Time to revamp the Strata Titles Boards

Source : Today – 22 Jun 2009

IT APPEARS that there is an urgent need to review the role of the Strata Titles Boards (STB), especially regarding collective or en bloc property sales in the light of recent court judgments that saw the board come under criticism.

The most recent involved the decision by the Court of Appeal to call off the sale of Horizon Towers after a tussle between various owners over the condominium’s sale to a group led by listed Hotel Properties Ltd (HPL).

The STB was criticised for a number of lapses, including its failure to ask whether the sale price of $500 million was the best “reasonably obtainable”. It was also rapped for concluding that the original sales committee had “acted in good faith” in selling the property to HPL just because the committee had received and relied on advice from its lawyers.

The Court of Appeal also felt that the STB had erred in refusing to call one of the owners to testify and by allowing the sales committee to assert “legal privilege” in not divulging the legal advice it had received. The STB was also criticised for ignoring possible conflicts of interest in the sales committee members’ purchase of additional units.

In another case involving the sale of Regent Garden in West Coast to Allgreen Properties, the STB received flak from the Court of Appeal for calling for hearings and then refusing to approve the sale while the issue was before the High Court.

The Court of Appeal felt that if the STB had deferred the matter until the court hearing, it would not only have saved time and costs but would have also avoided the STB’s decision being inconsistent with that of the High Court, which allowed the sale to go through. The Court of Appeal also said that the STB’s refusal to approve the sale to Allgreen was “questionable in law”.

It also affirmed that the Land Strata Titles Act was there to protect minorities, and not to protect majorities from their own “improvident” bargain when the majority at Regent Garden wanted to renege on their sales agreement.

While the STB system was set up some decades ago as more and more people took to high-rise living with ownership of property based on strata titles, many in the property business feel that many of the board’s members are not adequately qualified to deal with the complex legal issues surrounding en bloc sales.

This is despite the fact that under the law governing the STB, the president and his two deputies must be legally qualified persons. At present, the board is presided over by lawyer Tan Lian Ker and assisted by senior lecturer Philip Chan Chuen Fye and lawyer Alfonso Ang Cheng Ann.

There is the registrar, who is there to help with queries on how to submit an application but cannot provide legal advice on the merits of a case.

Then there are about 30 other panel members who include accountants, engineers, lawyers, property consultants and surveyors. Each time an application is made, a Strata Titles Board is constituted, consisting of the president or a deputy with two or four other persons from the panel.

Apart from the registrar, all other members of the STB are employed elsewhere. In a sector where time is of the essence and millions can be gained or lost due to the volatility of the property market, their availability to sit at a board hearing becomes an issue. It’s also not fair to ask them to give up their valuable time to do “national service”, albeit with some compensation thrown in, but which most would consider a pittance given their standing.

So, perhaps it’s time to have en bloc cases heard by the arbitration courts or by a specially constituted court with the expertise on property matters to avoid long and costly battles as in the case of Horizon Towers. With the High Court having a smaller load these days as a result of former Chief Justice Yong Pung How’s efforts to speed up the processing of cases, there ought to be no undue strain on the courts.

The present lull in en bloc sales should provide the ideal opportunity to revamp the STB before the next round of collective sales takes off when property prices start to soar once again.