cited various correspondence and minutes of sales committee meetings which he said showed that he did not play a major role in the various aspects of the collective sale.

Mr Tan also said that the sales committee did not seriously consider an alternative offer made at the time by a Vineyard Holdings, as it had ‘questioned the credibility of the expression of interest from Vineyard and their level of seriousness given that Vineyard was a Hong Kong company that was not well known and its lawyers were not from a Singaporean firm, but from a small Malaysian law firm’.

He claims he suggested waiting for a higher offer, but that the majority of the sales committee did not agree. He said the sales committee genuinely felt they would not get a better offer than the one by HPL, and that they had been advised by their lawyers to accept the offer.

Mr Tan had also sought to strike out the minorities’ suits against him and Mr Samtani, saying that the entire remedy sought by the minorities was already dealt with by the Court of Appeal last April, when it decided on how it would award costs to the various parties. But the High Court chose to dismiss this application yesterday.

The defendants have 14 days to submit their appeal.

Source : Business Times – 25 Feb 2010

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Posted in En-bloc / Collective Sales

Tagged Collective Sales, Enbloc, Horizon Towers, Horizon Towers Enbloc

HK ups stamp duty on sales of luxury homes

Posted on 25 Feb 2010 | Comments Off

Move may drive speculators to target lower end of property market

Hong Kong raised taxes on luxury homes for the first time in more than a decade, a move some analysts said may backfire by fuelling speculation in the cheaper housing market.

Stamp duty on sales of more than HK$20 million (S$3.6 million) will rise to 4.25 per cent from 3.75 per cent from April 1, Financial Secretary John Tsang said yesterday in his Budget speech, citing the increased risk of a property bubble.

For people buying their own homes ‘there might be some impact, but it shouldn’t be that big,’ said Buggle Lau, chief property analyst at realty company Midland Holdings Ltd. ‘For speculators, the cost of speculation increases, so they may shift their target to the lower end of the property market.’

The lowest mortgage rates in at least two decades and an influx of overseas capital equivalent to more than a third of Hong Kong’s annual gross domestic product helped fuel a 29 per cent gain in property prices last year.

The government is concerned at the risk to the economy should interest rates rise and will move to limit speculation if it spreads, Mr Tsang said.

‘If there’s a reappearance of speculation, we will act quickly with measures to cool down the market,’ Mr Tsang told reporters yesterday. While ‘it’s easy for the government to roll out some measures pushing home prices down, it’s difficult to push them back up. We won’t act recklessly.’

The new transaction tax on luxury homes, the first increase since 1999, will only affect about 2 per cent of the property market. Of 110,000 Hong Kong residential sales in 2009, about 2,000 sold for more than HK$20 million, according to Midland.

‘It will have a 0.01 per cent impact because they raised the stamp duty by half a percent on properties accounting for 2 per cent of the total market,’ said Nicole Wong, a Hong Kong- based real estate analyst at CLSA Asia-Pacific Markets, the regional brokerage unit of Credit Agricole SA. ‘What they announced today is only paying lip service. It will have almost no impact because there is no sign of determination.’

Mr Tsang said the government will also seek to address the supply of land for development by putting more residential sites up for auction.

The change in auction policy could also have an unintended effect as prices ‘in bull markets become signposts’, said Ms Wong. ‘More auctions more frequently could even fuel the property market further.’

In Hong Kong, the primary source of land available to property developers is through government auctions. The operator of the city’s Mass Transit Railway, the MTR Corp, and the Urban Renewal Authority also put sites up for tender.

Under the current system for government auctions, developers must indicate interest in a site on a government list. Once a ‘trigger price’ has been met, the land is auctioned. Mr Tsang said the government would now put sites up for sale at its own discretion.

He said the government will also ensure an increase in the supply of small and medium-sized flats by imposing conditions of future land sales. The government held the first land auction of 2010 on Feb 22.

‘Overall the government wants to increase the land supply,’ said Midland’s Mr Lau, who noted there were only two auctions last year. ‘In the past the land bank replenishment pace has not been very fast.’

Luxury property prices, for which there is no official index, may have risen as much as 40 per cent last year, Ms Wong said. Buyers of luxury homes were undeterred by an October increase in downpayment requirements from 30 per cent to 40 per cent.

Since the fourth quarter of 2008, HK$640 billion of capital had flowed into Hong Kong’s HK$215 billion economy, Mr Tsang said.

Sun Hung Kai Properties Ltd, the world’s biggest developer by market value, reported selling 900 homes in the suburban Yuen Long area for HK$4.2 billion on Feb 20 and 21, or an average of HK$5,400 per square foot. That compared with HK$3,000 in the same area a year ago, Centaline Property Agency Ltd said.

‘The increased risk of a bubble forming in the property market has also aroused public concern about the difficulty in buying homes,’ Mr Tsang said.

Shares of real estate developers gained after the speech, with Sun Hung Kai adding 1.5 per cent to HK$107.20 at the close of trading and Sino Land Co. up 1 per cent at HK$13.92. The Hang Seng Property Index was the only one of the four industry groups on the benchmark gauge to rise.

The stocks gained because ‘there is nothing too radical on property’ in the Budget, said Andrew Sullivan, a sales trader at Mainfirst Securities Hong Kong Ltd.

Source : Business Times – 25 Feb 2010