En Bloc Legislation: Are They Constitutional?

Consider this: I own a unit in a 30-unit strata development which comes with a 1/30 share in the common property of the development.

After more than 25 years of backbreaking mortgage payments, I finally paid off my mortgage and completely own the unit.

One way or another, the en bloc fever set in at my estate. I voted against the en bloc sale at every extraordinary general meeting (EOGM), but I was outvoted. I refused to sign the collective sale agreement (CSA) and vocally opposed the collective sale committee (CSC), but the requisite number of proprietors sign, and the CSC members are duly appointed. I expressly write to the lawyers acting in the sale that I do not wish to appoint them to act for me in the sale. I forbade them to collect any money on behalf in the purported sale by public tender, but they duly do so. Not only that, the terms of the CSC provide that the lawyers be allowed to retain a portion of the interest on the money deposited with them as stakeholders by the eventual buyers.

After a hearing before the Strata Titles Board (STB), my objections were overruled and I was ordered to vacate the premises and collect the money from solicitors I never appointed. In effect, I have been ordered by Board to:

  1. sell my property against my wishes;
  2. pay the property agents to market the property notwithstanding my opposition;
  3. accept a particular price despite my objections; and
  4. retain a particular firm of lawyers whom I expressly forbade to represent me and remunerate them in terms of the CSA, including the interest on the stakeholders’ money.

Whilst our Constitution does not expressly provide for freedom of contract, this concept is necessarily implicit in any capitalist society, subject only to the greater good of the wider society. Understandably, our Parliament in 1999 has seen fit to pass a law to enable older estates to be renovated using private funds through the use of market forces. But, is it for the greater good of society that the specific terms of contract among private individuals be dictated to a minority who do not agree to them? Even the Housing and Development Act, the closest comparison with a property-related contract, prescribes the terms of the contract with the HDB and other related government authorities, whereas the Land Titles (Strata) Act extends it to clearly non-government parties with none of the accountability to the public good.

The possibility of abuse by greedy individuals in many different situations was only recently highlighted in the NKF saga. The same situation can and has arisen in some en-bloc sales: letters to the press, anti-enbloc blogs and newspaper reports bear testimony to this.

The Horizon Towers saga amplifies even more strongly, the greed which threatens to undermine any public good derived from enbloc legislation. Consider the following issues uppermost in the minds of most:

  1. It appeared that the wishes of a portion of the owners who had signed the CSA were “anti-sale”, rather than “pro-sale”. Should the claim by the buyers be against such owners only? After all, they were the ones who had signed the CSA or let their representatives sign the CSA on their behalf.
  2. If the answer is “No” (largely because these owners would probably be unable to pay the hefty damages being sought – $800m at last count), should an owner who consistently opposed the CSA, CSC, and the appointment of the lawyers, be liable for the damages claimed by the buyers?
  3. If the lawyers retain the stakeholders’ interest for a unit which belongs to an owner who consistently opposed the CSA, CSC, and the appointment of the lawyers, should they be liable to refund the money to offset the huge losses?
  4. Were the agents also liable for failing to properly advise the CSC to reconsider the reserve price in the face of a runaway en bloc market?
  5. Back to the monetary issue, who is best able to pay the hefty damages? How did the buyers read the market so well to accumulate a potential profit of $800m, while the property consultant advising the CSC got it so wrong?

What happens if the buyer of an en-bloc project engage in any sharp business practices in the tender exercise? This issue is particularly pertinent in smaller developments where the buyer can ‘develop’ a relationship with some sellers. The justification for amending the previous laws requiring 100% consensus for en-bloc sales was to avoid unfair predatory practices by the last opposing seller. If the changes, which forces the contract terms onto reluctant sellers now favour the shrewd buyer, then is it a discrimination which may be challenged in the courts on constitutional grounds?