The High Court has halted the $590 million collective sale of Thomson View Condominium and slammed the behaviour of marketing agent HSR, in a landmark judgment released yesterday.
Experts say the ruling by Justice Andrew Ang could have a chilling effect on the collective sales market as it means that developers will face the difficult task of keeping a much closer eye on the behaviour of sales committees and marketing agents.
Justice Ang said HSR had "egregiously breached" its duty to avoid conflict of interest during the sale process by paying some owners to back the deal. He noted that by offering incentive payments to select owners, HSR in effect was reducing its own commission from the sale, but to the benefit of only those owners.
The ultimate outcome was that HSR was acting in "bad faith" regarding the distribution of the collective sales proceeds by HSR to unit owners, he said.
The case was heard over five days in June and centred on an application by Thomson View's collective sales committee to approve the sale, which had stalled after some owners' objection.
The objectors - represented by law firms Drew & Napier, Daisy Yeo & Co and Kelvin Chia Partnership - told the court that the sale should be canned as it was not made "in good faith".
As well as the issue of HSR paying a few owners to back the sale, the agreed price was another bone of contention among some owners. They said the $590 million offer accepted by the sales committee was too low in light of a government announcement in August last year of a Thomson Line MRT station to be built nearby.
However, Justice Ang ruled that the sales committee's behaviour during the sale and marketing of the property "did not amount to bad faith".
The tender for the 540,314 sq ft Thomson View site had been awarded to Wee Hur-Lucrum, a joint venture between mainboard-listed Wee Hur Development and private equity investment firm Lucrum Capital, at $712 per sq ft per plot ratio in September last year.
Wee Hur-Lucrum's lawyer Lee Liat Yeang of Rodyk & Davidson said it needed time to analyse the judgment before deciding on its next course of action.
The Thomson View en bloc was one of the largest such deals in recent years and the owners' success in securing a buyer at $590 million had been taken as a sign of improving sentiment.
The ruling will focus attention on another mega collective sale that has yet to close - Eunosville opposite Eunos MRT station. It went on the market in June with an asking price of $688 million.